Modifying Medicare’s Long-Term Care Hospital Payments (H.R. 2580)

What is H.R. 2580?

(Updated July 19, 2017)

This bill would modify Medicare’s long-term care hospital outlier payments to limit those payments. Starting with the rate year beginning on October 1, 2016 and for subsequent rate years, the Secretary of Health and Human Services would use a reduction factor of 8 percent to establish an outlier pool.

In reimbursing outlier payments under this system, payment amounts would be structured so that they wouldn’t exceed 99.0625 percent of the outlier pool. Reductions in payments from this outlier pool would not count towards a budget neutrality provision.

This legislation would not apply to the computation of the applicable site neutral payment rate.

Argument in favor

These changes make sense from a financial standpoint, as money set aside for long-term care hospitals would be used to pay for treatment at those hospitals.

Argument opposed

Including budget offsets in this legislation would place a greater financial burden on long-term care hospitals that are eligible for outlier payments.

Impact

Long-term care hospitals and their payments, Centers for Medicare and Medicaid Services.

Cost of H.R. 2580

The CBO estimates that this legislation would increase Medicare spending by $47 million, and that adjusting the high-cost outlier payment system would decrease Medicare spending by $48 million. This results in a net spending reduction of $1 million over the 2016-2025 period.

Additional Info

In-Depth:

Long-term care hospitals typically treat patients who require inpatient treatment for more than 25 days, and are reimbursed through outlier payments by Medicare for treating patients that exceed thresholds for high cost cases and also for unusually short stays.

The American Hospital Association weighed in on this legislation, supporting the underlying premise but objecting to a limitation on outlier payments that it says will further complicate the operations of long-term care hospitals, which are already dealing with criteria changes.

This bill was passed by the House Ways and Means Committee via voice vote.

Media:

• House Ways and Means Committee Press Release
• CBO Cost Estimate
  
• American Hospital Association (Partially Opposed - PDF Link)
• Centers for Medicare and Medicaid Services (Context)
  

Summary by Eric Revell
(Photo Credit: Flickr user niiicedave)