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Assessment of the Value of Long-Term Care Hospitals to Medicare and Development of Payment Policy Alternatives

In recent years, there has been increasing interest in assessing the value of long-term care hospitals (LTCHs) to Medicare beneficiaries and to the Medicare program.  Although evidence supports the need for specialized care for certain types of LTCH patients, researchers have observed that the LTCH patient population overlaps both with step-down units of acute care hospitals and with other post-acute care providers.  In response to these findings, policymakers have proposed payment policies designed to limit access to LTCH care to those who benefit most from it.  KNG Health was commissioned to conduct a study to assess the value that LTCH care brings to Medicare beneficiaries and to develop policy alternatives to improve their value to Medicare and its beneficiaries.  In partnership with BD2, LLC, we examined the effects of receiving care in an LTCH immediately following discharge from a short-term acute care hospital (ACH) as compared to receiving care in some other setting following discharge.  We found that receiving care in an LTCH results in better outcomes for several conditions and used our findings to develop an outcomes-based definition of a chronically critically ill and medical complex (CCI/MC) patient.  This definition was a key component in our development of proposed policy adjustments to LTCH payments to help ensure continued access to LTCH care for those patients who benefit most from it and appropriate growth in LTCH use.  The results and policy recommendations present a potential path forward to improve the cost effectiveness of care provided in long-term care hospitals.

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