FY2027 Rule Highlights and Lowlights and an LTACH Tool You Want to Try

Last week, as we were anxiously awaiting the release of the 2027 Inpatient final rule, the Centers for Medicare and Medicaid Services (CMS) was trickling out the other rules that are equally important but receive much less attention. Here are a few of the highlights that I found interesting.

First, Inpatient Rehabilitation Facilities (IRFs) will be required to provide every necessary therapy modality to begin within 36 hours of the first midnight of admission. Previously, there was some ambiguity in the regulations but not anymore.

Now the fallout that might occur is that IRFs may not want to accept new patients on Fridays if there is any possibility that they won’t have therapists of any modality in the facility over the weekend to initiate care. And forget it if a Monday holiday is approaching. And of course that means a longer hospital length of stay.

In addition, the first interdisciplinary team meeting must also occur with 4 days of admission rather than the current 7 days. And once again, hospitals will feel the effect of this as IRFs will be less likely to admit patients on Thursday, as that would mean every modality would need to assess the patient on that day or Friday and the meeting would need to occur by Friday afternoon unless they have every therapy and the physiatrist in-house at the same time on weekends.

Then on Friday at 4:25 pm, CMS released the Inpatient Prospective Payment System (IPPS) Final Rule. And as expected, they finalized most of their proposals, including a national, mandatory total joint replacement bundled payment program, CJR-X. But, if it can be considered good news, they are not starting this program until January 1, 2028, instead of October 1, 2027, as proposed so you have an extra three months to squeeze in as many joint replacements as you can. But the bad news is that you will be responsible for all costs in the 90 days after surgery. Many asked CMS to use a 30-day episode of care as with TEAM but they would not relent.

CMS is also finalizing the addition of sepsis to the readmission reduction program. And as Tiffany Ferguson pointed out at a recent conference lecture, if you are one of the hospitals that use SIRS as your criteria to diagnose sepsis, your increased volume of sepsis patients may result in your seeing an increase in your readmission penalty in future years. Now, will the added DRG payment compensate for the increased penalty and adverse effects on your quality ratings? Who knows.

Another lowlight is CMS finalizing the removal of the designation of the Z70.x codes for housing insecurity as a Complication/Comorbidity (CC) for DRG assignment. It was clear from the commenters that patients with housing insecurity have longer lengths of stay and require more resources, but CMS rebutted by noting that their analysis of data suggested otherwise.

The message from that discussion to me was not that housing insecurity is not a factor but rather that not enough hospitals are reporting the code on claims for their patients with housing insecurity. And many know, there are a limited number of fields for reporting ICD-10-CM codes, and many facilities prioritize codes for medical conditions over social conditions, perhaps with the belief that those codes will be more likely to influence CC/MCC designations and affect quality reporting scores.

But without these codes on claims, CMS has no way to determine the real influence that the social drivers of health truly have on all aspects of medical care. Z code reporting on claims is crucial and should be prioritized, and even more so now with the cuts coming to Medicaid and SNAP and other social programs.   

Finally, at that same conference I was talking to Michael Fancher, who is the vice president of business development at Kindred Hospitals, a national LTACH operator. And he told me about a project he undertook in his spare time, developing an online tool that lets you not only determine if a patient qualifies for LATCH care based on national standards but if they do qualify, it also provides you arguments to use with the insurance company to get the transfer approved.

There is no cost to use it, you do have to register but you don’t get added to any mailing list, there is no PHI collected at all, and it is unaffiliated with Kindred. It is just to help patients get the care they need and deserve. It sounds corny but he is my kindred spirit – doing what’s right for the patient and the system simply because it’s the right thing to do.

I tried it out and it’s amazing. So, write this down and try it later: http://www.ThinkLTACH.com.