Advocacy Issue: Long-Term Care Hospital Payment

Long-term care hospitals, or LTCHs, and the other three post-acute care settings have been central to our recovery from COVID-19. The pandemic has particularly highlighted the distinct clinical competencies of LTCHs.

AHA Position

The AHA is deeply concerned with CMS’ woefully inadequate proposed update for LTCH payment rates of a staggering negative 2.5%. This insufficient adjustment is simply unsustainable given the near decades-high inflation and increased costs LTCHs have been facing for labor, equipment, drugs and supplies.

2022 was the most financially challenging year for hospitals during the pandemic, with half of hospitals finishing the year with a negative operating margin. So far, this worrying trend has continued in 2023, most recently with reports of record high hospital defaults. The AHA has repeatedly requested that CMS and the Administration remedy shortcomings in its previous market basket forecasts for hospitals. For example, CMS’ LTCH payment update was 2.9 percentage points less than what actual market basket inflation was in 2022.

Layering these inadequate inflationary adjustments on top of Medicare’s existing underpayments to hospitals does not reflect the reality of the world in which hospitals are providing care. Without more substantial updates in the final rule, LTCHs’ ability to continue caring for patients and providing essential services for their communities will be threatened.

Key Resources