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Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations
payments for LTCH PPS standard Federal payment rate cases will be 7.975 percent of estimated total LTCH PPS standard Federal payment rate payments in FY 2022, this will result in an estimated decrease in high cost outlier payments as a percentage of total LTCH PPS standard Federal payment rate payments of approximately 0.83 percent between FY 2021 and FY 2022. We note that, in calculating these estimated high cost outlier payments, we inflated charges reported on the FY 2019 claims by the charge inflation factor in section V.D.3.b. of the Addendum to this final rule. We also note that, in calculating these estimated high cost outlier payments, we estimated the cost of each case by multiplying the inflated charges by the adjusted CCRs that we determined using our methodology described in section V.D.3.b. of the Addendum to this final rule.
Table IV shows the estimated impact of the payment rate and policy changes on LTCH
PPS payments for LTCH PPS standard Federal payment rate cases for FY 2022 by comparing estimated FY 2021 LTCH PPS
payments to estimated FY 2022 LTCH PPS
payments. As noted earlier, our analysis does not reflect changes in LTCH admissions or case-mix intensity. We note that these impacts do not include LTCH PPS site neutral payment rate cases for the reasons discussed in section I.J.3. of this Appendix.
As we discuss in detail throughout this final rule, based on the best available data, we believe that the provisions of this final rule relating to the LTCH PPS, which are projected to result in an overall increase in estimated aggregate LTCH PPS payments, and the resulting LTCH PPS payment amounts will result in appropriate Medicare payments that are consistent with the statute.
Comment: Multiple commenters expressed concerns about the application of the site neutral payment rate once the PHE waivers are ended. Several of these commenters stated their belief that cases paid at the site neutral payment rate will continue to be underpaid as those cases, according to commenters, have on average higher levels of clinical complexity and costs that significantly exceed IPPS-level payment and that the lower payment of site neutral cases relative to the LTCH PPS standard Federal payment rate has negatively impacted LTCHs as a provider type. Some of these commenters acknowledged that CMS is unable to change this policy but request that CMS take into consideration the costs of site neutral payment rate cases when proposing any future changes to the LTCH PPS.
A commenter expressed concern that our impact analysis is done based on LTCHs as a class of providers and not on a hospital-byhospital basis.
Response: We acknowledge commenters concerns about the costs of treating site neutral cases, however, as noted by some commenters and discussed previously, the site neutral payment rate is a statutory requirement. We will consider the costs of site neutral payment rate cases as appropriate in future rulemaking. For readers interested in the provider-level data used for this impact analysis, we refer them to the FY
2022 LTCH PPS Final Rule Impact File which can be found on our website at:

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https www.cms.gov/Medicare/MedicareFee-for-Service-Payment/
LongTermCareHospitalPPS/LTCHPPSHistorical-Impact-Files.
2. Impact on Rural Hospitals For purposes of section 1102b of the Act, we define a small rural hospital as a hospital that is located outside of an urban area and has fewer than 100 beds. As shown in Table IV, we are projecting a 1.2 percent increase in estimated payments for LTCH PPS
standard Federal payment rate cases for LTCHs located in a rural area. This estimated impact is based on the FY 2019 data for the 19 rural LTCHs out of 360 LTCHs that were used for the impact analyses shown in Table IV.
3. Anticipated Effects of LTCH PPS Payment Rate Changes and Policy Changes a. Budgetary Impact Section 123a1 of the BBRA requires that the PPS developed for LTCHs maintain budget neutrality. We believe that the statutes mandate for budget neutrality applies only to the first year of the implementation of the LTCH PPS that is, FY
2003. Therefore, in calculating the FY 2003
standard Federal payment rate under 412.523d2, we set total estimated payments for FY 2003 under the LTCH PPS
so that estimated aggregate payments under the LTCH PPS were estimated to equal the amount that would have been paid if the LTCH PPS had not been implemented.
Section 1886m6A of the Act establishes a dual rate LTCH PPS payment structure with two distinct payment rates for LTCH discharges beginning in FY 2016.
Under this statutory change, LTCH
discharges that meet the patient-level criteria for exclusion from the site neutral payment rate that is, LTCH PPS standard Federal payment rate cases are paid based on the LTCH PPS standard Federal payment rate.
LTCH discharges paid at the site neutral payment rate are generally paid the lower of the IPPS comparable per diem amount, reduced by 4.6 percent for FYs 2018 through 2026, including any applicable high cost outlier HCO payments, or 100 percent of the estimated cost of the case, reduced by 4.6
percent.
As discussed in section I.J.2. of this Appendix, we project an increase in aggregate LTCH PPS payments in FY 2022 of approximately $42 million. This estimated increase in payments reflects the projected increase in payments to LTCH PPS standard Federal payment rate cases of approximately $31 million and the projected increase in payments to site neutral payment rate cases of approximately $11 million under the dual rate LTCH PPS payment rate structure required by the statute beginning in FY 2016.
As discussed in section V.D. of the Addendum to this final rule, our actuaries project cost and resource changes for site neutral payment rate cases due to the site neutral payment rates required under the statute. Specifically, our actuaries project that the costs and resource use for cases paid at the site neutral payment rate will likely be lower, on average, than the costs and resource use for cases paid at the LTCH PPS

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standard Federal payment rate, and will likely mirror the costs and resource use for IPPS cases assigned to the same MSDRG.
While we are able to incorporate this projection at an aggregate level into our payment modeling, because the historical claims data that we are using in this final rule to project estimated FY 2022 LTCH PPS
payments that is, FY 2019 LTCH claims data do not reflect this actuarial projection, we are unable to model the impact of the change in LTCH PPS payments for site neutral payment rate cases at the same level of detail with which we are able to model the impacts of the changes to LTCH PPS
payments for LTCH PPS standard Federal payment rate cases. Therefore, Table IV only reflects changes in LTCH PPS payments for LTCH PPS standard Federal payment rate cases and, unless otherwise noted, the remaining discussion in section I.J.3. of this Appendix refers only to the impact on LTCH
PPS payments for LTCH PPS standard Federal payment rate cases. In the following section, we present our provider impact analysis for the changes that affect LTCH PPS
payments for LTCH PPS standard Federal payment rate cases.
b. Impact on Providers The basic methodology for determining a per discharge payment for LTCH PPS
standard Federal payment rate cases is currently set forth under 412.515 through 412.533 and 412.535. In addition to adjusting the LTCH PPS standard Federal payment rate by the MSLTCDRG relative weight, we make adjustments to account for area wage levels and SSOs. LTCHs located in Alaska and Hawaii also have their payments adjusted by a COLA. Under our application of the dual rate LTCH PPS payment structure, the LTCH PPS standard Federal payment rate is generally only used to determine payments for LTCH PPS standard Federal payment rate cases that is, those LTCH PPS cases that meet the statutory criteria to be excluded from the site neutral payment rate. LTCH
discharges that do not meet the patient-level criteria for exclusion are paid the site neutral payment rate, which we are calculating as the lower of the IPPS comparable per diem amount as determined under 412.529d4, reduced by 4.6 percent for FYs 2018 through 2026, including any applicable outlier payments, or 100 percent of the estimated cost of the case as determined under existing 412.529d2. In addition, when certain thresholds are met, LTCHs also receive HCO
payments for both LTCH PPS standard Federal payment rate cases and site neutral payment rate cases that are paid at the IPPS
comparable per diem amount.
To understand the impact of the changes to the LTCH PPS payments for LTCH PPS
standard Federal payment rate cases presented in this final rule on different categories of LTCHs for FY 2022, it is necessary to estimate payments per discharge for FY 2021 using the rates, factors, and the policies established in the FY 2021 IPPS/
LTCH PPS final rule and estimate payments per discharge for FY 2022 using the rates, factors, and the policies in this FY 2022
IPPS/LTCH PPS final rule as discussed in section VIII. of the preamble of this final rule and section V. of the Addendum to this final
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