Medicare Creates New 'Catastrophic Specialty Hospital' Status for Brain and Spinal Injury Centers

The Catastrophic Specialty Hospital Act of 2025 is setting up a new, elite tier of hospitals within the Medicare system, specifically targeting facilities that specialize in long-term care for severe neurological injuries like spinal cord injuries (SCI) and acquired brain injuries (ABI).

This bill doesn't just tweak a few rules; it creates a whole new payment category. If a long-term care hospital earns this “catastrophic specialty hospital” designation, it gets pulled out of the standard, often restrictive, Medicare payment system (Section 1886(m)(1)). The idea is to ensure these highly specialized centers get paid appropriately for the intensive, long-term care they provide, which standard payment models often don't cover well. This is a big deal because it recognizes that treating a complex SCI patient for months is fundamentally different—and more expensive—than treating many other conditions under Medicare.

The High Bar for Elite Status

To qualify for this new designation, a hospital has to prove it’s truly dedicated to this niche. The requirements are incredibly specific and tough, based on the hospital’s activity over the three years leading up to the designation period. Think of it as earning a specialized certification that only a few centers can achieve.

First, they need to show focus: at least 80% of their patient discharges must be related to SCI or ABI codes. They also have to meet high volume requirements—at least 175 discharges for SCI and 175 discharges for ABI each year within that three-year window. This ensures the hospital isn't just dabbling; it’s a high-volume, specialized center.

Second, they must be regional hubs. At least 30% of their inpatients must come from outside the state where the hospital is located. If you live in a rural area and need complex neurorehabilitation, this provision is key, ensuring specialized care isn't just localized but available across state lines.

Research and Long-Term Commitment

The bill also demands a commitment to the future of care. To qualify, hospitals must show dedication to neurorehabilitation research over those three years. This means they need to be doing things like employing full-time research staff, publishing in peer-reviewed journals, running training programs (like fellowships), or maintaining an approved medical residency program in neurology or rehabilitation. This links specialized payment to continuous improvement and innovation in treating these complex injuries.

Crucially, the bill requires the hospital to have provided a “full range of care, including inpatient stays, outpatient services, and a focus on long-term wellness.” This is where the Secretary of Health and Human Services has some room to define what that “full range” actually means, which is important. It suggests Medicare is looking for facilities that treat the patient from injury through recovery and beyond, not just during the acute phase.

What This Means for Patients and Providers

For someone dealing with a catastrophic injury, this legislation is potentially very beneficial. It creates a financial incentive for the best hospitals to maintain their focus on these complex, long-term conditions. By removing them from the standard payment structure, the hope is that these hospitals can afford to provide the full spectrum of intensive care needed without constantly fighting Medicare reimbursement limits.

The designation lasts for three years, and renewal is automatic if the hospital continues to meet all the strict criteria. If they fall short, they get 60 days to prove compliance before the designation expires. This continuous oversight is good; it prevents hospitals from meeting the criteria once and then letting standards slip.

On the flip side, this move could put financial pressure on other long-term care hospitals that don't meet the high bar. If Medicare is now paying potentially higher rates to these specialized centers, it further differentiates the payment landscape. Also, if the new payment structure results in significantly higher costs, taxpayers and the Medicare program will bear those costs, though the goal is to ensure quality care for critical patient populations.