Long-term care hospitals (LTCHs) serve a critical role within the Medicare program by treating the sickest patients who need extended hospital stays. This important role is under threat as the LTCH field implements the Bipartisan Budget Act of 2013 requirement for “site-neutral” payments for cases with lower acuity. Analyses by the Medicare Payment Advisory Commission (MedPAC) and the AHA highlight the transformative nature of the site-neutral payment policy, which has led to the underpayment of 36 percent of LTCH cases, a more than $1 billion reduction in payments to LTCHs and LTCH closures.
Given the magnitude of these payment changes and other reforms, LTCHs need to focus their resources on adapting their operations and patient services. They also need relief from other pressures, such as any new regulatory requirements or payment reductions. Once these reforms are fully implemented, policymakers can evaluate their impact to help guide whether subsequent changes are necessary.