Long Term Care Hospitals (LTCHs) are certified as acute care hospitals for patient with serious medical problems that require intense, special treatment usually for more than 25 days. Each year, Medicare sets thresholds for reimbursement for care based on five-sixths of the expected length of stay for a particular diagnosis. The thresholds vary by diagnosis so that one patient’s diagnosis of a broken hip would have a different threshold than say a patient with pneumonia. Medicare rules pays LTCHs smaller payments for stays that are shorter than the threshold but there’s a sweet spot for LTCHs when the patient reaches the threshold. A narrow window of opportunity exists for LTCHs immediately after the threshold has been reached in which providers receive a lump sum payment. That payment is meant to cover the remainder of costs for treatment. Any days after that window of opportunity see no additional Medicare money. According to a study published in the Journal of Health Affairs the unintended effect of the policy for patients is that LTCHs not owned by the government demonstrated a discharge rate heavily concentrated on or immediately after the date of a patient’s payment threshold.

The study found that LTCHs discharged a quarter of their skilled nursing patients during the three days after reaching the thresholds. Based on a Wall Street Journal analysis and the subsequent research study, researchers found that the policy created a strong financial incentive for LTCHs to discharge during that threshold to maximize payments rather than to meet any goals for medical treatment. One LTCH discharged as many as eight times as many Medicare patients during the day patients reached their threshold as were discharged the day before.

According to the Wall Street Journal, some LTCHs ordered additional tests or services in order to retain patients until they reached their threshold or released patients who were costing the hospital money regardless of their condition.

Beginning this year, Medicare will pay LTCHs the higher rate only after they have spent three or more days in intensive care units at general hospitals or when they are on ventilators. However, analysis done by the Wall Street Journal as well as the study’s researchers found that the change was unlikely to change the incentive for LTCHs.

Why does all this matter? It matters because some people with severe problems are getting released prior to their actually being ready to be released and they are going home with family members thinking they are in better shape health-wise than they actually are. On the other end of the scale, some people are being forced to hang out in an LTCH for extra days so that the LTCH can make more money not so that they can recover better before going home. Someone who needs to spend time in an LTCH probably will need care when they get home before they will fully recover. Consider hiring a Geriatric Care Manager to help make the transition back home easier but also to help make sure that the care a patient receives while in someone else’s care is appropriate. Since most people don’t have nursing degrees or the experience necessary for knowing when professionals are cutting corners or padding their bills, it’s important to have an experienced professional on your side to push for the patient’s rights and when necessary to appeal a decision.