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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 FAH that established patient criteria governing payment for patients admitted to a 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 three 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. The legislation provided for a two-year temporary blended payment – 50% LTCH/50% site-neutral rate -- for these cases. Subsequent legislation extended the blended payment by an additional two years, recognizing that 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. This provision was paid for through a reduction over time in the LTCH market basket rate payment component.

Going forward, CMS should eliminate the 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.