The Centers for Medicare & Medicaid Services late today issued its long-term care hospital prospective payment system final rule for fiscal year 2016. The rule implements the new dual-rate payment structure for LTCHs, which will be phased in through a two-year transition that begins Oct. 1. In general, the two-tiered system will pay traditional LTCH PPS rates for higher acuity patients and lower, “site-neutral” rates similar to inpatient PPS rates for less medically complex cases. For FY 2016, LTCH PPS rates would increase by 1.7% overall, which includes a 2.4% market-basket update, mandatory cuts of 0.5 percentage point for productivity and an additional 0.2 percentage point, a 0.2 percentage point increase for short-stay outlier payments, and a 0.1 percentage point cut for high-cost outlier payments. With regard to CMS’s final methodology for site-neutral payments, the agency implemented several key AHA recommendations, such as eliminating use of inpatient PPS discharge status codes to identify cases eligible for a standard LTCH PPS payment. “At a time when LTCHs are seeing payment reductions for one out of every two patients, abandoning the use of discharge status codes is appreciated by these hospitals who are navigating new and choppy waters,” said Ashley Thompson, AHA vice president and deputy director, policy. In addition, CMS lowered the proposed fixed-loss amount for high-cost outlier cases, which will increase the accuracy of payments for standard LTCH PPS cases. However, Thompson expressed concern that it appears that the agency will apply two budget-neutrality adjustments related to site-neutral outlier payments that result in rates that are lower than inpatient PPS rates, which would be duplicative and unwarranted. Lastly, CMS finalizes three measures for the FY 2018 LTCH quality reporting program to satisfy the requirements of the Improving Medicare Post Acute Transformation Act of 2014. The measures assess skin integrity, falls with major injury and all-cause readmissions. CMS also will begin publicly reporting certain LTCH QRP quality data by the fall of 2016.  The rule’s provisions will take effect Oct. 1.