Long-Term Acute Care Hospitals

Long-Term Acute Care Hospitals (LTCH) specialize in treating critically ill patients, including those dependent on ventilators for life support, patients with complex wounds, and patients with multiple organ system failure who require extended treatment in hospital settings.  LTCHs are an indispensable provider in the post-acute spectrum of care.

In December 2013, Congress enacted legislation long advocated by the FAH, establishing patient criteria governing payment for patients admitted to an LTCH.  Effective with cost report periods after October 1, 2015, patients are considered LTCH “appropriate” and covered under the LTCH prospective payment system if they meet either one of two criteria:

  • Patients with 3 or more days in an acute care hospital Intensive Care Unit (ICU)
  • Patients receiving “prolonged mechanical ventilation” (greater than 96 hours) in the LTCH.  

Other patients may still be admitted to LTCHs receiving a “site neutral” rate that is the lower of the cost of care, or a per diem rate comparable to payments made to acute care hospitals under the IPPS payment system.  Legislation provided for a two-year temporary blended payment – 50 percent LTCH/50 percent site neutral rate -- for these cases.

With the transition under the 2013 patient criteria legislation nearly complete, it has become evident that several issues require further action.  Most important, Congress should pass legislation to freeze the blended payment for site neutral cases.  These patients are demonstrably more medically complex than the lower acuity patient population in short-stay acute hospitals such that the site neutral payment rate does not adequately cover the cost of care these patients need and receive in an LTCH.

In addition, CMS should eliminate budget neutrality factors it has applied to the payment of short-stay outlier cases as well as LTCH site neutral cases that qualify for high cost outlier payments.  In both instances, budget neutrality is neither called for under the legislation, nor needed to prevent excess payment, and is already accounted for in the high-cost outlier payment methodology.

Finally, while FAH appreciates CMS’s proposal to extend for one year the statutory moratorium on the “25 percent Rule,” the FAH believes there are compelling reasons for CMS to completely retire the Rule, especially following the implementation of patient criteria legislation, the chief purpose of which is to ensure the medical necessity of cases paid under the LTCH prospective payment system.  At a minimum, CMS should never apply the Rule to LTCH cases paid at the site neutral rate.  The application of the 25% Rule is arbitrary, duplicative, unnecessary and punitive.