The LTCH Prospective Payment System (PPS) uses the Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) to classify patient stays. MS-LTC-DRGs mirror Medicare Severity Diagnosis-Related Groups (MS-DRGs) that we use in the Inpatient Prospective Payment System (IPPS), weighted to show different resources that LTCH patients use.
We group each patient stay using:
- 1 principal diagnosis
- Up to 24 secondary diagnoses
- Up to 25 surgical procedure codes
- Patient discharge status
We annually update each MS-LTC-DRG based on the latest LTCH discharge data and its predetermined Average Length of Stay (ALOS). We pay LTCHs for each discharge based on the MS-LTC-DRG if it meets exclusion requirements from the site neutral payment rate. We pay for cases assigned to an MS-LTC-DRG based on the federal payment rate, including payment and policy adjustments.
When a patient doesn’t meet specific criteria, we pay LTCH discharges at a site neutral payment rate. The site neutral payment rate is generally the lower of:
We exclude site neutral discharges from the payment rate and pay based on the standard federal payment rate if the:
- Provider directly admits the patient from the IPPS hospital and the patient had at least 3 days in an intensive care or coronary care unit but no psychiatric or rehabilitation MS-LTC-DRG LTCH care
- Provider directly admits the patient from the IPPS hospital and the patient got at least 96 hours of LTCH respiratory ventilation services but no psychiatric or rehabilitation MS-LTC-DRG LTCH care
Short-Stay Outlier (SSO), High-Cost Outlier (HCO), fixed-loss amounts, and interrupted stay payment policy adjustments all apply to site neutral and standard federal payment rate discharges except where noted.
The SSO policy helps prevent inappropriately paying cases without a full episode of care. SSO payment adjustments apply only to the standard federal payment rate discharges and may happen when a patient:
- Experiences an acute condition that needs urgent treatment or more intensive rehabilitation and discharges to another facility
- Doesn’t need an LTCH-care-level and discharges to another facility
- Discharges to home
- Dies within the first days of LTCH admission
- Exhausts LTCH benefits during the stay
We apply an adjustment when the LOS ranges from 1 day through 5/6 of the ALOS for the MS-LTC-DRG where we group that case. We subject the MS-LTC-DRG payment to the SSO adjustment.
We don’t apply an adjustment when the LOS is more than 5/6 of the ALOS for the MS-LTC-DRG where we group that case. In this situation, the LTCH gets the full MS-LTC-DRG payment.
Note: When calculating the SSO adjustment, we cap the SSO threshold (5/6 of the ALOS for the MS-LTC-DRG) at 25 days. We never subject stays of 25 days or more to the SSO policy.
This policy doesn’t apply to site neutral discharges.
We blend the MS-LTC-DRG per diem amount with what the program would pay under the IPPS, calculated as a per diem and capped at the full IPPS comparable amount.
SSO Payments When Patient Benefits Exhaust During an LTCH Stay
We base LTCH payments on the patient’s covered benefit days until the LOS triggers a full MS-LTC-DRG payment. This means a patient’s remaining benefit days and length of hospital stay affects LTCH payments and may result in an SSO payment adjustment.
Table 3. Benefits Exhaust & LOS is Below MS-LTC-DRG Threshold
|Patient uses regular episode benefit days during a LOS below the SSO MS-LTC-DRG threshold
- Patient pays non-covered days
- LTCH gets SSO payment for patient’s covered hospital stay
- MS-LTC-DRG SSO threshold is 25 days and the patient’s LOS is 20 days; LTCH gets SSO payment
- Patient benefit days end on day 15
- We pay for 15 covered days under the LTCH SSO policy
- Patient pays for days 16–20
Table 4. Benefits Exhaust & LOS Exceeds MS-LTC-DRG Threshold
|Patient uses all episode benefit days during a LOS exceeding the SSO MS-LTC-DRG threshold
- Patient doesn’t pay for non-covered days (until they reach HCO threshold)
- LTCH gets full MS-LTC-DRG payment
- MS-LTC-DRG SSO threshold is 25 days and patient’s benefit days end on day 30; patient’s LOS is 35 days
- Patient doesn’t pay for days 31–35 (SSO policy doesn’t apply)
- LTCH gets full MS-LTC-DRG payment; patient pays for first day stay; LOS qualifies as HCO
Note: We allow 90 covered episode benefit days of care under the inpatient hospital benefit. Each patient has 60 lifetime reserve days. The patient may use these lifetime reserve days to cover non-covered episode days of care exceeding 90 days.
The HCO policy adjusts the applicable LTCH PPS payment rate (site neutral rate or standard federal rate) for LTCH stays with costs exceeding typical cases of similar case-mix cost. To qualify for an HCO payment, an LTCH’s estimated treatment costs must exceed the outlier threshold. We calculate the applicable outlier threshold as the case’s applicable LTCH PPS payment plus the applicable fixed-loss amount.
The HCO payment equals 80% of the difference between the estimated case-cost and the outlier threshold.
For SSO cases, we calculate the outlier threshold by adding the applicable fixed-loss amount to the adjusted SSO MS-LTC-DRG payment. If the estimated SSO case cost exceeds the outlier threshold, it qualifies for an HCO payment.
We set 2 fixed-loss amounts: 1 for the site neutral payment rate and 1 for the standard federal rate.
The HCO adjustment:
- Improves LTCH PPS hospital- and patient-resource cost accuracy
- Cuts LTCH financial losses from treating patients needing more costly care
- Limits LTCH loss to fixed-loss amount and cost percentages above the marginal cost factor
- Cuts incentives to under-serve high-cost patients
Medicare Administrative Contractors (MACs) use PRICER software to determine if there’s enough medically necessary benefit days in the outlier period. If a patient has enough benefit days, the MAC processes the claim as usual and the LTCH takes no other action. If a patient’s benefit days exhaust, the MAC returns the claim to the LTCH for correction, indicating the correct HCO threshold amount.
HCO Payments When Patient Benefits Exhaust During an LTCH Stay
We make HCO payments for:
- Days the patient has Medicare coverage (regular, coinsurance, or lifetime reserve days) for part of the stay beyond the HCO threshold
- Medically necessary covered cost days when the patient has a benefit day available
Table 5. Patient Benefits Exhaust Before Qualifying for Full LTCH PPS Standard Federal Rate Payment
- Patient’s benefits exhaust before qualifying for the full MS-LTC-DRG payment
- Covered care costs exceed the standard federal rate HCO threshold for an SSO adjusted payment
|LTCH gets HCO payment with SSO adjusted payment for covered medically necessary benefit days
- LTCH admits standard federal rate patient with 5 remaining benefit days grouped to an MS-LTC-DRG with a 30-day ALOS
- Patient doesn’t have enough regular benefit days to trigger a full MS-LTC-DRG standard federal rate payment (5/6 of MS-LTC-DRG ALOS) qualifying case for an SSO-adjusted payment
- LTCH-covered services cost during 5 benefit days exceeds the standard federal rate HCO threshold qualifying case HCO payment for all costs above the HCO threshold days 1–5
- Patient pays for days 6–discharge
Table 6. Patient Benefits Exhaust After Qualifying for Full Applicable LTCH PPS Payment
- Patient’s benefits exhaust after qualifying for the full applicable LTCH PPS payment
- Covered care cost exceeds the applicable HCO threshold
|LTCH gets HCO payment with the full LTCH PPS payment for covered medically necessary benefit days
- LTCH admits standard federal rate patient with 36 remaining benefit days grouped to an MS-LTC-DRG with a 30-day ALOS
- On day 33, the patient’s care cost exceeds the standard federal rate HCO threshold qualifying case for the full MS-LTC-DRG standard federal rate payment and the HCO payment for all covered costs (available benefit days) above the HCO threshold
- Patient pays for days 37–discharge
Full applicable LTCH PPS payment means the standard federal rate (including SSO adjustment) or the site neutral payment rate, based on the LTCH case. Applicable HCO threshold means the HCO threshold determined from the standard federal rate fixed-loss amount or site neutral fixed-loss amount based on the LTCH case.
Table 7. Patient Benefits Exhaust Before Exceeding Applicable HCO Threshold
- Patient qualifies for the full applicable LTCH PPS payment
- Patient uses all regular benefit days for the stay before exceeding the applicable HCO threshold
- LTCH gets the full LTCH PPS payment (and doesn’t get the HCO payment)
- Patient pays costs incurred the day after case exceeds the applicable HCO threshold
- LTCH admits standard federal rate patient with 36 remaining benefit days grouped to an MS-LTC-DRG with a 30-day ALOS
- Patient care-cost exceeds the standard federal HCO threshold on day 45
- Patient exhausted all benefit days before reaching the HCO threshold; case isn’t eligible for HCO payment
- Patient doesn’t pay covered costs for days 37–45
- Patient pays for days 46–discharge
If the patient’s benefits exhaust during the LTCH stay, determine the:
- Day when the case-cost reaches the applicable HCO threshold (use charges per day and CCR)
- Number of benefit days the patient has left
To calculate the HCO, use the costs for the days after the patient’s case cost reaches the HCO threshold of available benefit days. If the patient remains under care after benefits exhaust, they pay the costs of those remaining days.
Under Medigap or Medicaid, changes to HCO payments under the LTCH PPS outlier reconciliation policy won’t retroactively affect a patient’s lifetime reserve days or coverage status, benefits, and payments.
HCO Fixed-Loss Amounts
- Under the dual-rate LTCH PPS payment structure, we set 2 HCO fixed-loss amounts: 1 for standard federal payment rate cases and 1 for site neutral payment rate cases.
- Fixed-loss amount for standard federal payment rate cases is the amount allowing yearly projected total HCO payments to equal 7.975% of the total LTCH PPS standard federal payment rate payments estimated for that year (full MS-LTC-DRG payments or adjusted SSO amount plus HCO payments).
- For FY 2023, we determined the outlier fixed-loss amount for standard federal payment rate cases by calculating and averaging 2 fixed-loss amounts: 1 calculated with COVID-19 claims included and 1 with COVID-19 claims excluded. We also used charge inflation factors and CCR adjustment factors based on data before the COVID-19 Public Health Emergency (PHE).
- The applicable HCO threshold for site neutral payment rate cases is the sum of the case’s site neutral payment rate and the IPPS fixed-loss amount. For FY 2023, we set the site neutral case fixed-loss amount to the same as the IPPS fixed-loss amount.
- We estimate each case’s cost using provider specific file (PSF) CCRs:
- Use the applicable statewide average CCR when the LTCHs’ PSF CCRs aren’t available.
- MACs estimate a case’s cost by multiplying the Medicare-covered charges by the LTCH’s overall CCR, based on the most recently settled or tentatively settled cost report.
- These CCR revisions or determinations may also apply:
- We may ask MACs to use an alternate CCR showing recent substantial increases or decreases in a hospital’s charges.
- LTCHs may ask their MAC(s) to use a higher or lower CCR based on substantial evidence when their CMS Regional Office approves it.
- MACs annually assign the statewide average CCR to LTCHs with CCRs above the maximum ceiling.
- MACs use an LTCH’s actual CCR rather than the statewide average LTCH CCR with CCRs below the minimum floor.
- MACs may use the statewide average CCR when the LTCH CCR isn’t determined (for example, before a new LTCH submits its first Medicare cost report or when data isn’t available to calculate the CCR because it’s missing or incorrect).
- LTCH PPS outlier policy allows for reconciling HCO payments at cost report settlement and looks for differences between the estimated and actual CCR.
An interrupted stay happens when an LTCH discharges a patient to an acute care hospital, inpatient rehabilitation facility (IRF), skilled nursing facility (SNF), swing bed, or home, and the patient readmits to the same LTCH for more medical treatment within a specified period. For example, an LTCH patient discharges for treatment and services unavailable in the LTCH.
There are 2 types of interrupted stays:
- 3-day or less
- Greater than 3-day
Interruption day count begins the day of discharge (first day the patient’s away from the LTCH at midnight).
3-Day or Less Interruption Example
- If an LTCH discharges a patient on September 2, the 3-day or less interrupted stay policy determines payment if the LTCH readmits the patient to the same LTCH on September 2, 3, or 4
- If an LTCH discharges a patient and readmits them to the same LTCH within 3 days, the patient may:
- Get outpatient or inpatient tests, treatment, or care at an inpatient acute care hospital, IRF, SNF, or swing bed:
- Outpatient or inpatient care during interruption is part of a single LTCH care episode and bundled into the LTCH payment
- If a patient gets tests or procedures during a 3-day interruption and the LTCH pays the provider under arrangements, the total patient day count includes all interrupted days
- Have an intervening patient stay at home for up to 3 days with no tests, treatment, or care:
- If the patient doesn’t get care during the 3-day interruption, the LTCH can’t use days away in the total LOS
- However, if the patient gets care during an interruption that the LTCH pays for under arrangements, the LTCH uses all interruption days in that patient’s LOS
Greater Than 3-Day Interruption Example
If a patient discharges from an LTCH on September 2, the greater than 3-day interrupted stay policy determines payment if the patient is readmitted to the same LTCH between September 5 and the applicable provider’s fixed period threshold.
For a greater than 3-day interruption, the LTCH must discharge the patient, admit them directly to an inpatient acute care hospital, IRF, SNF, or swing bed, and readmit them to the original LTCH within a specified period.
Table 8. Greater Than 3-Day Interruption
|Facility Discharge to
||Interrupted Stay Fixed Period
|Inpatient acute care hospital
||Between 4–9 consecutive days
||Between 4–27 consecutive days
|SNF or swing bed
||Between 4–45 consecutive days
- We treat an interrupted stay episode as 1 discharge for payment and make 1 LTCH PPS payment
- Interrupted stays are eligible for HCO payments
- We pay separately for an intervening inpatient stay at the acute care hospital, IRF, SNF, or swing bed
Uninterrupted Stay Examples
- Patient’s facility-stay (acute care inpatient hospital, IRF, SNF, or swing bed) exceeds the fixed-day period
- Patient discharges to a facility type other than an acute care inpatient hospital, IRF, SNF, or swing bed
- Patient discharges to more than 1 facility or goes home between LTCH stays
- If stay disruption doesn’t meet the interrupted stay definition, the original discharge ends the patient’s first stay
- If an LTCH readmits the patient, the second admission begins a new stay
- LTCH gets 2 LTCH PPS payments (full MS-DRG payment or adjusted SSO payment, as applicable) for 2 patient stays:
- Payment for the first stay
- Payment for the stay after an LTCH readmission
Interrupted Stay Billing Requirements
- From date is the original admission date.
- Through date is the final discharge date.
- Report payable days in the Covered Days field (value code 80).
- Report interrupted days in the Non-Covered Days field (value code 81).
- Occurrence Span Code (OSC) 74 with dates the patient is absent at midnight (interruptions of more than 1 day).
- OSC from date is the initial LTCH discharge date.
- OSC through date is the last LTCH date the patient isn’t present at midnight.
- Don’t change the principal diagnosis when the patient readmits to an LTCH. If the patient has other medical conditions when they return, report the diagnosis codes on the claim.
- Use revenue code 018X to show the number of interruption days.
Discharge Payment Percentage Adjustment
An LTCH’s discharge payment percentage is the ratio of the LTCH’s discharges that got the standard federal rate payment to its total Medicare discharges number under the LTCH PPS. If an LTCH’s discharge payment percentage for a cost reporting period isn’t at least 50%, this payment adjustment policy applies after we calculate the percentage and notify the LTCH. For cost reporting periods subject to this adjustment, the discharge payment percentage adjustment is:
- An amount like the hospital IPPS payment
- An added HCO-cases payment based on the fixed-loss amount for an IPPS hospital in effect at the time of the LTCH discharge
The payment adjustment ends when the calculated cost reporting period’s discharge payment percentage is at least 50%. We may subject the LTCH to this adjustment again if, after reinstatement, the discharge payment percentage falls below 50%.
LTCHs subject to a cost reporting period payment adjustment can get a special probationary reinstatement. They can do this by getting the payment adjustment delayed if, for at least 5 consecutive months of the 6 months before the cost reporting period, they calculate the discharge payment percentage to at least 50%.
For any cost reporting period that the payment adjustment would apply without a delay, the payment adjustment applies for all discharges if the discharge payment percentage isn’t at least 50%.
LTCHs not reporting quality data get a 2.0 percentage point reduction to the annual market basket update. LTCHs may qualify for a Quality Reporting Program (QRP) reconsideration and exception and extension process.
FY 2024 Quality Reporting Measures
LTCH Continuity Assessment Record and Evaluation (CARE) Data Set Measures:
- National Quality Forum (NQF) #0674 — Application of Percent of Residents Experiencing One or More Falls with Major Injury (Long Stay)
- NQF #2631 — Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
- NQF #2631 — Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
- NQF #2632 — Functional Outcome Measure: Change in Mobility Among Long-Term Care Hospital Patients Requiring Ventilator Support
- Drug Regimen Review Conducted with Follow-Up for Identified Issues-Post Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
- Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
- Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay
- Ventilator Liberation Rate
- Transfer of Health Information to the Provider Post-Acute Care
- Transfer of Health Information to the Patient Post-Acute Care
Denominator for Transfer of Health (TOH) Information to Patient Post-Acute Care won’t use patients discharged to home under the care of organized home health service or hospice.
Data for the National Healthcare Safety Network (NHSN) measures submitted to the CDC:
- NQF #0138 — National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure
- NQF #0139 — National Healthcare Safety Network (NHSN) Central Line-Associated Blood Stream Infection Outcome Measure
- NQF #0431 — Influenza Vaccination Coverage Among Healthcare Personnel
- NQF #1717 — National Healthcare Safety Network (NHSN) Facility-Wide Inpatient Hospital-onset Clostridium difficile Infection Outcome Measure
- COVID-19 Vaccination Coverage among Healthcare Personnel (HCP)
CDC developed the COVID-19 Vaccination Coverage among HCP Measure to track COVID-19 vaccination coverage among LTCH HCP.
Medicare Fee-for-Service claims-based measures. LTCH QRP data collection or submission is no longer associated with these measures:
- NQF #3480 — Discharge to Community-Post-Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
- NQF #3562 — Medicare Spending Per Beneficiary-Post-Acute Care (PAC) Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
- Potentially Preventable 30-Day Post-Discharge Readmission Measure for Long-Term Care Hospital (LTCH) Quality Reporting Program (QRP)
In FY 2022, we finalized proposals to begin publicly reporting:
- Quality measures with fewer than standard numbers of quarters due to the COVID-19 PHE exemptions
- Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of LTCH stay
- Ventilator Liberation Rate
LTCH QRP webpage and LTCH QRP FAQs have more information.