CMS Pub. 100-04, ch. 3, § 150.10

Facility-level adjustments are based on individual LTCH characteristics. The BIPA

confers broad authority on the Secretary to include "appropriate adjustments to the long-term hospital payment system."

Variables examined include an area wage adjustment, adjustment for geographic

reclassification, disproportionate share patient (DSH) percentage, and an adjustment for

indirect medical education (IME).

• The system includes an area wage adjustment that is being phased in over 5 years.

• The wage adjustment is made by multiplying the labor-related share of the

standard Federal rate by the applicable wage index value.

• A LTCH's wage index is based on the Metropolitan Statistical Area (MSA) or rural

area in which the hospital is physically located, without regard to geographic

reclassification under http://www.ssa.gov/OP_Home/ssact/title18/1886.htm

§§1886(d)(8) - (10) of the Act. Effective July 1, 2005, an LTCH wage index is

based on the Core-Based Statistical Area (CBSA).

• The phase-in of the wage index adjustment is as follows:

Cost Reporting

Periods Beginning

During

Applicable Wage Index Value

FY 2003 1/5th of the value of the

applicable pre-reclassification,

no floor hospital inpatient wage

index

FY 2004 2/5ths of the value of the

applicable pre-reclassification,

no floor hospital inpatient wage

index

FY 2005 3/5ths of the value of the

applicable pre-reclassification,

no floor hospital inpatient wage

index

FY 2006 4/5ths of the value of the

applicable pre-reclassification,

no floor hospital inpatient wage

index

FY 2007 Full value (5/5ths) of the value

of the applicable pre-reclassification, no floor

hospital inpatient wage index

Based on analyses of patient charge data from FYs 2000 and 2001 MedPAR data and cost

report data from FY 1998 and 1999 HCRIS data, there is no empirical evidence to support

other adjustments. Therefore, for the present, there are no adjustments for DSH, IME, or

geographic reclassification.

There is a cost-of-living adjustment (COLA) for LTCHs located in Alaska and Hawaii.

• The adjustment is made by multiplying the nonlabor-related portion of the

unadjusted standard Federal rate by the applicable COLA factor from OPM based

on the county that the LTCH is located (similar to the COLA under the acute care

hospital inpatient PPS).

• Annual updates for the LTCH PPS appear in Federal Register publications: for

payment rates and associated adjustments, see the LTCH PPS final rule with an

effective date of July 1. Annual updates of the LTC-DRGs are published in the

IPPS final rule with an effective date of October 1.

• The COLA factors effective July 1, 2004 are the same as under the acute care

hospital inpatient PPS and are as follows:

Area COLA

Alaska:

All Areas 1.25

Hawaii:

Honolulu 1.25

Hawaii County 1.165

Kauai County 1.2325

Maui County 1.2375

Kalawao County 1.2375

Cost-of-Living Adjustment Factors: Alaska and Hawaii Hospitals Area Cost of

Living Adjustment Factor effective for discharges on and after October 1, 2008.

Alaska:

City of Anchorage and 80-kilometer (50-mile) radius by road 1.24

City of Fairbanks and 80-kilometer (50-mile) radius by road 1.24

City of Juneau and 80-kilometer (50-mile) radius by road 1.24

Rest of Alaska 1.25

Hawaii:

City and County of Honolulu 1.25

County of Hawaii 1.17

County of Kauai 1.25

County of Maui and County of Kalawao 1.25