LTACH versus Managed Care and Beyond

The controversy continues over hospitals denied authorization to transfer patients to LTACHs.

It is my long-held opinion that health insurance companies exist to not pay claims. They are an investment tool for the investment class. The plutocracy has never acted in its own long-term best interests. In few places is this more obvious than in healthcare finance.

As the Feb. 13 article by Dr. Howard Stein presented so well, limiting access to what one would think are inviolate Medicare benefits is a significant way of retaining revenue for investors. One such victim of limiting benefits is the Long-Term Acute Care Hospital (LTACH).

It’s been a rough few years for the LTACH sector. Some years ago, the Centers for Medicare & Medicaid Services (CMS) all but declared war on specialty hospitals. There was the moratorium on new LTACHs, plus changing reimbursements via a modified DRG structure apparently intent on reducing revenues and other rule changes, all the while CMS retained the mandated overall minimum average length of stay. Now, as Dr. Stein so well describes, LTACHs must contend with increased difficulty of getting authorization from Medicare Advantage (MA) plans to transfer patients from the acute hospital. MA plans now more than ever lack financial motivation to approve LTACH transfers.

I am so happy to be out of the LTACH business. But bad news, it turns out, runs deep. 

Medicare made way for the LTACH for two main purposes: to serve as a financial safety valve for significant outliers in general mean length of stay (GMLOS), and to provide expertise to beneficiaries who were not recovering as hoped, particularly the ventilator-dependent patient. And what an amazing thing this was for acute hospitals and patients. Then came the MA plans.

Traditional Medicare had given way to MA plans that promise benefits such as lower prescription costs beyond Part D provisions. Most acute-care hospitals have deep penetration by MA plans in their payor mix. These have mostly switched from per diem payments to a DRG structure. With the change to DRGs, the burden on hospitals lightened a bit, although there are still myriad ways to deny a claim. But that relief is offset by altered access to benefits. There is little incentive for payors to approve alternate levels of care, including at Skilled Nursing Facilities (SNFs) and Inpatient Rehabilitation Facilities (IRFs). Two major payors (and I mean major) don’t even have functional prior authorization departments on weekends, leaving hospitals to sit on patients when prior authorization could not be obtained by end of business Friday. Why should investor-owned DRG payors care?  

This means the financial safety valve is plugged. MA plan members – who are still Medicare beneficiaries, by the way – are denied LTACH expertise: a Medicare benefit. To me, this is a financially shortsighted perspective. It is also a quality issue. 

LTACH transfer authorization is possible when the hospital case manager is ready to fight for their patient, all the while doing a “soft sell” on the concept with prior authorization departments. Be prepared for a peer-to-peer conversation. And be prepared to spend some time on it; given the financial stakes, the CFO will understand. The request should be expressed as a quality issue. Hospital case managers, be fearless in involving patients and their representatives in the effort. Their voice can be very instrumental in getting the payor to do the right thing. 

Medicare Advantage plans are quick to quote lines and subsections of Medicare rules and regulations when denying a claim. They are not so quick to apply the same exact rules to safeguarding Medicare benefits for their members.

Remember this: a positive compliment is seldom made; a complaint is broadcast far and wide. Medicare Advantage plans, unlike employer and group health plans, rely on one-by-one member enrollment.

Get leverage where and when you can.