Report: Pennsylvania’s Long Term Care Hospitals (LTCHs)

Beyond the ICU

The role of these hospitals in the health care continuum and the regulatory threat to their existence

Prepared by KNG Health Consulting LLC

Commissioned for The Hospital and Healthsystem Association of Pennsylvania

Key Findings

• The 12 long-term care hospitals (LTCHs) in Pennsylvania provided over 130,000 days of inpatient care to critically ill and medically complex patients in 2022. Patients cared for at Pennsylvania’s LTCHs had an average length of stay (ALOS) of almost 29 days. By comparison, the ALOS at general hospitals is approximately 6 days, reflecting differences in severity of illness.
• LTCHs are specialty hospitals that can provide intensive care unit (ICU)-level care and offer focused and specialized care to patients on ventilators, those with multiple organ system failure, and those with severe skin wounds. ICU beds are a limited resource and have too often been in short supply, particularly during the COVID-19 pandemic. The care provided by Pennsylvania LTCHs frees up this valuable resource at general hospitals.
• LTCHs, including those in Pennsylvania, have faced a challenging environment due to low Medicare reimbursement for their most costly patients and an increasing number of prior authorization denials by Medicare Advantage plans. As a result, the number of LTCHs in Pennsylvania has fallen by more than a third since 2016.
• Medicare established the LTCH high-cost outlier (HCO) policy to improve payment adequacy and to help prevent providers from avoiding or underserving the sickest and costliest patients in Medicare. The HCO policy provides additional payments for the costliest of cases. However, recent regulatory changes in how Medicare pays for HCO cases have become the latest challenge facing Pennsylvania LTCHs.
• To be eligible for outlier payments under Medicare, an LTCH must incur a certain amount of financial loss (fixed-loss amount). Medicare pays an LTCH 80 cents for each additional dollar of cost past that fixed-loss amount. If finalized through the regulatory process, the fixed-loss amount will increase to more than $90,000 in fiscal year (FY) 2025, up from roughly $27,000 in 2021.
• Without changes to the pending HCO policy, Pennsylvania LTCHs will be negatively impacted by reductions in outlier payments under Medicare, potentially reducing patient access to care and increasing hospital readmissions. These effects would disproportionately impact the care of some of the most vulnerable and sickest of all Medicare beneficiaries.

 

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Topics: Access to Care, Federal Advocacy, Medicare, Regulatory Advocacy

Revision Date: 5/16/2024

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