Did Site-Neutral Payment for Long-Term Care Hospitals Reduce Financial Incentives to Time Discharge?

Area of Science:

• Health Economics
• Healthcare Policy
• Hospital Administration

Background:

• Historically, Medicare's fee-for-service model for long-term care hospitals (LTCHs) created financial incentives for discharging patients on the short-stay outlier (SSO) threshold day.
• This practice led to significant spikes in discharges precisely on the SSO threshold day due to reduced lump-sum payments for earlier discharges.

Purpose of the Study:

• To investigate whether LTCHs exhibit similar discharge timing behaviors at the SSO threshold for blended site-neutral payment cases compared to standard payment cases.
• To assess the impact of modified payment structures on discharge timing incentives within LTCHs.

Main Methods:

• A cross-sectional study analyzed a national dataset of 100% LTCH Medicare discharges for fiscal year 2017.
• The study utilized a multinomial model, adjusting for patient demographics and case-mix, to compare discharge timing on the SSO threshold.
• Exposure was defined by prior intensive care unit (ICU) days (≥3 days for standard payment vs. fewer for blended site-neutral cases).

Main Results:

• The analysis included 10,910 LTCH discharges, with 24% classified as blended site-neutral cases.
• Despite a 50% reduction in payment increase for blended site-neutral cases, the adjusted probability of discharge on the SSO threshold day remained similar to standard payment cases (20% vs. 16%).
• The difference in discharge spikes on the SSO threshold between blended site-neutral and standard payment cases was -3% (95% CI, -5% to 2%).

Conclusions:

• Persistent, unwarranted discharge spikes on the SSO threshold day were observed, even with substantially reduced payment incentives.
• These findings indicate that current reimbursement structures may continue to incentivize strategic discharge timing, regardless of payment modifications.
• Policymakers and payers should consider reimbursement models for LTCH stays that do not create meaningful payment increases based on length-of-stay thresholds.