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House Approves Budget Bill

Leslie J. Levinson
Edwards Wildman Palmer LLP - New York Office

Michaela ("Kayla") Tabela
Edwards Wildman Palmer LLP - Boston Office

December 18, 2013

Previously published on December 2013

On December 12, 2013, the House approved a bipartisan budget proposal. The bill is expected to also pass in the Senate. The proposal, among other things, amends: the Sustainable Growth Rate (‘SGR”) provisions of the Medicare physician fee schedule; disproportionate share hospital (“DSH”) payments; and long term care hospital (“LTCH”) payments. The following is a high-level summary of those provisions.

SGR: This provision provides a 3-month reprieve from the SGR, which would otherwise make substantial cuts to physician payments. Specifically, it delays the 20.1 percent cut in reimbursements scheduled to go into effect on January 1, 2014, and replaces the reduction with a 0.5 percent increase in payments from January 1 - March 31, 2014.

DSH Payments: Under current law, the Centers for Medicare & Medicaid Services (“CMS”) will annually reduce DSH payments from FY2014 through FY2020, with the reductions staying the same in years FY2021 and FY2022, and then reverting back to their pre-ACA (i.e., not reduced) amounts in FY2023. This provision relieves the states of the $500,000,000 reduction planned for FY2014 and delays the FY2015 reduction ($600,000,000) until FY2016. However, it also delays the restoration of the old, pre-ACA rate until FY2024.

LTCH Payments: This provision establishes (1) new criteria for patients admitted to LTCH hospitals in order for the LTCH to be paid under the LTCH rate system, and (2) a new payment rate - the “site neutral IPPS payment rate” - for patients who fail to meet the new criteria. Under the new criteria, only two types of patients will qualify for the LTCH rate:

  • patients whose stay in the LTCH was immediately preceded by at least three days of care in an ICU (in an acute care hospital); and

  • patients whose stay in the LTCH was immediately preceded by at least 96 hours of ventilator services (in an acute care hospital).

For all other patients, the LTCH will receive the “site neutral payment rate,” which will be comparable to rate under the inpatient prospective payment system (“IPPS”).

Further, beginning during or after FY2020, an LTCH hospital’s status will be contingent on the percentage of patients who received either days of ICU services or 96 hours of ventilator services immediately before admission. If that number falls below 50 percent, CMS may revoke the facility’s LTCH status. The provision does not change the requirements around average length of stay calculation.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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