The Centers for Medicare & Medicaid Services late today issued its long-term care hospital prospective payment system final rule for fiscal year 2017. The rule finalizes a 2.8% market-basket update, a 0.3% cut for productivity and an additional 0.75% cut as mandated by the Affordable Care Act. The rule also implements the second year of the transition to a dual-rate payment system for LTCHs, which was mandated under the Bipartisan Budget Act of 2013 and represents a transformative change for the field. During this phase-in, site-neutral cases are paid a 50/50 blend of the LTCH PPS and site-neutral rates. When accounting for all the rule’s provisions, CMS estimates that total LTCH payments are estimated to decrease by 7.1%, or $363 million, compared to FY 2016 payment levels. This overall impact includes a 0.7% net increase in payments for cases paid a standard LTCH PPS rate, and a 23% drop in payments for LTCH site-neutral cases. In addition, despite AHA's urging, CMS finalized its proposal to proceed with 25% Rule implementation for discharges occurring on or after Oct. 1, 2016, which the agency believes complies with the statutory deadlines. “We are deeply disappointed that CMS is implementing the long-term care hospital 25% Rule,” said AHA Executive Vice President Tom Nickels. “This arbitrary decision discounts the transformation that the LTCH field is undergoing and has the potential to negatively affect patient access to care.” CMS also finalized four new measures for the LTCH Quality Reporting Program to meet the requirements of the Improving Medicare Post-Acute Care Transformation Act. For the FY 2018 LTCH Quality Reporting Program, CMS adds measures for Medicare spending per beneficiary, discharge to community and potentially-preventable 30-day post-discharge readmissions. For the FY 2020 LTCH QRP, CMS adopts a drug regimen review measure. AHA staff are reviewing the rule, and members will receive more information. The rule’s provisions will take effect Oct. 1.