CMS Places Three-Year Moratorium On Construction Of New Long-Term Care Hospitals

CMS officials this week announced a regulation that places a three-year moratorium on the construction of new long-term care hospitals and limits the effects of payment reductions to existing facilities, CQ HealthBeat reports. According to CQ HealthBeat, admissions criteria among long-term care hospitals and the industry’s “Medicare-fueled growth” had “raised eyebrows among policy makers.”

As a result, several regulatory provisions, including a proposal to reduce base rates and the extension of the so-called 25% rule, were “putting the hurt” on the long-term care hospital industry. The 25% rule reduced payments for care of each patient from a single referring facility above one-quarter of a long-term care hospital’s patient load. According to CQ HealthBeat, the 25% rule addressed hospitals building long-term care facilities within their own facilities to capture higher revenues associated with long-term care. The new regulation implements provisions of a measure signed by President Bush last year regarding Medicare and Medicaid payments and an extension of SCHIP.

The new revisions “ease the impact” of the 25% rule and block the base rate reduction, according to CQ HealthBeat. In addition, the regulation sets policies for implementing the moratorium and determines which facilities will be prohibited from new construction. CMS will be evaluating exemptions on a case-by-case basis, according to Alec Vachon, a Washington, D.C. consultant and former Senate Finance Committee staffer. The regulation will be published in the Federal Register on Thursday (Reichard, CQ HealthBeat, 5/21).

Norman DeLisle, MDRC
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