• CMS Makes Unusual Mid-Year Correction to LTCH PPS Rates
  • June 26, 2009 | Authors: Dennis M. Barry; Christopher L. Keough
  • Law Firm: King & Spalding LLP - Washington Office
  • CMS reports that the agency has discovered that it made an error in the calculation of the budget neutrality factor for long term care hospitals (LTCHs) for the current fiscal year. CMS says that this error overstated the rates for LTCHs by 3.9 %. CMS says that it will not apply the new rates retrospectively, but will apply them immediately as of publication of a revised rule in the June 3 Federal Register.

    In the preamble to the new rule, CMS alleges that its policy on correcting PPS rates is as follows:

    “Consistent with our general and longstanding policy in PPS contexts, we do not make retroactive changes to correct past errors in PPS rate-setting, regardless of whether an error resulted in higher payments to providers (as in this situation) or lower payments to providers; we also do not make prospective adjustments to PPS rates to account for errors that occurred in prior periods, regardless of whether an error resulted in higher payments or lower payments to providers.”

    One problem with this policy is that it appears not to be in any way part of any “longstanding policy.” This “policy” statement appears to be made for defense of ongoing litigation involving other, much more substantial, errors in CMS payment calculations. Additionally, CMS is not equally vigilant in determining and correcting errors resulting in understatement of PPS rates. When a hospital advocate brought to CMS’s attention in 2006 an error in how budget neutrality was calculated for hospital inpatient PPS rates, CMS did not correct the problem in the FFY 2007 rulemaking and then attempted to permanently cement the error into all future PPS rates in FFY 2008 rulemaking.