Hospital associations have laid out their policy wish list for Congress regarding long-term care hospitals (LTCH), calling for refinements to various requirements around patient criteria and stay length that affect payments.
The changes outlined by the lobbying groups, including the American Hospital Association, would relieve the “severe stress” the subsector is facing and head off facility closures that have mounted in recent years, they said. Failing to stem the loss of LTCH beds “will exacerbate growing hospital and post-acute capacity concerns in markets throughout the country,” they said.
The primary cause of that financial strain, they said, is a “dual-rate” payment system implemented by Medicare in 2016 that holds back full payments unless a beneficiary has either spent three days in an ICU prior to their LTCH admission or received at least 96 hours of ventilator care in the LTCH. Failing to meet that criteria holds Medicare payments to the rates paid to short-term acute care hospitals, “which is well below the cost of LTCH care,” they wrote.
“It has become clear that the dual-rate payment system has gone beyond its intended effect of realigning incentives toward more complex beneficiaries and has instead jeopardized the financial stability of the LTCH field,” the groups wrote. “For example, Medicare fee-for-service spending on LTCH care decreased by a cumulative $11 billion from 2016 to 2022,” which was far beyond the 10-year, $3 billion prediction of the Congressional Budget Office.
Based on the Centers for Medicare and Medicaid Services claims files, annual Medicare spending on LTCH services is 45% lower than it was prior to the payment system change. More than a quarter of the country’s LTCHs closed their doors in the past decade due to the strain, the groups wrote, and cases have become highly concentrated in a subset of payment groups that don’t sufficiently reimburse for the highest acuity cases.
As such, the hospital groups’ foremost proposed reform is to expand the dual-rate prospective payment system (PPS) criteria to include high-complexity patients that don’t fall under the existing payment requirements.
They also called on Congress to adjust specific components of the annual LTCH PPS, which relies on the same diagnosis-related groups as the inpatient PPS. Revising and reweighing these specifically for the LTCH PPS could help offset losses from high-acuity cases, as could another look at the system’s inflation adjustments that “have not kept pace with LTCHs’ cost increases,” they said.
Other proposed fixes include a change to the 1983 requirement that LTCHs have a 25-day average length of stay, which the groups said limits care advances that allow for earlier discharges, and strengthened outlier payments to reflect the increasing proportion of cases that well exceed standard care costs. At a broader level, the groups also pushed for expanded rural access to LTCHs and again bemoaned Medicare Advantage plans’ “inappropriate prior authorization practices.”
Hospital lobbying groups that co-authored the policy paper (PDF) are the American Hospital Association, the Coalition of Long-Term Acute-Care Hospitals, the Federation of American Hospitals and the National Association of Long Term Hospitals.
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