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 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:

  • Stay three or more days in an acute care hospital Intensive Care Unit (ICU)
  • Receive “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. In addition, payment policy should better recognize the greater medical complexity of patients treated in an LTCH who may not meet the criteria for payment under the LTCH PPS, and that the “site neutral” payment tied to the IPPS is insufficient.

Unified Post-Acute Care Payment PPS

FAH urges an immediate refresh of the Unified Post-Acute Care (PAC) Prospective Payment System (PPS) mandate outlined in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). The COVID-19 pandemic has raised numerous issues and questions around the operational and clinical capabilities of America’s PAC providers — inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), skilled nursing facilities (SNFs) and home health agencies (HHAs) — including patient outcomes and safety.

A significant aspect of the IMPACT Act was the mandate to design a Unified PAC Prospective Payment System (PPS). The law laid out a timeline for the collection and reporting of substantial amounts of quality and patient data, followed by an eventual report from CMS to Congress on a technical PAC PPS prototype. This timeline, however, must now be revisited and updated in order to reflect the reality that IMPACT Act data from 2017-2019 is no longer an accurate depiction of the post-acute care landscape. In the six years since the enactment of the IMPACT Act, significant changes in each of the four PAC setting payment systems have occurred, including CMS’s concerted shift towards patient-driven reimbursement, and now the unprecedented impacts of the COVID-19 pandemic. Together, these dynamics have created important shifts in the way post-acute care is delivered and paid for, shifts that are not sufficiently captured in the data CMS is currently relying on from 2017-2019 to inform its development work on the PAC PPS technical model. Given these changes, the FAH urges an immediate refresh of the Unified PAC PPS mandate outlined in the IMPACT Act as part of the next COVID-19 relief package. In addition to relying on post-public health emergency data, CMS should pilot a PAC PPS prototype in real-word settings before submitting a report to Congress.