Determining Medical Necessity and Appropriateness of Care for Medicare Long Term Care Hospitals

128 Pages·2011·5.66 MB·English

THE SECRETARY OF HEALTH AND HUMAN SERVICES

WASHINGTON, D.C. 20201

March 9, 2011
The Honorable Joseph R. Biden, Jr.
President ofthe Senate
Washington, DC 205lO
Dear Mr. President:
Section 114(b) ofthe Medicare, Medicaid and SCHIP Extension Act of2007 (P.L. 110-173)
requires that the Secretary ofHealth and Human Services provide a report to Congress on the
establishment ofnational facility and patient criteria for determining medical necessity,
appropriateness ofadmission, continued stay and discharge from long-term care hospitals
(LTCHs) together with recommendations for legislative and administrative action. The Centers
for Medicare & Medicaid Services (CMS) contracted with Kennell and Associates with a
subcontract to Research Triangle International (RTI) to conduct this study. The Report to
Congress includes CMS' recommendations for legislative and administrative actions and its
consideration ofrecommendations contained in the MedP AC June 2004 Report to Congress on
long-term care facility and patient criteria. This Report to Congress predates the passage ofthe
Affordable Care Act and thus does not discuss possible effects ofthe Affordable Care Act on
L TCHs. I respectfully submit this letter and the enclosed Report to Congress to satisfy this
requirement.
This study provides a review ofpast studies by MedPAC, the LTCH industry and RTI (under
contract to CMS) examining patient and facility characteristics ofLTCHs and past examinations
ofLTCH payment adequacy and patient appropriateness. This is followed by an examination of
the clinical characteristics of the LTCH population focused on defming medical complexity,
identifying critically complex patients, predicting outcomes for these patients using severity
scoring systems, and evaluating their quality ofcare. The final chapter presents an agenda for
research to define a critically complex patient popUlation. This study is enclosed with this
Report to Congress as Appendix I.
Based on research reported in the above study, I currently have no actions to recommend. In a
subsequent letter from MedPAC to CMS ofMarch 24, 2008, MedPAC stated that " ...The types
of cases treated by L TCHs can be (and are) treated in other settings, particularly in step-down
units ofmany acute-care hospitals. Therefore, it is not possible (nor desirable) to develop
criteria defining patients who can be cared for exclusively in LTCHs. Rather, CMS should seek
to define the level ofcare typically furnished in LTCHs, step-down units ofmany acute-care
hospitals, and some specialized skilled nursing facilities (SNFs) and inpatient rehabilitation
facilities (IRFs)."
The Honorable Joseph R. Biden, Jr.
March 9,2011
Page 2
Please accept the enclosed report as the Department of Health and Human Services' Report to
Congress. I am also sending a copy ofthis report to the Speaker of the House of
Representatives.
Sincerely,
~~
Kathleen Sebelius
Enclosure
THE SECRETARY OF HEALTH AND HUMAN SERVICES

WASHINGTON, D.C. 20201

March 9,2011
The Honorable John A. Boehner
Speaker ofthe House ofRepresentatives
Washington, DC 20515
Dear Mr. Speaker:
Section 114(b) ofthe Medicare, Medicaid and SCHIP Extension Act of2007 (P.L. 110-173)
requires that the Secretary of Health and Human Services provide a report to Congress on the
establishment ofnational facility and patient criteria for determining medical necessity,
appropriateness ofadmission, continued stay and discharge from long-term care hospitals
(LTCHs) together with recommendations for legislative and administrative action. The Centers
for Medicare & Medicaid Services (CMS) contracted with Kennell and Associates with a
subcontract to Research Triangle International (RTI) to conduct this study_ The Report to
Congress includes CMS' recommendations for legislative and administrative actions and its
consideration ofrecommendations contained in the MedP AC June 2004 Report to Congress on
long-term care facility and patient criteria. This Report to Congress predates the passage ofthe
Affordable Care Act and thus does not discuss possible effects ofthe Affordable Care Act on
L TCHs. I respectfully submit this letter and the enclosed Report to Congress to satisfy this
requirement.
This study provides a review ofpast studies by MedP AC, the LTCH industry and RTI (under
contract to CMS) examining patient and facility characteristics ofLTCHs and past examinations
of LTCH payment adequacy and patient appropriateness. This is followed by an examination of
the clinical characteristics ofthe LTCH population focused on defining medical complexity,
identifying critically complex patients, predicting outcomes for these patients using severity
scoring systems, and evaluating their quality ofcare. The final chapter presents an agenda for
research to define a critically complex patient population. This study is enclosed with this
Report to Congress as Appendix l.
Based on research reported in the above study, the Secretary currently has no actions to
recommend. In a subsequent letter from MedPAC to CMS ofMarch 24, 2008, MedPAC stated
that"...The types ofcases treated by L TCHs can be ( and are) treated in other settings,
particularly in step-down units ofmany acute-care hospitals. Therefore, it is not possible (nor
desirable) to develop criteria defining patients who can be cared for exclusively in LTCHs.
Rather, CMS should seek to define the level of care typically furnished in L TCHs, step-down
units of many acute-care hospitals, and some specialized skilled nursing facilities (SNFs) and
inpatient rehabilitation facilities (IRFs)."
The Honorable John A. Boehner
March 9,2011
Page 2
Please accept the enclosed report as the Department of Health and Human Services' Report to
Congress. I am also sending a copy of this report to President ofthe Senate.
Sincerely,
~~
Kathleen Sebelius
Enclosure
eMS Report

Determining Medical Necessity and

Appropriateness of Care for

Medicare Long Term Care Hospitals

March 2011

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INTRODUCTION
This Report to Congress is the Secretary's response to Section 114(b) (2) ofthe
Medicare, Medicaid and SCHIP Extension Act (MMSEA) of2007 (PL 110-173). The statute
requires that the Secretary ofHealth and Human Services at (b)(I) conduct a study on the
establishment ofnational long-term care hospital (L TCH) facility and patient criteria for
determining medical necessity, appropriateness ofadmission, continued stay and discharge from
long-term care hospitals (L TCHs) and at (b )(2) provide a report on the results ofthis study to
Congress together with recommendations for legislation and administrative action, including
time lines for implementation ofcriteria or other appropriate action. The statute further specifies
that in conducting the study and preparing the report, the Secretary "shall consider
recommendations contained in a report to Congress by the Medicare Payment Advisory
Commission in June 2004 for long-term care hospital-specific facility and patient criteria to
ensure that patients admitted to long-term care hospitals are medically complex and appropriate
to receive long-term care hospital services; and ongoing work by the Secretary to evaluate and
determine the feasibility ofsuch recommendations."
The mandated study includes a summary ofpast research, a discussion ofMedPAC's
recommendations and recommendations regarding ongoing research that are included as
Appendix I. Based on research presented in the mandated study, the Secretary does not
recommend the development ofadditional patient and facility level criteria for LT CHs at this
time. Regarding MedPAC's recommendation in 2004 for the development of such criteria, in a
subsequent letter to the Centers for Medicare & Medicaid Services (CMS) (dated March 24,
2008), MedPAC stated that " ...The types ofcases treated by LTCHs can be (and are) treated in
other settings, particularly in step-down units ofmany acute-care hospitals. Therefore, it is not
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possible (nor desirable) to develop criteria defining patients who can be cared for exclusively in
LTCHs. Rather, CMS should seek to define the level of care typically furnished in LTCHs,
step-down units of many acute-care hospitals, and some specialized skilled nursing facilities
(SNFs) and inpatient rehabilitation facilities (IRFs)."
SUMMARY OF THE KENNELLIRTI STUDY (APPENDIX I)
Section I of the Kennell/RTI study contains background information on characteristics of
L TCHs and how they have been paid under Medicare. L TCHs represent a relatively small
number ofhospitals (approximately 400) treating specialized patient groups. They have average
Medicare lengths ofstay of 25 days or more. About 90 percent ofLT CH Medicare cases are
admitted directly from an acute care hospital where they have been stabilized medically. Over
80 percent of L TCH patients are Medicare beneficiaries. Over 60 percent of LT CHs are located
in the same facilities (co-located) with acute care hospitals, although under separate ownership.
The number ofLTCHs has increased rapidly during the past 12 years. Only 7 states and Puerto
Rico did not have LTCHs in operation by the end of2007, but, LTCHs are more heavily
concentrated in some states than others. The case-mix treated by L TCHs has evolved over time
to become centered on the treatment ofpatients with complex medical conditions.
From 1983 to 2003, L TCHs were paid under a cost based system. LTCHs were moved
to a prospective payment system (LTCH-PPS) in Fiscal Year (FY) 2003. Payments are much
higher, however, for the same DRG admitted to LTCHs compared to payments received by acute
hospitals for the same DRG. CMS payment policy treats cases that are discharged from an acute
care hospital directly into an L TCH as two separate stays, eligible for both an IPPS payment for
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the initial hospitalization plus a second, often larger LTCH-PPS payment. The following
payment policy issues are ofpotential concern:
• The medical conditions treated in L TCHs are also treated in acute care hospitals and
other facilities, especially in areas where no LT CHs operate. Nevertheless, payment
amounts differ by type of provider.
• Many patients treated in L TCHs may not require hospital level care and may be more
appropriately treated in a less intensive setting.
• The ability to generate two Medicare payments may provide an opportunity to split a
predictably long inpatient hospital stay into two PPS payments, especially when
L TCHs and acute care hospitals are co-located.
Section II of this study reviews the findings from the Medicare Payment Advisory
Commission (MedPAC), studies commissioned by the LTCH industry, and RTI studies under
contract to CMS. This section also summarizes recent legislative and regulatory changes
affecting L TCHs.
Research Findings from MedPA C
The 2003 MedPA C report documented rapid growth in the number of L TCHs and total
Medicare spending on L TCH services, high concentrations of L TCHs in a few states, higher
payments and lack of evidence for better clinical outcomes for LT CH users.
MedPAC's 2004 analysis used multivariate modeling on a full sample of L TCH claims
and found that, for very complex patients, LT CH use was associated with similar or improved
outcomes at similar or lower Medicare payments, compared to patients receiving other (or no)
post acute care. Similar results were not found for other, less complex, types of patients.
MedPA C recommended in the 2004 report that LT CHs should be defined by facility and patient
criteria that ensure that patients admitted to L TCHs are medically complex and have a good
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chance of improvement. MedPAC in their March, 2008 letter to CMS stated that while it was
not possible to develop criteria defining patients who could be cared for exclusively in an L TCH
setting, it was still important to define the level ofcare that is typically furnished in L TCHs.
Industry Sponsored Studies
In response to the findings presented in the 2004 MedPAC report, the National
Association of Long Term Hospitals (NALTH), an LTCH industry trade association, sponsored
two sets ofresearch studies. These studies found that L TCHs treat a critically ill population with
complex needs and poor outcomes, and that L TCH users had lower average costs and better
clinical outcomes compared with similar patients in non-LTCH settings. The NALTH­
commissioned Barlow studies offered a wealth of information regarding the characteristics of
L TCHs and the critical-care prolonged mechanical ventilation (PMV) patients they treat, they
provided little insight into MedPAC's concerns regarding the high cost of L TCH treatment
compared to similar treatment in other facilities that were found in other studies. However, by
providing greater clinical detail on the severity of illness and co-morbidities of LTCH PMV
patients, the Barlow studies demonstrated the difficulty offinding an appropriate comparison
group for patients admitted to an L TCH, and highlighted the need for additional clinical data to
describe L TCH patients and to identify similar patients who receive care in other settings.
Research Findings from RTI
With the recommendations of MedPAC's June 2004 Report to Congress as a point of
departure, CMS awarded a contract to RTI at the start ofFY 2005 for a comprehensive
evaluation ofthe feasibility ofdeveloping patient and facility level characteristics for L TCHs
that could distinguish L TCH patients from those treated in other hospitals. The highlights of
RTI's findings are listed below:
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• An examination of Medicare quality review contractors indicated that patients who
are more appropriate for treatment at LT CHs than at other post-acute facilities have
multiple co-morbidities and require an intense level of care with frequent physician
and nurse visits.
• The two most important factors in predicting L TCH admission are: 1) proximity to
an L TCH; that is, whether the beneficiary lived in a state where many L TCHs were
available; and 2) severity of illness.
• There were no differences in average outcomes between episodes from areas that
have high L TCH use and those that do not.
• For the most medically complex ventilator patients, Medicare payments were the
same or lower, mortality was lower, and the chance ofbeing discharged to home was
higher than those remaining in acute care settings. However, among the least
complex ventilator patients, Medicare payments were much higher, hospital stays
were longer, and all other outcome measures were the same or worse for those
referred to L TCHs versus those remaining in acute care settings. This finding
supports previous research by MedP AC that LT CHs may provide beneficial and cost­
effective services for a subset ofcomplex patients, but not for all types ofpatients
admitted to these hospitals.
• An L TCH admission was associated with a shorter length of stay in the general acute
care hospital, on average, and controlling for a number of factors, including age,
gender, number ofco-morbid conditions, and critical care use. This indicates, at least
for some patients, that L TCH care may be substituting for what would normally be
provided in the later days of an acute care hospital stay.
• Between 40 to 45 percent of all LT CH admissions qualifY for a payment reduction as
a "short-stay outlier". This means that payments for these cases are reduced ifthe
length of stay is substantially less than the average length ofstay for a given LTCH­
DRG. A high percentage of short-staying cases in a payment system designed for
long-stay patients highlight the complexity in discerning which patients are
appropriate for admissions to L TCHs.
• The RTI Technical Expert Panel (TEP) reached a consensus that LTCHs provide a
service that is comparable to general acute step-down units and is not unique to
L TCHs. Discussions with L TCH physicians and acute care hospital physicians
practicing in areas that lack LT CHs confirmed that there is an overlap in the patient
populations treated in LTCHs and in acute care. Critical care post-ICU patients
whom L TCHs describe as their targeted population are treated throughout most ofthe
country in acute care hospital step-down units.
• The TEP acknowledged that Medicare patients with respiratory conditions requiring
mechanical ventilation comprise less than 15 percent ofall LT CH patients. Thus,
these patients insufficiently define which critically ill patients with complex medical
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