Hospital-specific Payment

For Long Term Care Hospital (LTCH) and Psych PPS, payment is based on a blend of the hospital-specific payment and the Federal payment. The hospital-specific payment is a percentage of the payment the hospital would have received BEFORE the new Prospective Payment System (PPS) was initiated.

By blending the old payment and the new over several years, the government eases the pain of transition from the old cost reimbursed systems to the new prospective payment systems.

Currently, LTCH is 80% Federal and 20% Hospital-specific. So, if the old payment would have been $50,000 and the new would be $40,000, the payment would be 20% of $50,000 ($10,000) PLUS 80% of $40,000 ($32,000), for a total payment of $42,000. Then, next year - when hospital-specific percent = 0, the payment would be 100% of the Federal ($40,000).