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Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations fiscal impact on the Medicare budget and on LTCHs.
There are 363 LTCHs included in this impact analysis. We note that, although there were 373 LTCHs with cases in the FY 2019
MedPAR files, for purposes of this impact analysis, we excluded the data of allinclusive rate providers consistent with the development of the FY 2022 MSLTCDRG
relative weights discussed in section VIII.B.3.c. of the preamble of this final rule.
Moreover, in the claims data used for this final rule, 3 of these 363 LTCHs only have claims for site neutral payment rate cases and, therefore, do not affect our impact analysis for LTCH PPS standard Federal payment rate cases.
In the impact analysis, we used the payment rate, factors, and policies presented in this final rule, the 1.9 percent annual update to the LTCH PPS standard Federal payment rate, the update to the MSLTC
DRG classifications and relative weights, the update to the wage index values and laborrelated share, and the best available claims and CCR data to estimate the change in payments for FY 2022.
Under the dual rate LTCH PPS payment structure, payment for LTCH discharges that meet the criteria for exclusion from the site neutral payment rate that is, LTCH PPS
standard Federal payment rate cases is based on the LTCH PPS standard Federal payment rate. Consistent with the statute, the site neutral payment rate is the lower of the IPPS
comparable per diem amount as determined under 412.529d4, including any applicable outlier payments as specified in 412.525a, reduced by 4.6 percent for FYs 2018 through 2026; or 100 percent of the estimated cost of the case as determined under 412.529d2. In addition, there are two separate high cost outlier targetsone for LTCH PPS standard Federal payment rate cases and one for site neutral payment rate cases. The statute also establishes a transitional payment method for cases that are paid the site neutral payment rate for LTCH discharges occurring in cost reporting periods beginning during FY 2016 through FY 2019. For FY 2021 and FY 2022, we expected no site neutral payment rate cases would still be eligible for the transitional payment method since it only applies to those site neutral payment rate cases whose discharges occur during a LTCHs cost reporting period that begins before October 1, 2019. Site neutral payment rate cases whose discharges from an LTCH occur during the LTCHs cost reporting period that begins on or after October 1, 2019 are paid the site neutral payment rate amount determined under 412.522c1. Therefore, for purposes of this impact analysis, to estimate total LTCH PPS payments for site neutral payment rate cases in FYs 2021 and 2022 the site neutral payment rate amount was applied in full.
Based on the best available data for the 363
LTCHs in our database that were considered in the analyses used for this final rule, we estimate that overall LTCH PPS payments in FY 2022 will increase by approximately 1.1
percent or approximately $42 million based on the rates and factors presented in section VIII. of the preamble and section V. of the Addendum to this final rule.

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Based on the FY 2019 LTCH cases that were used for the analysis in this final rule, approximately 25 percent of those cases were classified as site neutral payment rate cases that is, 25 percent of LTCH cases did not meet the statutory patient-level criteria for exclusion from the site neutral payment rate.
Our Office of the Actuary currently estimates that the percent of LTCH PPS cases that will be paid at the site neutral payment rate in FY
2022 will not change significantly from the most recent historical data. Taking into account updates to the IPPS rates and other changes that will apply to the site neutral payment rate cases in FY 2022, we estimate that aggregate LTCH PPS payments for these site neutral payment rate cases will increase by approximately 3 percent or approximately $11 million. This projected increase in payments to LTCH PPS site neutral payment rate cases is primarily due to the updates to the IPPS rates used in calculating the IPPS comparable per diem amount, as well as an estimated increase in costs for these cases determined using the charge and CCR adjustment factors described in section V.D.3.b. of the Addendum to this final rule. We note, we estimate payments to site neutral payment rate cases in FY 2022
represent approximately 10 percent of estimated aggregate FY 2022 LTCH PPS
payments.
Based on the FY 2019 LTCH cases that were used for the analysis in this final rule, approximately 75 percent of LTCH cases will meet the patient-level criteria for exclusion from the site neutral payment rate in FY
2022, and will be paid based on the LTCH
PPS standard Federal payment rate for the full year. We estimate that total LTCH PPS
payments for these LTCH PPS standard Federal payment rate cases in FY 2022 will increase approximately 0.9 percent or approximately $31 million. This estimated increase in LTCH PPS payments for LTCH
PPS standard Federal payment rate cases in FY 2022 is primarily due to the 1.9 percent annual update to the LTCH PPS standard Federal payment rate for FY 2022 and the projected 0.8 percent decrease in high cost outlier payments as a percentage of total LTCH PPS standard Federal payment rate payments, which is discussed later in this section.
Based on the 363 LTCHs that were represented in the FY 2019 LTCH cases that were used for the analyses in this final rule presented in this Appendix, we estimate that aggregate FY 2021 LTCH PPS payments will be approximately $3.771 billion, as compared to estimated aggregate FY 2022 LTCH PPS
payments of approximately $3.813 billion, resulting in an estimated overall increase in LTCH PPS payments of approximately $42
million. We note that the estimated $42
million increase in LTCH PPS payments in FY 2022 does not reflect changes in LTCH
admissions or case-mix intensity, which will also affect the overall payment effects of the policies in this final rule.
The LTCH PPS standard Federal payment rate for FY 2021 is $43,755.34. For FY 2022, we are establishing an LTCH PPS standard Federal payment rate of $ 44,713.67 which reflects the 1.9 percent annual update to the LTCH PPS standard Federal payment rate
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and the budget neutrality factor for the updates to the area wage level adjustment of 1.002848 discussed in section V.B.6. of the Addendum to this final rule. For LTCHs that fail to submit data for the LTCH QRP, in accordance with section 1886m5C of the Act, we are establishing an LTCH PPS
standard Federal payment rate of $43,836.08.
This LTCH PPS standard Federal payment rate reflects the updates and factors previously described, as well as the required 2.0 percentage point reduction to the annual update for failure to submit data under the LTCH QRP.
Table IV shows the estimated impact for LTCH PPS standard Federal payment rate cases. The estimated change attributable solely to the annual update of 1.9 percent to the LTCH PPS standard Federal payment rate is projected to result in an increase of 1.8
percent in payments per discharge for LTCH
PPS standard Federal payment rate cases from FY 2021 to FY 2022, on average, for all LTCHs Column 6. The estimated increase of 1.8 percent shown in Column 6 of Table IV
also includes estimated payments for shortstay outlier SSO cases, a portion of which are not affected by the annual update to the LTCH PPS standard Federal payment rate, as well as the reduction that is applied to the annual update for LTCHs that do not submit the required LTCH QRP data. For most hospital categories, the projected increase in payments based on the LTCH PPS standard Federal payment rate to LTCH PPS standard Federal payment rate cases also rounds to approximately 1.8 percent.
For FY 2022, we are updating the wage index values based on the most recent available data data from cost reporting periods beginning during FY 2018 which is the same data used for the FY 2022 IPPS
wage index. In addition, we are establishing a labor-related share of 67.9 percent for FY
2022, based on the most recent available data IGIs second quarter 2021 forecast on the relative importance of the labor-related share of operating and capital costs of the 2017based LTCH market basket. We also applying an area wage level budget neutrality factor of 1.002848 to ensure that the changes to the area wage level adjustment will not result in any change in estimated aggregate LTCH PPS
payments to LTCH PPS standard Federal payment rate cases.
For LTCH PPS standard Federal payment rate cases, we currently estimate high cost outlier payments as a percentage of total LTCH PPS standard Federal payment rate payments will decrease from FY 2021 to FY
2022. Based on the FY 2019 LTCH cases that were used for the analyses in this final rule, we estimate that the FY 2021 high cost outlier threshold of $27,195 as established in the FY 2021 IPPS/LTCH PPS final rule will result in estimated high cost outlier payments for LTCH PPS standard Federal payment rate cases in FY 2021 that are projected to exceed the 7.975 percent target.
Specifically, we currently estimate that high cost outlier payments for LTCH PPS standard Federal payment rate cases will be approximately 8.8 percent of the estimated total LTCH PPS standard Federal payment rate payments in FY 2021. Combined with our estimate that FY 2022 high cost outlier
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