Potential Impact of the Site-Neutral Payment Policy on Regions and Hospitals with Differential LTAC Utilization: A National Study of Medicare Beneficiaries

BACKGROUND: Long-term acute care hospitals (LTAC) are the fastest growing and most expensive post-acute care provider. Due to rising LTAC use, beginning in 2018 the site-neutral payment (SNP) policy will reduce reimbursement for Medicare beneficiaries without prolonged mechanical ventilation or ICU stay prior to transfer because these patients are considered less likely to require this level of care. Since half of the variation in LTAC use is explained by differences between regions and hospitals, we sought to examine whether regions and hospitals with more LTAC use transfer patients with lower severity and complexity of illness and how they may be affected by SNP policy. METHODS: We conducted a retrospective cohort study using 5% national Medicare data. We included adults ?65 years with Medicare parts A and B who were transferred from an acute care hospital to an LTAC in 2012. We compared characteristics of patients transferred to LTACs by tertile of regional LTAC supply (beds per 100,000 residents) and by propensity-score matched hospitals with low (< median of 1.26%) versus high (? 1.26%) historical LTAC transfer rates. RESULTS: We included 3,898 and 1,673 older adults transferred to an LTAC for our regional and hospital-level analyses respectively. For both comparisons, patient demographics, prior healthcare utilization, comorbidities, and functional impairment were similar. Compared to regions with the lowest LTAC supply, patients in the highest supply regions had shorter hospital length of stay (5 fewer days), lower intensity diagnoses (DRG weight of 1.91 vs 3.06), fewer intensive therapies (11% vs 27% for tracheostomy), and were more likely to meet SNP criteria (47% vs. 30%; p<0.01 for all comparisons). Similarly, patients from high LTAC transfer hospitals were less sick compared to patients from matched low transfer hospitals. However, the magnitudes of the differences were smaller than those between regions (i.e. length of stay difference of 2 days; 14% vs 22% for tracheostomy; 43% vs. 36% for SNP). Patients who meet SNP criteria were otherwise similar between regions and hospitals with different LTAC supply and use. CONCLUSION: High regional LTAC supply and LTAC transfer hospitals were associated with greater LTAC care for patients with lower severity and complexity of illness. The SNP policy will impact LTACs in high supply regions more than those accepting patients from high transfer hospitals, however nearly a third of patients in low supply regions and from low transfer hospitals will also be affected. Further research is warranted to study the impact of SNP policy on LTAC access and how this relates to patient outcomes, recovery, and costs.