Long Term Acute Care Hospital Update CY 2008
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Slide 1 :
1 Long Term (Acute) Care Hospitals (LTACH) State of the Industry 2008
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2 Background LTACH Criteria: Medicare 25 + day ALOS LTCH Base Payment for FY 2007 = $38,086 Acute Care base payment = $5,308 Rehab base payment = $12,952 CMS estimates the total Medicare Payment to LTACHs for rate year 2007 at $5.27 billion. MedPAC (June 2005 report to Congress) estimates 33% of Medicare pts receive Post Acute Services: 13% SNF 11% Home Health 5% either LTCH, IRF, or Psych 4% multiple services
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3 CY 08 Proposed Changes Increased national base rate by 0.71% from $38,086.04 to $38,356.45. 25% Rule Extended from co-located (hospitals within hospitals) to ALL hospitals. Expand 25% rule to apply to all LTACHs so that the no more than 25% from any SINGLE acute care hospital. 25% Rule states that if an LTACH receives more than 25% of its Medicare patients from any single hospital, the LTACH receives “only what Medicare would have otherwise paid” had the patient stayed in acute care.
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4 Impact of 25% Rule CMS implements the 25% rule because it believes that in many cases it is paying twice for the same episode of care when patients are moved to LTACH. Rather than delineating episodes of care based on MEDICAL conditions, this rule defines the delineation of care only in FINANCIAL terms. For LTACH patients, CMS states that patients who have hit the acute care DRG cost outlier, then they are not counted in the 25% calculation.
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5 25% Rule LTACH is the only level of care that has this 25% Rule. CMS seems to be able to differentiate between Inpatient Rehab Facilities (IRF), Skilled Nursing Facilities (SNF), Hospice and Home Health. CMS seems to miss that MOST post acute services are really a continuation of the acute episode of care. SNF has a 3 day prior hospitalization requirement for admission to SNF. Home Health and Hospice have significant acuity requirements. All of the Post Acute Services have CLINICAL/MEDICAL requirements (Conditions of Participation) rather than financial.
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6 Problems with 25% Rule CMS has a mechanism to minimize “paying twice”, known as the transfer rule. Most acute care DRGs have an expected length of stay that if the patient is discharge prior to this minimum stay, the hospital does not receive full payment. What hospital a patient starts in has no relationship to whether the patient needs the LTACH level of care. LTACH’s take care of complex medical patients and most of these cases come from acute care hospital that treat medically complex patients. Only certain acute care hospitals treat these tertiary care patients in a market which limits LTACH’s ability to stay under the 25% cap.
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7 The Real Issue The real issue is that Medicare wants to minimize the growth of LTACHs and minimize the ACCESS to this level of care for patients.
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8 LTCH Growth
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9 Hospital within Hospital Growth
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10 Impact (for CMS) $1.28 - $1.84 billion savings to CMS over 5 years. CMS reimbursed LTCH a total of $3.32 billion in 2006.
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11 Research Triangle Institute (RTI) RTI engaged by CMS for “Long-Term Care Hospital Payment System Refinement/Evaluation”. Designed to assist CMS develop a criteria for assuring appropriate and cost-effective use of LTCHs following the MedPAC recommendations. Phase I: Background Phase II: Examine tools used by QIOs and the industry to assess patient appropriateness for admission; Analysis of claims to understand variation between LTCH pts and pts staying in acute care for longer stays/outliers; Site visits to 8 LTCHs and 1 acute care hospital to interview providers regarding differences between LTCH and acute care patients.
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12 RTI Findings 80% of LTCH patients are admitted from acute care hospitals. LTCHs patients had: Shorter inpatient stays and lower outlier payments Fewer SNF admissions Lower payments for trach patients Lower hospital readmission rates While discharging patients to LTCH does not save money for Medicare, for patients with higher severity of illness, it does not cost anymore than keeping the patient in acute care and in certain diagnoses (Trach patients), discharging to LTCH does save money. Severity index has the highest correlation with patients admitted to LTCH. 71% of patients admitted to LTCH had an APR-DRG severity index of 3 or 4. 37% (Marwood Group estimate) - 43% (RTI report) of all LTCH admissions receive payment adjustments for having shorter than average stays in LTCH.
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13 RTI Findings (cont) The majority of LTCH pts are severely ill (medically complex), however, a small percentage are less medically complex and have longer than expected LOS. “These less intensive patients may resemble those otherwise treated in rehabilitation facilities or psychiatric hospitals.” “However, the Medicare program does not currently restrict LTCH admissions to the medically complex.” “Because of the lack of clinical admissions criteria, LTCH patients could be treated at other acute-level facilities for all or part of the care they receive at an LTCH.” “LTCH rates, on the other hand, may be set too high for the services they are providing as shown in higher average PPS margins for cases in LTCHs. While aggregate LTCH inpatient PPS margins were at 8% in 2003, this varied by type of case. For DRG 475, (10% of all LTCH admissions), we estimate an aggregate LTCH PPS margin of 18%.”
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14 RTI Findings (Financial Performance)
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15 RTI Recommendations RTI Makes 15 Recommendations broken into four sections: Patient Level Recommendations Facility Level Recommendations Recommendations to improve consistency b/w general acute and LTCH payment and certification policies. Administrative Recommendations
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16 Patient Level Recommendations Restrict LTCH admissions to cases that meet certain medical conditions, including a primary dx that is medical in nature, (not function or psych) and meets a certain level of medical complexity that reflects severely ill populations. Require LTCH admissions to be discharged if not having diagnostic procedures or showing improvement. Develop a list of criteria to measure medical severity. Establish a Technical Advisory Group to assist: Recommend criteria for medical complexity Recommend measurement levels. Establish a data collection mechanism to collect this information. Require LTCHs to collect functional measures as well as physiologic measures on all pts receiving PT, OT, SLP.
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17 Facility Level Recommendations Standardize conditions of participation and set staffing requirements to ensure appropriate staff for treating medically complex cases. (see Conditions of Participation recommendations) Keep the 25 day ALOS requirement in place to limit LTCH incentives to unbundle and clearly delineate between general and LTCH patients.
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18 Recommendations to improve consistency b/w general acute and LTCH payment and certification policies. Allow LTCHs to open certified, distinct-part rehab and psych units if CMS finds that restricting LTCH admissions to medically complex cases results in access problems for IRF or psych populations. Require LTCHs to meet same regulatory restrictions as general acute by limiting allowance to only one of each type of distinct-part unit. Establish payment rules that provide a disincentive for LTCHs to transfer cases early to other post acute settings. Conduct additional research on costs associated with different segments of a acute episode for medically complex patients. This should include an examination of the IPPS margins for common types of LTCH cases.
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19 Administrative Recommendations Establish a provider identification code for satellite facilities and hospitals in hospitals. Strengthen the requirement for parent facilities to report satellite locations by requiring them to be identified on the cost report. Clarify QIO roles in overseeing appropriateness of admissions of LTCHs. (QIO = Quality Improvement Organization)
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20 Conditions of Participation Recommendations Require the delivery of multi-disciplinary care Require daily physician on-site review Require specialized nurse training Standardized staffing levels higher than general medical/surgical units.
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21 Recent Updates SCHIP legislation signed December, 2007 25% Rule only applies to co-located hospitals until further research is done. 3 Year moratorium on any new LTACH beds.
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22 Michael J. Soisson, MS, MHA Executive Director Good Shepherd Penn Partners Michael.firstname.lastname@example.org
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