CMS finalizes FY 2025 rule increasing long-term care hospital payments by $45 million; includes 3.0% market basket update and 0.8% reduction in outlier payments percentage

The Centers for Medicare & Medicaid Services Aug. 1 finalized policy changes to the long-term care hospital standard rate payment system that will increase payments by 2.0%, or $45 million, in fiscal year 2025 relative to FY 2024. This includes a 3.0% market basket update, a cut of 0.5 percentage points for productivity, and a cut related to outlier payments, among other policies. Specifically, due to an increase in the outlier threshold, CMS will reduce outlier payments as a percentage of total LTCH PPS standard federal payment rate payments by 0.8%. CMS also finalized a rebasing of the LTCH market basket using a 2022 base year.  

 
In a statement shared with the media, Molly Smith, AHA group vice president for public policy, said, “We are troubled that the final long-term care hospital outlier threshold is nearly 30% higher than it is currently. Since FY 2021, this figure has increased by more than 180%, which forces these hospitals to absorb hundreds of thousands of dollars in additional losses when caring for the sickest patients. This increase will create serious access issues for patients and put additional burden back on acute-care hospitals and other providers that do not specialize in caring for this unique patient population.”

While CMS did not adopt or remove any quality measures from the LTCH Quality Reporting Program, the agency finalized its proposal to adopt and modify certain patient assessment items related to health-related social needs; LTCHs will be required to collect and report specific data elements related to living situation, food and utilities beginning with the FY 2028 LTCH QRP. CMS also extends the window in which patient assessments must be done from three to four days after admission.

Provisions of the final rule generally take effect Oct. 1.