Hospitals rejoice at death of the 25% rule, following years of temporary delay

A blue hospital sign on the side of a building
After years of delays and complaints from industry, a Bush-era policy that would have cut hospital reimbursement might finally be dead. (Getty/Manuel-F-O)

Among the many new policy provisions within the Trump administrations' annual payment rule lies a long-sought-after policy change that is making hospitals very happy.

Through a proposed inpatient payment rule released this week, the Centers for Medicare & Medicaid Services (CMS) is preparing to officially rescind the 25% threshold policy for long-term care transfers, which was set to begin Oct. 1. 

If implemented, the policy would reduce Medicare payments to acute care hospitals if they transfer 25% of patients to a long-term care facility. Such payment cuts could also be exaggerated with penalties under site-neutral rules.

The intent of the regulation was to reduce costs within the Medicare program, but providers roundly criticized the proposal. The agency estimated the elimination would increase payments to hospitals by $36 million. 

Hospital groups have pushed for an end to the rule since its development under the Bush administration in 2003, calling the rule "outdated." The reimbursement policy has undergone several delays due to action from both Congress and the White House, including in the 21st Century Cures Act. 

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Hospitals expressed relief that the policy might finally be dead. 

"This will help ensure that patients get the care they need when they need it without facing arbitrary restrictions by non-patient-centered regulations," the American Hospital Association said in a statement. 

The comment period for the proposed rule ends June 25, and the agency will make a final decision on the rule later this year.