Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

VULNERABILITIES IN 

MEDICARE’S 

INTERRUPTED-STAY POLICY 

FOR LONG-TERM CARE 

HOSPITALS 

Daniel R. Levinson 

Inspector General 

June 2014 

OEI-04-12-00490 
 

 

EXECUTIVE SUMMARY: VULNERABILITIES IN MEDICARE’S INTERRUPTED-STAY POLICY FOR 

LONG-TERM CARE HOSPITALS, OEI-04-12-00490 

WHY WE DID THIS STUDY 

In 2010 and 2011, Medicare paid $10.3 billion to 449 long-term care hospitals (LTCHs) for services billed on behalf of 

approximately 254,000 beneficiaries. LTCHs are the most expensive post-acute care setting because they are intended to 

treat patients with complex medical conditions. Beneficiaries may leave an LTCH and return at a later date. The 

Medicare LTCH interrupted-stay policy is intended to save money by treating time spent at an LTCH before and after 

an interruption as a single stay, rather than considering the second portion of the LTCH stay to be a readmission and 

thus paying for two separate stays. However, LTCHs receive payment for a second stay if a beneficiary returns to the 

LTCH after a certain number of days (known as the fixed-day period) or receives services from multiple facilities 

before returning. 

HOW WE DID THIS STUDY 

We analyzed data from claims from 2010 and 2011 from LTCHs and from “intervening facilities”—i.e., facilities that 

treat patients during interruptions in their LTCH stays—to identify inappropriate payments for interrupted stays in 

LTCHs. Additionally, we identified LTCHs with a high number of readmissions immediately after the fixed-day period 

and after multiple short intervening-facility stays. We also identified co-located LTCHs—i.e., LTCHs located in the 

same building or on the same campus as another provider—that billed in 2010 and 2011 and determined whether they 

reported their co-located status and whether they exceeded the 5-percent readmission threshold. (If the number of 

discharges and readmissions between an LTCH and a co-located provider exceeds 5 percent of the LTCH’s total 

Medicare discharges to that provider during a cost-reporting period, all readmissions from the co-located provider are 

to be paid for as interrupted stays, regardless of the number of days spent away from the LTCH.) 

WHAT WE FOUND 

We identified several vulnerabilities in the LTCH interrupted-stay policy, including inappropriate payments, financial 

incentives to delay readmissions, and potential overpayments to co-located LTCHs. Specifically, in 2010 and 2011, 

Medicare inappropriately paid $4.3 million to LTCHs and intervening facilities for interrupted stays. Additionally, 59 

LTCHs had a high number of readmissions immediately after the fixed-day period and 24 LTCHs had a high number of 

readmissions following multiple short stays at intervening facilities. Medicare paid $12 million and $3.1 million, 

respectively, for these readmissions. While these readmissions may be appropriate, this raises concerns about whether 

financial incentives, rather than beneficiaries’ medical conditions, may have influenced some LTCHs’ readmission 

decisions. Further, the Centers for Medicare & Medicaid Services (CMS) did not know the co-located status of most 

LTCHs, preventing it from applying a payment adjustment to the 35 percent of co-located LTCHs that exceeded the 

5-percent readmission threshold. 

WHAT WE RECOMMEND 

We recommend that CMS (1) review existing safeguards to determine whether additional action is needed to prevent 

future inappropriate payments for interrupted stays, (2) conduct additional analysis to determine the extent to which 

financial incentives influence LTCHs’ readmission decisions, (3) develop a system to enforce the 5-percent 

readmission threshold, (4) take appropriate action regarding LTCHs exhibiting certain readmission patterns, and (5) 

take appropriate action regarding inappropriate payments and overpayments we identified. CMS concurred— 

contingent on receiving more information from OIG—with two of our recommendations and nonconcurred with three 

recommendations. 
TABLE OF CONTENTS 

Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................9 

Findings......................................................................................................13 

Nearly all interruptions and readmissions occurred between LTCHs 

and hospitals...................................................................................13 

Medicare inappropriately paid $4.3 million to LTCHs and 

intervening facilities for interrupted stays .....................................13 

Financial incentives in the interrupted-stay policy may influence 

the readmission decisions of some LTCHs ....................................14 

Approximately one-third of co-located LTCHs exceeded the 

5-percent readmission threshold, but CMS lacks the information 

to apply a payment adjustment ......................................................18 

Conclusion and Recommendations ............................................................21 

Agency Comments and Office of Inspector General Response .....24 

Appendixes ................................................................................................27 

A: Number of Long-Term Care Hospitals by State, 2010 and 

2011 ................................................................................................27 

B: Example of Total Payments to a Long-Term Care Hospital 

for a Stay With a 3-Day-or-Less Interruption for 

MS-LTC-DRG 207 ........................................................................29 

C: Number of Long-Term Care Hospitals With a High Number 

of Readmissions Immediately After the Fixed-Day Period 

by State, 2010 and 2011 .................................................................30 

D: Number and Percentage of Co-Located Long-Term Care 

Hospitals by Medicare Administrative Contractor Jurisdiction, 

2010 and 2011 ................................................................................31 

E: Agency Comments ...................................................................32 

Acknowledgments......................................................................................36 
 

 

OBJECTIVES 

1.	 To describe billing of interrupted stays and readmissions in long-term 

care hospitals (LTCHs). 

2.	 To determine the extent to which Medicare made inappropriate 

payments for interrupted stays in LTCHs. 

3.	 To determine the extent to which additional Medicare payments were 

made because LTCHs readmitted beneficiaries immediately after the 

fixed-day period or after multiple short stays at intervening facilities. 

4.	 To determine the extent to which co-located LTCHs reported their 

co-located status and exceeded the 5-percent readmission threshold. 

BACKGROUND 

Patients that require continued medical care after a hospitalization receive 

post-acute care. Post-acute care can be provided in skilled nursing 

facilities (SNFs), inpatient rehabilitation facilities, the home, or LTCHs. 

LTCHs are intended to treat patients with complex medical conditions that 

require prolonged post-acute hospital-level care. Therefore, LTCHs are 

the most expensive post-acute care setting and are paid at rates higher than 

those paid to acute-care hospitals (i.e., hospitals).1 To qualify for and 

receive Medicare payments as an LTCH, a facility must meet Medicare 

conditions of participation for hospitals and have an average length of stay 

greater than 25 days for its Medicare beneficiaries.2 In 2010 and 2011, 

Medicare paid $10.3 billion to 449 LTCHs for services billed on behalf of 

approximately 254,000 beneficiaries.3 

LTCHs are located in almost all States, but are not distributed evenly 

throughout the country. Over 50 percent of LTCHs are located in 

seven States. Texas and Louisiana have the most LTCHs, with 18 percent 

and 9 percent of the national amount, respectively. (See Appendix A for 

the number of LTCHs by State in 2010 and 2011.) Further, two major 

1

 The Medicare Payment Advisory Commission (MedPAC), Report to the Congress: 

Variation and Innovation in Medicare, June 2003, pp. 71, 84. Accessed at 

http://www.medpac.gov/publications/congressional_reports/June03_Ch5.pdf on 

August 27, 2013. See also MedPAC, Assessing Payment Adequacy and Updating 

Payments: Hospital Inpatient and Outpatient Services, December 12, 2013. Accessed at 

http://www.medpac.gov/transcripts/hospital dec 2013 public presentation.pdf on 

December 20, 2013. 

2

 Social Security Act, § 1861(ccc), 42 U.S.C. 1395x(ccc). 42 CFR pt. 482 defines the 

conditions of participation for hospitals. 42 CFR pt. 489 specifies the terms of provider 

agreement for hospitals. 42 CFR § 412.23(e)(2) defines LTCHs as having an average 

length of stay greater than 25 days for Medicare beneficiaries. 3

 OIG analysis of 2010 and 2011 Part A Standard Analytical Files, 2013. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 1 
 

 

 

 

 

 

 

 

 

 

LTCH companies (i.e., chains) own more than half of all LTCHs. Many of 

the remaining LTCHs belong to smaller chains.4 

From 2004 to 2007, Medicare spending on LTCH services increased by 

22 percent, from $3.7 billion to $4.5 billion.5 The number of LTCHs also 

increased by 22 percent during this time.6 In December 2007, Congress 

established a moratorium on new LTCHs and on new beds in existing 

LTCHs, questioning whether this dramatic growth was due to an increase 

in clinical need or a means to gain Medicare profits.7 The LTCH 

moratorium expired in December 2012, but LTCH chains appear to be 

opening new facilities or increasing the number of beds in existing LTCHs 

at low rates, rather than at the high rates seen before.8, 9 

Medicare Prospective Payment System for LTCHs 

In October 2002, the Centers for Medicare & Medicaid Services (CMS) 

established a prospective payment system for LTCHs.10 This prospective 

payment system uses the inpatient Medicare severity diagnosis related 

group (MS-DRG) classification system that hospitals use, with 

4

 MedPAC, Report to the Congress: Medicare Payment Policy, March 2012, pp. 258, 

267. Accessed at http://www.medpac.gov/chapters/Mar12_Ch10.pdf on November 13, 

2013. 

5 Ibid., p. 267. 

6 Ibid., p. 266.
 7

 The Medicare, Medicaid, and SCHIP Extension Act of 2007, P.L. No. 110-173, 

§ 114(d). The Patient Protection and Affordable Care Act (ACA), P.L. No. 111-148, 

§§ 3106(b) and 10312(b), extended the moratorium through 2012. See also Pete Stark,
 

Introduction of the LTCH Moratorium Act, Congressional Record, Volume 150, 

Number 16 (February 10, 2004). Accessed at http://www.gpo.gov/fdsys/pkg/CREC2004-02-10/html/CREC-2004-02-10-pt1-PgE135-3.htm on December 3, 2013. 8

 ACA, §§ 3106(b) and 10312(b). 

9

 MedPAC, Report to the Congress: Medicare Payment Policy, March 2014, p. 275. 

Accessed at http://www.medpac.gov/documents/Mar14_entirereport.pdf on April 3, 

2014. 

10 A prospective payment system is a method of reimbursement in which Medicare pays
 

providers on the basis of a predetermined, fixed amount. The payment amount for a 

particular service is derived from the classification system for that service (e.g., diagnosis 

related group). CMS, Prospective Payment Systems—General Information. Accessed at 

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ProspMedicareFee 

SvcPmtGen/index.html?redirect=/prospmedicarefeesvcpmtgen/ on October 10, 2013. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 2 
 

 

 

 

 

 

 

 

 

 

 

relative weights to account for resource utilization specific to LTCHs (i.e., 

MS-LTC-DRG).11, 12 

Each beneficiary’s stay is grouped into an MS-LTC-DRG based on 

diagnoses (including secondary diagnoses), procedures performed, age, 

gender, and discharge status.13 This grouping reflects the typical resources 

used for treating an LTCH beneficiary. Each MS-LTC-DRG has a 

predetermined average length of stay, which CMS updates annually 

according to LTCH discharge data. LTCHs are paid according to each 

beneficiary’s MS-LTC-DRG and do not receive per diem payments.14, 15 

Therefore, excluding adjustments, the LTCH receives the same payment 

for all stays with a certain MS-LTC-DRG, regardless of the length of 

stay.16 

Interruptions and Readmissions in LTCHs 

Beneficiaries may leave an LTCH during their stay and return to the LTCH 

at a later date. A return to the same LTCH will result in either an 

interrupted stay or a readmission, depending on how long the beneficiary 

was away from the LTCH and where he/she received additional services, 

if any. The LTCH interrupted-stay policy aims to save Medicare money 

by treating certain LTCH stays before and after an absence (an 

11 The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, 

P.L. No. 106-113 § 123, as amended by the Medicare, Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 2000, P.L. No. 106-554 § 307. See also: CMS, 

Elements of LTCH PPS. Accessed at http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/LongTermCareHospitalPPS/elements_ltch.html on December 20, 2013. 12 Two LTCHs in Maryland are paid in accordance with demonstration projects under the 

Maryland hospital waiver and are thus not subject to payments under the prospective 

payment system. Novitas Solutions, Provider Audit & Reimbursement Part A: Maryland 

Waiver. Accessed at https://www.novitas-solutions.com/parta/arcenter/reimb-ref/mdwaiver.html on August 27, 2013. (Note: Link no longer works.) These LTCHs are not 

included in our analysis. 

13 CMS, Medicare Learning Network Fact Sheet, Long Term Care Hospital Prospective 

Payment System: Interrupted Stay, December 2012, p. 2. Accessed at 

http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads/ltch-intstay.pdf on August 22, 2013. 14 42 CFR § 412.521.
 15 A beneficiary’s MS-LTC-DRG may change during an LTCH stay. In such a case, 

LTCHs are paid according to the beneficiary’s MS-LTC-DRG on the discharge date.
 16 Adjustments include facility-level and case-level adjustments. Facility-level 

adjustments include adjustments for differences in area wages and cost of living for
 

LTCHs in Hawaii and Alaska. CMS, Elements of LTCH PPS. Accessed at 

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCare 

HospitalPPS/elements_ltch.html on August 26, 2013. Case-level adjustments include 

short-stay outlier payments, which are reduced payments for certain shorter LTCH stays; 

and high-cost outlier payments, which are increased payments for LTCH stays that meet 

a cost threshold. CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 3 

§§ 150.9.1.1 and 150.9.1.5. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 3 
 

 

 

 

 

 

 

interruption) as a single episode of care, rather than paying LTCHs for two 

separate stays. 

Interruptions. An interruption occurs when a beneficiary leaves an LTCH 

and returns to the same LTCH for further medical treatment within a 

specific number of days.17 During the interruption, the beneficiary may 

receive services at an intervening facility that are not available at the 

LTCH. An intervening facility may be a hospital, an inpatient 

rehabilitation facility, or a SNF or “swing bed.”18 The interruption begins 

on the first day that the beneficiary is away from the LTCH and continues 

until the beneficiary returns to the same LTCH.19 A beneficiary may have 

multiple interruptions during one LTCH stay. The term “interrupted stay” 

refers to an LTCH stay with one or more interruptions. 

There are two types of interruptions in LTCH stays, defined by the length 

of the interruption: 3-day-or-less interruptions and greater-than-3-day 

interruptions. Excluding any adjustments, the total Medicare payment to 

the LTCH is the same for a stay with a 3-day-or-less interruption and a 

stay with a greater-than-3-day interruption. However, the method of 

paying intervening facilities differs. 

During a 3-day-or-less interruption, beneficiaries may receive services 

from one or more intervening facilities or return home without receiving 

additional services before returning directly to the LTCH. CMS considers 

this interruption to be part of a single LTCH stay. CMS makes one 

payment to the LTCH based on the beneficiary’s MS-LTC-DRG at 

discharge.20 The LTCH must pay the intervening facility, or facilities, 

under arrangements for any services provided during the interruption.21 

CMS has system “edits” (i.e., automated system processes) to prevent 

payments to intervening facilities for services provided during a 

17 42 CFR § 412.531. See also CMS, Medicare Learning Network Fact Sheet, Long Term 

Care Hospital Prospective Payment System: Interrupted Stay, December 2012, p. 1. 

Accessed at http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads/ltch-intstay.pdf on August 22, 2013. 18 A “swing bed” is a hospital bed for which reimbursement is made for skilled nursing 

services. Hospitals that have received approval from CMS use “swing beds” to provide 

hospital- or SNF-level care, as needed. Social Security Act, § 1883, 42 U.S.C. § 1395tt. 

19 CMS, Medicare Learning Network Fact Sheet, Long Term Care Hospital Prospective 

Payment System: Interrupted Stay, December 2012, p. 5. Accessed at 

http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads/ltch-intstay.pdf on August 22, 2013. 20 42 CFR § 412.531(b)(1)(ii)(A).
 21 “Under arrangements” means that the LTCH bills and is paid by Medicare for a 

beneficiary’s stay, and the LTCH is then responsible for paying the intervening facility or
 

facilities. Medicare does not make a separate payment to intervening facilities for 

services provided during a 3-day-or-less interruption. See Social Security Act, 

§ 1861(w), 42 U.S.C. § 1395x (w).
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 4 
 

 

 

 

 

 

3-day-or-less interruption.22 See Appendix B for an example of payments 

for a stay with a 3-day-or-less interruption. 

During a greater-than-3-day interruption, beneficiaries receive services 

from one intervening facility and do not return home before returning 

directly to the LTCH. CMS makes a separate payment to the intervening 

facility for services provided during a greater-than-3-day interruption.23 If 

a beneficiary’s return to the same LTCH occurs between 4 days and a 

certain maximum number of days (i.e., the fixed-day period), CMS 

considers it a continuation of the original LTCH stay and will pay the 

LTCH for one stay upon the beneficiary’s discharge. The fixed-day period 

varies by the type of intervening facility from which the beneficiary 

receives services: 

 4–9 days for hospitals, 

 4–27 days for inpatient rehabilitation facilities, and 

 4–45 days for SNFs or swing beds.24 

For these stays, Medicare makes one payment to the LTCH based on the 

beneficiary’s MS-LTC-DRG at discharge and a separate payment to the 

intervening facility. CMS has system edits to prevent payments to LTCHs 

for a new stay if a beneficiary returns to the LTCH within the fixed-day 

period.25 

Readmissions. If a beneficiary returns to the same LTCH after the 

fixed-day period, CMS considers it a readmission rather than an 

22 CMS Manual System, Pub. 100-04 Medicare Claims Processing, Transmittal 1001, 

July 21, 2006. Accessed at http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/Downloads/R1001CP.pdf on August 22, 2013. Edits 

validate claims data by detecting errors or potential errors and verifying that certain data 

are consistent and appropriate. CMS, Medicare Administrative Contractor Workload 

Implementation Handbook (Legacy-to-MAC), pp. 4–8. February 2012. Accessed at 

http://www.cms.gov/Medicare/Medicare-Contracting/Medicare-AdministrativeContractors/Downloads/Handbooks/Legacy2MACImp.pdf on October 10, 2013. 23 CMS, Medicare Learning Network Fact Sheet, Long Term Care Hospital Prospective 

Payment System: Interrupted Stay, December 2012, p. 4. Accessed at 

http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads/ltch-intstay.pdf on August 22, 2013. 24 If a beneficiary returns to an LTCH after spending 3 or more days at home, CMS 

considers this to be a readmission rather than an interrupted stay. CMS, Medicare 

Learning Network Fact Sheet, Long Term Care Hospital Prospective Payment System: 

Interrupted Stay, December 2012, p. 4. Accessed at http://www.cms.gov/Outreach-andEducation/Medicare-Learning-Network-MLN/MLNProducts/downloads/ltch-intstay.pdf 

on August 22, 2013. 

25 CMS Manual System, Pub. 100-04 Medicare Claims Processing, Transmittal 1001, 

July 21, 2006. Accessed at http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/Downloads/R1001CP.pdf on August 22, 2013.
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 5 
 

 

interruption and will pay the LTCH for two separate stays.26 CMS also 

makes a separate payment to the intervening facility. See Figure 1 for an 

example of payments for a stay with a greater-than-3-day interruption 

versus payments for a readmission for a common MS-LTC-DRG.27 

Figure 1: Comparison of Total Payments to an LTCH for a Stay With a 

Greater-Than-3-Day Interruption and Payments for a Readmission for 

MS-LTC-DRG 207 

Stay With a Greater-Than-3-Day Interruption Readmission 

Total Medicare payments to LTCH: 

$80,158.22 

Continued LTCH stay 

Length: 20 days 

Payment to LTCH for 

MS-LTC-DRG 207: 

$80,158.22 

Intervening-hospital stay within the 

fixed-day period 

Length: 5 days CMS pays hospital for services 

provided 

LTCH stay 

Length: 30 days No payment to LTCH 

Total Medicare payments to LTCH: 

$160,316.44 

New LTCH stay 

Length: 20 days 

2nd payment to LTCH for 

MS-LTC-DRG 207: 

$80,158.22 

Intervening-hospital stay greater than the 

fixed-day period 

Length: 10 days CMS pays hospital for services 

provided 

LTCH stay 

Length: 30 days 

Payment to LTCH for 

MS-LTC-DRG 207* 

$80,158.22 

*Payments reflect fiscal year (FY) 2011 LTCH Prospective Payment System rates and do not include any potential case-level or 

facility-level adjustments. 

Source: Office of Inspector General (OIG) analysis of interrupted-stay policy and 2011 LTCH Prospective Payment System 

Reimbursement Rates, 2013. 

Additionally, if a beneficiary returns to the LTCH within the fixed-day 

period but has received services from more than one intervening facility, 

26 In this report, unless otherwise stated, the term “readmission” refers specifically to 

direct readmissions or those involving one LTCH and one intervening facility with no 

days between discharge and readmission. 

27 MS-LTC-DRG 207 is for respiratory system diagnosis with ventilator support for 

96+ hours. This was the most common MS-LTC-DRG in 2010 and 2011, accounting for 

11 percent of all LTCH stays during this period. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 6 
 

 

 

 

 

 

 

CMS considers the return to be a readmission, regardless of the total 

length of stay at the intervening facilities.28 

Policies for Co-Located LTCHs 

An LTCH can be freestanding or co-located with another provider (e.g., a 

hospital or SNF). A co-located LTCH is located in the same building as 

another provider or in a separate building on the same campus as another 

provider.29 An LTCH may also have a satellite facility, which operates as 

part of the LTCH but in a separate location.30 A satellite facility can also 

be co-located with another provider. 

Interrupted Stays for Co-Located LTCHs. In 2002, CMS established a 

payment adjustment that applies if the number of discharges and 

readmissions between an LTCH and a co-located provider exceeds 

5 percent of the LTCH’s total Medicare discharges to that provider during 

a cost-reporting period. If an LTCH exceeds this threshold, all 

readmissions from the co-located provider are to be paid for as interrupted 

stays, regardless of the number of days spent away from the LTCH.31 For 

example, if an LTCH discharged 40 patients to a co-located hospital and 

readmitted 10 of those patients during the same cost-reporting period, the 

LTCH exceeded the 5-percent threshold because it readmitted 25 percent 

of the patients discharged to a co-located hospital. Therefore, all 10 of the 

stays will be treated as interrupted stays rather than readmissions, and the 

LTCH will be subject to a payment adjustment and receive only 1 payment 

for each of the 10 stays instead of 2 payments. CMS calculates the 

5-percent readmission threshold separately for (1) all discharges and 

readmissions between co-located LTCHs and hospitals; and (2) all 

discharges and readmissions between co-located LTCHs and inpatient 

rehabilitation facilities, SNFs or swing beds, and/or psychiatric facilities.32 

28 CMS, Medicare Learning Network Fact Sheet, Long Term Care Hospital Prospective 

Payment System: Interrupted Stay, December 2012, p. 4. Accessed at 

http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/downloads/ltch-intstay.pdf on August 22, 2013. 

29 42 CFR § 413.65. “Campus” means the physical area immediately adjacent to the 

provider’s main buildings, other areas and structures that are not strictly contiguous to the 

main buildings but are located within 250 yards of the main buildings, and any other 

areas that the CMS regional office determines (on an individual-case basis) to be part of 

the provider’s campus.
 30 42 CFR § 412.22(h).
 31 67 Fed. Reg. 55954, 56053–56054 (August 30, 2002), codified at 42 CFR § 412.532. 

A similar payment adjustment was established in 1999 specifically for LTCHs that were 

located within a hospital. 67 Fed. Reg. 56005–56007. 

32 42 CFR § 412.532(c)–(d). There is no interrupted-stay policy or fixed-day period for 

psychiatric facilities. However, CMS includes these facilities in the 5-percent 

readmission threshold for co-located LTCHs.
 

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Reporting Requirements for Co-Located LTCHs. A co-located LTCH 

must notify its Medicare Administrative Contractor (MAC) about the 

provider(s) with which it is co-located within 60 days of its first 

cost-reporting period.33, 34 Additionally, an LTCH must report a change in 

co-located status within 60 days of the change. The MAC should notify 

the appropriate CMS regional office of an LTCH’s co-located status.35 

Related OIG Work 

In 2004, OIG found that 19 of 87 “hospitals-within-hospitals”—i.e., 

LTCHs that are co-located specifically with acute-care hospitals— 

exceeded the 5-percent threshold for readmissions from their host 

hospitals at least once during their fiscal years ending in September 2000 

through December 2002.36 Additionally, OIG found that CMS lacked a 

system to detect readmissions over the 5-percent threshold. In its response 

to this 2004 report, CMS stated that it was formulating an effective 

program to enable claims processing contractors to enforce this threshold. 

Further, in 2008, OIG found that discharge patterns for short-stay 

outliers—i.e., stays that end before they reach five-sixths of the average 

length of stay for the patient’s MS-LTC-DRG—in LTCHs raised questions 

as to whether financial incentives, rather than beneficiaries’ condition, 

triggered discharges.37 

In 2009, OIG found that 448 of 986 inpatient rehabilitation facilities did 

not bill correctly for interrupted stays during 2004 and 2005; as a result, 

Medicare made overpayments of $4.2 million.38 These inpatient 

rehabilitation facilities incorrectly billed for interrupted stays as two or 

more stays instead of single stays. 

Finally, in March 2013, OIG issued an early alert memorandum to CMS to 

report the preliminary finding that co-located LTCHs remained 

33 42 CFR § 412.532(i). See also: CMS, Medicare Claims Processing Manual, 

Pub. 100-04, ch. 3, § 150.9.1.4. CMS uses contractors known as MACs and Fiscal 

Intermediaries to process Part A claims. The Medicare Prescription Drug, Improvement, 

and Modernization Act of 2003, P.L. No. 108-173 § 911, required CMS to replace Fiscal 

Intermediaries with MACs. CMS was completing this transition at the time of our 

review. In this report, we refer to both types of contractors as MACs. 

34 A cost-reporting period is an annual period selected by providers for Medicare 

cost-reporting purposes. Cost-reporting periods vary among providers. CMS, Medicare 

Provider Reimbursement Manual, Part 2, ch. 1, § 102. 35 CMS, Medicare Claims Processing Manual, Pub. 100-04, ch. 3, § 150.9.1.4. 36 OIG, Long-term Care Hospitals-within-Hospitals, OEI-01-02-00630, July 2004. 37 OIG, Long Term Care Hospital Short-Stay Outliers, OEI-01-07-00290, March 2008. 38 OIG, Review of Interrupted Stays at Inpatient Rehabilitation Facilities for Calendar 

Years 2004 and 2005, A-01-08-00502, April 2009. 

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unidentified and that potential overpayments could result. 39 Since this 

early alert memorandum was issued, CMS has begun to review the colocated status of the LTCHs identified in this report. Additionally, CMS 

cited the report in its 2014 LTCH Prospective Payment System Final Rule, 

published in August 2013, and urged co-located LTCHs that had not 

fulfilled the reporting requirement to do so immediately.40 

METHODOLOGY 

We analyzed the population of 310,860 claims submitted by LTCHs from 

CMS’ National Claims History Part A Standard Analytical Files for 2010 

and 2011. We also analyzed intervening facility claims from 2010 and 

2011, which included claims submitted by hospitals, inpatient 

rehabilitation facilities, SNFs or swing beds, and psychiatric facilities for 

beneficiaries who had LTCH stays in 2010 and/or 2011. 

We were generally unable to identify 3-day-or-less interruptions using 

Medicare claims data because these types of interruptions are not 

identified on claims, and intervening facilities should not submit claims 

for services provided during these interruptions.41 Therefore, unless 

otherwise specified, the term “interruption” hereinafter refers to a 

greater-than-3-day interruption. 

Identifying Interruptions 

We analyzed claims submitted by LTCHs and intervening facilities from 

2010 and 2011 to identify interruptions. We first identified LTCH claims 

indicating that a leave of absence occurred during the stay.42 We analyzed 

claims from intervening facilities to identify those that had the same 

service dates as the leave of absence from the LTCH stay. If an LTCH 

claim had a corresponding intervening-facility claim with service dates 

that matched the leave of absence, we considered it to be an interruption. 

We determined the number of LTCH stays with interruptions in 2010 and 

2011 and their length. We also determined the number of LTCHs, the 

types of intervening facilities, and the MS-LTC-DRGs associated with 

interruptions. 

39 OIG, Early Alert Memorandum Report: Co-Located Long-Term Care Hospitals 

Remain Unidentified, Resulting in Potential Overpayments, OEI-04-12-00491, 

March 2013. 

40 78 Fed. Reg. 50496, 50771–50772 (August 19, 2013). 41 In some cases, intervening facilities inappropriately submitted claims for 3-day-or-less 

interruptions, enabling us to identify some 3-day-or-less interruptions. OIG analysis of 

2010 and 2011 Part A Standard Analytical Files, 2013. 

42 Span code 74 on a Part A claim indicates a leave of absence. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 9 
 

 

 

Identifying Inappropriate Payments for Interrupted Stays 

We analyzed claims submitted by LTCHs and intervening facilities to 

identify two types of inappropriate payments: 

(1) to LTCHs for readmissions after stays at intervening facilities within 

the fixed-day period (i.e., stays that should have been paid as 

interruptions rather than readmissions) and 

(2) to intervening facilities for services provided during 3-day-or-less 

interruptions (i.e., services that should have been paid for by the LTCH 

under arrangements rather than paid by CMS to the intervening 

facility). 

First, to identify readmissions, we selected three consecutive claims for 

beneficiaries: (1) an LTCH claim, (2) a claim from an intervening facility, 

and (3) a claim from the original LTCH. If the length of the intervening 

facility stay was within the fixed-day period, we estimated inappropriate 

payments by summing the reimbursement amounts of the second LTCH 

claim.43 

Second, using the same claims sequences, we identified 

intervening-facility claims with lengths of stay of 3 days or less.44 We also 

identified intervening-facility claims that overlapped with LTCH stays and 

had lengths of stay of 3 days or less. We considered both types of 

payments to intervening facilities to be inappropriate and summed the 

reimbursement amounts. 

Identifying LTCHs With a High Number of Readmissions 

Immediately After the Fixed-Day Period 

Using the service dates on the hospital claim, we determined the length of 

stay at an intervening hospital for all interruptions and readmissions. We 

limited this analysis to interruptions and readmissions involving hospitals 

because there were few interruptions and readmissions involving inpatient 

rehabilitation facilities, SNFs, or swing beds.45 We compared the number 

of beneficiary returns to each LTCH on the 9th day (i.e., the last day of the 

fixed-day period for hospitals) and 10th day (i.e., immediately after the 

43 The services provided during the second LTCH stay should have been included in the 

claim for the first LTCH stay. Therefore, the total reimbursement for the second LTCH 

stay may not equal the total amount of inappropriate payments after adjusting the claim 

for the first stay to reflect all services. 

44 These stays should have resulted in a single stay with a 3-day-or-less interruption 

rather than three separate stays. Therefore, we considered the payment to the intervening 

facility to be inappropriate, as well as the payment for the second LTCH stay. 

45 In 2010 and 2011, there were 19 interruptions and 3 readmissions involving inpatient 

rehabilitation facilities. There were 118 interruptions and 228 readmissions involving 

SNFs or swing beds. However, there were approximately 9,000 interruptions and 

approximately 5,000 readmissions involving hospitals. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 10 
 

 

 

 

 

 

fixed-day period for hospitals) of a hospital stay and identified LTCHs 

with a high number of readmissions on the 10th day. These readmissions 

resulted in additional LTCH payments. 

We analyzed LTCHs with a high number of readmissions immediately 

after the fixed-day period by State and chain. We identified chains using 

Web sites and information from the National Plan and Provider 

Enumeration System (e.g., legal business name, authorized official, and 

business address). For example, LTCHs that are part of the same chain 

often share a legal business name and/or have the same authorized official 

and business address. 

Identifying LTCHs With a High Number of Readmissions 

Following Multiple Short Stays in Intervening Facilities 

If a beneficiary receives services consecutively from two or more 

intervening facilities and then returns to the same LTCH after 3 days, the 

beneficiary’s return is considered a readmission and results in an 

additional LTCH payment, regardless of the combined lengths of stay at 

the intervening facilities. 

To identify short stays in separate intervening facilities, we identified 

sequences of four claims for beneficiaries with no days in between: (1) an 

LTCH claim, (2) an intervening facility claim, (3) a claim from a different 

intervening facility, (4) a claim from the original LTCH. We also analyzed 

sequences of five claims to identify readmissions occurring after three 

intervening facility claims. We considered stays at intervening facilities to 

be short if the combined length of stay was greater than 3 days, but less 

than or equal to 9 days (i.e., the shortest fixed-day period).46 We identified 

LTCHs with a high number of these readmissions and analyzed them by 

State and chain. We summed the reimbursement amount for the second 

LTCH claim in the sequence to estimate the potential savings to Medicare 

had these stays been paid for as interrupted stays, rather than 

readmissions.47 

46 If the combined length of stay was 3 days or less, this should be considered a 

3-day-or-less interruption, during which beneficiaries may receive services from multiple 

intervening facilities that should not separately bill Medicare. We did not identify any 

payments for short stays with a total length of 3 days or less. 47 The services provided during the second LTCH stay would be included in the claim for 

the first LTCH stay. Therefore, the total reimbursement for the second LTCH stay may 

not equal the total amount of potential savings after adjusting the claim for the first stay 

to reflect all services. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 11 
 

 

 

Determining the Co-Located Status of LTCHs and the Extent to 

Which Co-Located LTCHs Exceeded the 5-Percent 

Readmission Threshold 

We requested information on LTCHs’ co-located status from MACs and 

then independently determined their co-located status to validate MAC 

responses. To determine whether LTCHs were co-located, we obtained 

addresses from the Services Tracking, Analysis, and Reporting System 

(STARS) database for LTCHs; hospitals; inpatient rehabilitation facilities; 

SNFs or swing beds; and psychiatric hospitals that billed Medicare in 

2010 and/or 2011.48 We used LTCHs’ Web sites to obtain addresses of 

their satellite facilities. We then used BatchGeo and Google Maps to 

determine whether an LTCH’s campus was less than 250 yards away from 

another provider’s campus pursuant to 42 CFR § 413.65.49, 50 

To determine the number of co-located LTCHs that exceeded the 5-percent 

readmission threshold, we first calculated the number of discharges an 

LTCH made to each co-located provider during its cost-reporting period. 

We then calculated the number of readmissions between an LTCH and 

each of its co-located providers and determined whether this number was 

greater than 5 percent of the total discharges to that provider. 

Limitations 

We were unable to identify the addresses of satellite facilities for all 

hospitals, independent rehabilitation facilities, and SNFs. Therefore, we 

may have underestimated the number of co-located LTCHs and/or the 

number of providers with which they are co-located. Further, our findings 

are based on an analysis of claims data, rather than medical 

documentation; we did not determine whether the lengths of stay at 

intervening facilities were appropriate. 

Standards 

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency. 

48 Five LTCHs that billed Medicare in 2010 and/or 2011were not in the STARS database. 

We obtained the address of these LTCHs using the National Plan & Provider 

Enumeration System’s online National Provider Identifier Registry. 

49 BatchGeo is a free online mapping tool that generates maps from location data saved in 

spreadsheets. 

50 Google Maps is a free online mapping tool that produces street maps and satellite 

images of requested locations and can measure distance between selected geographic 

points. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 12 
 

 

 

FINDINGS 

Nearly all interruptions and readmissions occurred 

between LTCHs and hospitals 

Returning to an LTCH after an intervening-facility stay results in an 

interrupted stay or a readmission, depending on the length of stay at the 

intervening facility. 

	 Of the 449 LTCHs that billed Medicare in 2010 or 2011, 422 had at 

least 1 interrupted stay. In 2010 and 2011, 8,823 interruptions 

occurred during 8,350 interrupted stays, representing 3 percent of all 

LTCH stays. The number of interruptions for each LTCH ranged 

from 1 to 209. 

	 In 2010 and 2011, 427 LTCHs had at least 1 readmission. There 

were 5,659 readmissions in 2010 and 2011, representing 2 percent 

of all LTCH stays. The number of readmissions for each LTCH 

ranged from 1 to 95. 

For nearly all interruptions and readmissions in 2010 and 2011, the 

intervening facility was a hospital. Table 1 shows the number of 

interruptions and readmissions by type of intervening facility for 2010 and 

2011. 

Table 1: Interruptions and Readmissions by Type of Intervening Facility, 

2010–2011 

Type of Intervening Facility Interruptions Readmissions 

Hospital 8,686 5,428 

Inpatient Rehabilitation Facility 19 3 

SNF or Swing Bed 118 228 

 Total 8,823 5,659 

Source: OIG analysis of 2010 and 2011 Part A Standard Analytical Files, 2013. 

Medicare inappropriately paid $4.3 million to LTCHs 

and intervening facilities for interrupted stays 

From 2010 to 2011, Medicare inappropriately paid $4.3 million for 

interrupted stays in LTCHs. The inappropriate payments were 

(1) to LTCHs for readmissions after stays at intervening facilities within 

the fixed-day period (i.e., stays that should have been paid for as 

interruptions rather than readmissions) and 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 13 
 

 

(2) to intervening facilities for services provided during 3-day-or-less 

interruptions (i.e., services that should have been paid for by the LTCH 

under arrangements rather than paid directly by Medicare to the 

intervening facilities). 

Medicare inappropriately paid $3.8 million to LTCHs for 

readmissions after stays at intervening facilities within the 

fixed-day period 

If a beneficiary receiving services at an intervening facility returns to the 

same LTCH within the fixed-day period, then CMS considers it an 

interrupted stay rather than a readmission and should pay the LTCH for 

one stay rather than two stays. However, Medicare inappropriately paid 

an estimated $3.8 million to 87 LTCHs in 2010 and 2011 because it paid 

LTCHs for a second stay, or readmission, after a beneficiary returned from 

an intervening facility within the fixed-day period.51 This represents less 

than one-tenth of a percent of all Medicare payments to LTCHs. Most 

(96 of 132) of these inappropriately paid readmissions followed 

intervening SNF stays. 

Medicare inappropriately paid approximately $523,000 to 

intervening facilities for services provided during interruptions 

of 3 days or less 

Intervening facilities should not submit claims to Medicare for services 

provided during 3-day-or-less interruptions, as these facilities are paid for 

the services by the LTCH under arrangements. However, Medicare 

inappropriately paid $523,079 to 50 intervening facilities for services 

provided during 3-day-or-less interruptions in 2010 and 2011. For nearly 

all (58 of 59) of these 3-day-or-less interruptions for which Medicare 

inappropriately paid, the intervening facility was a hospital.52 

Financial incentives in the interrupted-stay policy may

influence the readmission decisions of some LTCHs 

Returning to the same LTCH after an intervening-facility stay results in an 

interrupted stay or a readmission, depending on the length of stay at the 

intervening facility. Medicare pays LTCHs for a new stay following a 

readmission to the LTCH after the fixed-day period. Therefore, 

readmitting beneficiaries immediately after the fixed-day period, rather 

than during the fixed-day period, results in additional Medicare payments 

to the LTCHs. 

51 This figure is an estimate because CMS must adjust the claim for the first stay to 

reflect services provided during both LTCH stays. 

52 For the remaining inappropriate payment, the intervening facility was an independent 

rehabilitation facility.
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 14 
 

 

 

Fifty-nine LTCHs had a high number of readmissions from hospitals 

immediately after the fixed-day period, allowing them to receive 

additional payments more often than other LTCHs. This raises concerns 

about whether financial incentives, rather than beneficiaries’ conditions, 

influenced readmission decisions of some LTCHs. In 2010 and 2011, 

Medicare paid $12 million for readmissions immediately after the fixedday period in these 59 LTCHs.53 

Additionally, CMS considers it a readmission, which results in an 

additional LTCH payment, if beneficiaries receive services at more than 

one intervening facility, regardless of whether the combined length of stay 

at the intervening facilities is within the fixed-day period. In 2010 and 

2011, Medicare paid LTCHs $8.2 million for 259 readmissions that 

occurred after 2 or more short stays at intervening facilities. 

Fifty-nine LTCHs had a high number of readmissions 

immediately after the fixed-day period; as a result, additional 

LTCH payments were made 

In 2010 and 2011, beneficiaries left LTCHs to receive services from 

intervening hospitals and returned to the same LTCHs approximately 

14,000 times. Of these returns, 5,428 occurred after the fixed-day period 

for hospitals and resulted in readmissions, and second payments, for 

424 LTCHs. Most (264 of 424) LTCHs had the same number or fewer 

returns after a 10-day hospital stay (i.e., immediately after the fixed-day 

period) than after a 9-day hospital stay (i.e., the last day of the fixed-day 

period). Sixty-nine LTCHs had 1 more, and 32 LTCHs had 2 more returns 

immediately after the fixed-day period than on the last day of the 

fixed-day period. We considered the remaining 59 LTCHs with at least 

3 more returns immediately after the fixed-day period to have a high 

number of these readmissions. See Figure 3 for a comparison of the 

percentage of intervening hospital stays ending during and after the 

fixed-day period for these 59 LTCHs and all other LTCHs with at least 

1 readmission. 

53 Medicare paid $31.2 million to the 365 LTCHs with 2 or fewer returns immediately 

after the fixed-day period, resulting in a total of $43.2 million for all returns immediately 

after the fixed-day period. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 15 
 

Figure 3: Percentage of Interruptions and Readmissions by Length of 

Intervening Hospital Stay, 2010 and 2011 

0% 

2% 

4% 

6% 

8% 

10% 

12% 

14% 

16% 

4 5 6 7 8 9 10 11 12 13 14 15 

Percentage of Interruptions and Readmissions 

Length of Intervening-Hospital Stay (Days) 

LTCHs With Three or 

More Readmissions 

Immediately After the 

Fixed-Day Period 

LTCHs With Two or 

Fewer Readmissions 

Immediately After the 

Fixed-Day Period 

Interruptions Readmissions* 

Fixed-Day Period Ends 

*Additionally, 17 percent (556) and 14 percent (1,529) of returns occurred after intervening hospital stays lasting
 

16 days or longer for LTCHs with a high number of readmissions immediately after the fixed-day period and all 

remaining LTCHs, respectively. 

Source: OIG analysis of 2010 and 2011 Part A Standard Analytical Files, 2013. 

For the 59 LTCHs with a high number of readmissions immediately after 

the fixed-day period, 12 percent (380 of 3,222) of all returns took place 

immediately after the fixed-day period compared to only 5 percent 

(578 of 10,817) for the remaining 365 LTCHs. Medicare paid $12 million 

in 2010 and 2011 for readmissions occurring immediately after the 

fixed-day period in the 59 LTCHs with a high number of these 

readmissions. Therefore, only 14 percent of LTCHs with at least 

1 readmission (59 of 424 LTCHs) accounted for approximately 38 percent 

of all Medicare payments for readmissions occurring immediately after the 

fixed-day period. While the payments for these readmissions may be 

appropriate, they raise concerns about whether financial incentives in the 

interrupted-stay policy drive readmission decisions, rather than 

beneficiaries’ conditions. Retaining beneficiaries in intervening facilities 

until immediately after the fixed-day period results in an additional 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 16 
 

 

 

payment to LTCHs, which could essentially double an LTCH’s overall 

Medicare reimbursement. 

Forty-five of the 59 LTCHs were part of a chain, and 23 of these LTCHs 

were part of the same chain. The 23 LTCHs in this chain accounted for 

38 percent of the 380 readmissions immediately after the fixed-day 

period.54 Further, Medicare paid $4.9 million to these 23 LTCHs for 

readmissions immediately after the fixed-day period, or 41 percent of the 

$12 million paid to LTCHs with a high number of readmissions 

immediately after the fixed-day period. 

Additionally, the number of returns to these 59 LTCHs increased by over 

200 percent immediately after the fixed-day period. For 50 of these 

59 LTCHs, the number of returns doubled immediately after the fixed-day 

period. Three LTCHs had more than 10 more returns immediately after 

the fixed-day period than on the last day of the fixed-day period. These 

59 LTCHs were located in 24 States, with the highest concentrations in 

Texas, California, Ohio, Florida, and Massachusetts. See Appendix C for 

the number of LTCHs with a high number of readmissions immediately 

after the fixed-day period, by State. 

Twenty-four LTCHs had a high number of readmissions 

following multiple short stays at intervening facilities; as a 

result, additional LTCH payments were made 

In 2010 and 2011, 259 readmissions occurred after multiple stays at 

intervening facilities with combined lengths of stay of 9 days or less (i.e., 

the shortest fixed-day period); as a result additional LTCH payments were 

made.55 For 86 percent of these readmissions, the beneficiary was 

discharged to a SNF and then to a hospital, or two separate hospitals, 

before returning to the LTCH. Medicare paid $8.2 million to 144 LTCHs 

for these readmissions. 

Of the 144 LTCHs with at least 1 of these readmissions, most 

(120 LTCHs) had 2 or less. However, there were 24 LTCHs with 3 or 

more of these readmissions in 2010 and 2011. We considered these 

LTCHs to have a high number of readmissions following multiple short 

stays at intervening facilities. Medicare paid these 24 LTCHs $3.1 million 

for readmissions following multiple short stays at intervening facilities. 

While the payments for these readmissions may be appropriate, they raise 

questions about whether financial incentives in the interrupted-stay policy 

54 This chain represented 29 percent of all LTCH readmissions from hospitals from 2010 

to 2011. 

55 Of these 259 readmissions, 257 occurred after 2 short stays at intervening facilities and
 

2 occurred after 3 short stays at intervening facilities.
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 17 
 

 

 

 

drive discharge and readmission decisions for intervening facilities and 

LTCHs, rather than beneficiaries’ medical conditions. Eight of these 

24 LTCHs also had a high number of readmissions immediately after the 

fixed-day period and 12 were part of the same chain. These LTCHs were 

located in nine States; the highest concentrations were in California, Ohio, 

and Texas.56 

Approximately one-third of co-located LTCHs 

exceeded the 5-percent readmission threshold, but 

CMS lacks the information to apply a payment 

adjustment 

Of the 449 LTCHs that billed Medicare in 2010 and 2011, we identified 

329 that were co-located with at least 1 other provider.57 The number of 

providers with which LTCHs were co-located ranged from one to nine. Of 

the 329 co-located LTCHs, 88 (27 percent) reported their co-located status 

to MACs. Further, 35 percent of co-located LTCHs exceeded the 5-percent 

readmission threshold. Without complete information on LTCHs’ 

co-located status, CMS cannot enforce the 5-percent readmission threshold 

and apply payment adjustments to these LTCHs. 

Co-located LTCHs had a total of 537 readmissions that should 

have been treated as interruptions 

CMS is supposed to apply a payment adjustment to decrease 

reimbursements for co-located LTCHs that exceed the 5-percent 

readmission threshold. Thirty-five percent (116 of 329) of co-located 

LTCHs exceeded the 5-percent threshold for readmissions from co-located 

hospitals during a cost reporting period in 2010 and 2011.58 These 

116 LTCHs had a total of 537 readmissions from co-located providers that 

should have been treated as interruptions; only 1 payment should have been 

made to the LTCH rather than 2. Approximately 31 percent (36 of 116) of 

the LTCHs that exceeded this threshold had reported their co-located status 

56 Florida, Illinois, Louisiana, Massachusetts, New Jersey, and Nevada contained two or 

fewer LTCHs with a high number of readmissions following multiple short stays at 

intervening facilities. 

57 In March 2013, OIG issued an early alert memorandum to CMS to report the 

preliminary finding that co-located LTCHs remained unidentified and that overpayments 

could result. For the early alert memorandum, OIG determined the co-located status of 

211 LTCHs. This finding updates the information in the early alert based on an analysis 

of all 449 LTCHs. See OIG, Early Alert Memorandum Report: Co-Located Long Term 

Care Hospitals Remain Unidentified Resulting in Potential Overpayments, 

OEI-04-12-00491, March 2013. 

58 An additional 55 co-located LTCHs exceeded the 5-percent threshold by readmitting 

only 1 beneficiary discharged to a hospital. We did not include these LTCHs in this total 

because there were so few readmissions from the hospital with which the LTCH was 

co-located. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 18 
 

 

 

 

to a MAC. Eighteen LTCHs readmitted at least 40 percent, or 8 times the 

threshold, of the beneficiaries discharged to a co-located hospital. Four of 

these eighteen LTCHs were located in Texas. Further, three LTCHs 

exceeded the threshold with three different co-located hospitals, and 

five LTCHs exceeded the threshold with two different co-located hospitals. 

No co-located LTCHs exceeded the threshold for readmissions from colocated SNFs, inpatient rehabilitation facilities, swing beds, and psychiatric 

hospitals. 

Eighty-two percent of the co-located LTCHs that exceeded the 5-percent 

threshold were part of a chain.59 One chain represented 33 percent 

(38 of 116) of the co-located LTCHs that exceeded the 5-percent threshold 

and 30 percent of the 537 readmissions that should have been treated as 

interruptions.60 

Additionally, although the threshold does not apply to freestanding 

LTCHs, 195 freestanding LTCHs readmitted more than 5 percent of 

beneficiaries discharged to a single hospital.61 Eighty-one percent of these 

LTCHs were part of a chain. Fifty-six freestanding LTCHs readmitted at 

least 50 percent, or 10 times the threshold, of the beneficiaries discharged 

to a single hospital. Two freestanding LTCHs exceeded the 5-percent 

threshold with a SNF. 

CMS lacked information to identify co-located LTCHs that 

exceeded the 5-percent readmission threshold; as a result, 

overpayments were made 

LTCHs are required to notify MACs of their co-located status. MACs are 

then required to report this information to CMS regional offices. However, 

in 7 of the 14 claims-processing jurisdictions, no co-located LTCHs notified 

their MAC of their co-located status. We identified 96 co-located LTCHs in 

these 7 jurisdictions. Additionally, two of these seven MACs stated that 

they do not monitor the co-located status of LTCHs in their jurisdictions. 

See Appendix D for the number and percentage of co-located LTCHs in 

each MAC jurisdiction in 2010 and 2011. 

For 11 of the 14 jurisdictions, less than half of the co-located LTCHs that 

we identified reported their co-located status. Additionally, some LTCHs 

that reported their co-located status did not follow reporting requirements. 

59 Seventy-four percent of all co-located LTCHs were part of a chain. 

60 This chain represented 15 percent of all LTCH discharges during a cost-reporting 

period from 2010 to 2011. 

61 An additional 235 freestanding LTCHs readmitted more than 5 percent of beneficiaries 

discharged to a single hospital by readmitting only 1 beneficiary discharged to that 

hospital. We did not include these LTCHs in this total because there were so few 

readmissions from the hospital. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 19 
 

Specifically, 1 hospital chain provided the co-located status of 79 LTCHs to 

1 MAC, although none of these LTCHs were in that MAC’s jurisdiction. 

We were unable to determine whether the appropriate payment adjustments 

have been or will be made for the LTCHs that exceeded the 5-percent 

readmission threshold in 2010 and 2011. According to CMS, the 

adjustments would be made during the cost-report settlement process, which 

had not been completed at the time of this review. However, CMS did not 

know the co-located status of most LTCHs. Further, CMS has not 

instructed MACs or CMS regional offices to identify co-located LTCHs that 

exceed the 5-percent readmission threshold and has not created system edits 

to identify these LTCHs since the threshold was established in 2002. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 20 
 

CONCLUSION AND RECOMMENDATIONS 

Medicare paid $10.3 billion to 449 LTCHs for services billed on behalf of 

approximately 254,000 beneficiaries in 2010 and 2011. The number of 

LTCHs increased dramatically prior to a 2007 moratorium on their growth. 

This moratorium ended in 2012. The LTCH interrupted-stay policy is 

intended to save Medicare money by treating the LTCH stays before and 

after an interruption as a single stay, rather than paying LTCHs for two 

separate stays. However, our evaluation identifies several vulnerabilities in 

the LTCH interrupted-stay policy, including inappropriate payments, 

financial incentives to delay readmissions, and potential overpayments to 

co-located LTCHs. 

Medicare inappropriately paid $4.3 million to LTCHs and intervening 

facilities for interrupted stays. Additionally, financial incentives created by 

the interrupted stay payment policy may influence the readmission 

decisions of some LTCHs. For example, LTCHs can increase their 

reimbursement if beneficiaries stay at an intervening facility longer than the 

fixed-day period because this results in a readmission and an additional 

payment for the new LTCH stay. Specifically, 59 LTCHs had a high 

number of readmissions immediately after the fixed-day period. Medicare 

paid $12 million for these readmissions. LTCHs also receive an additional 

payment for a new stay if beneficiaries receive services from multiple 

intervening facilities before returning to the LTCH. Twenty-four LTCHs 

had a high number of readmissions following multiple short stays at 

intervening facilities. Medicare paid $3.1 million for these readmissions. 

A high number of either of these types of readmissions raises questions as to 

whether financial incentives—rather than beneficiaries’ medical 

conditions—influenced readmission decisions. 

Finally, CMS does not have the information needed to apply payment 

adjustments to the one-third of co-located LTCHs that exceeded the 

5-percent readmission threshold; as a result, overpayments were made. 

CMS has not developed a process to identify co-located LTCHs that exceed 

the 5-percent readmission threshold since this threshold was established in 

2002. 

We recommend that CMS: 

Review existing safeguards to determine whether 

additional action is needed to prevent future 

inappropriate payments for interrupted stays 

CMS should determine why its existing safeguards did not prevent all 

inappropriate payments to LTCHs and intervening facilities for interrupted 

stays. CMS inappropriately paid a total of $4.3 million to (1) LTCHs for 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 21 
 

readmissions after stays at intervening facilities within the fixed-day period 

and (2) intervening facilities for services provided during interruptions of 

3 days or less. CMS should address any issues it identifies to prevent future 

inappropriate Medicare payments for interrupted stays. 

Conduct additional analysis to determine the extent to 

which financial incentives influence LTCH readmission 

decisions 

CMS should conduct additional analysis of LTCH readmissions to 

determine the extent to which financial incentives, rather than beneficiaries’ 

conditions, influence LTCH readmission decisions. If it determines that this 

is an issue, CMS should consider ways to decrease the financial incentives 

created by the interrupted-stay policy. For example, CMS could consider 

imposing a readmission threshold on all LTCHs. If an LTCH exceeds the 

threshold, CMS could treat the readmissions as interruptions, which would 

decrease the financial incentive for readmissions. CMS could also consider 

expanding the interrupted-stay policy to include multiple short stays at 

different intervening facilities. 

Develop a system to enforce the 5-percent 

readmission threshold 

OIG continues to recommend that CMS develop a system to enforce the 

5-percent readmission threshold. MACs should consistently collect and 

store information on the co-located status of LTCHs and immediately share 

it with CMS regional offices. CMS or MACs could survey LTCHs on a 

recurring basis to identify co-located LTCHs and changes in co-located 

status. CMS should also continue to educate LTCHs on the requirement to 

notify MACs of their co-located status. This education could help ensure 

that LTCHs report this information to the appropriate MAC. CMS should 

then use this information to determine which LTCHs exceeded the 5-percent 

readmission threshold and recover overpayments to these LTCHs. 

Take appropriate action regarding LTCHs with a high 

number of readmissions immediately after the 

fixed-day period and LTCHs with a high number of 

readmissions following multiple short stays at 

intervening facilities 

In a separate memorandum, we will refer to CMS for appropriate action 

(1) the LTCHs with a high number of readmissions immediately after the 

fixed-day period, (2) the LTCHs with a high number of readmissions 

following multiple short stays at intervening facilities, and (3) the 

intervening facilities associated with these readmissions. Appropriate action 

may include determining whether all days at the intervening facilities and 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 22 
 

readmissions to these LTCHs were appropriate, by conducting medical 

record reviews and/or site visits and/or implementing prepayment reviews. 

If fraudulent or abusive activity is discovered, CMS should refer the LTCHs 

and/or intervening facilities to law enforcement for investigation. Further, 

CMS should monitor LTCHs with a high number of these readmissions and 

ensure that they do not use these methods to inappropriately receive 

additional payments. 

Take appropriate action on inappropriate payments for 

interruptions and overpayments to co-located LTCHs 

that exceeded the 5-percent readmission threshold 

In the aforementioned memorandum, we will also refer to CMS the claims 

associated with inappropriate payments to LTCHs and intervening facilities. 

CMS should review and recover these inappropriate payments, as 

appropriate. We will also refer to CMS the co-located LTCHs that exceeded 

the 5-percent readmission threshold and the claims associated with 

readmissions that should have been treated as interrupted stays. CMS 

should identify and recover overpayments to these LTCHs, as appropriate. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 23 
 

 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

In its comments on our draft report, CMS concurred—contingent on 

receiving more information from OIG—with two of our recommendations 

and nonconcurred with three recommendations. Noting that recently 

enacted legislation established a new LTCH Prospective Payment System 

payment structure beginning in FY 2016, CMS stated that it is examining 

whether the 5-percent readmission threshold will continue to be necessary 

under this new system. 

In several places in its comments, CMS stated that it needs to review OIG 

data before concurring, or fully concurring, with our recommendations. 

OIG’s Office of Evaluation and Inspections does not provide detailed 

evaluation data and analyses to agencies prior to the finalization of a report, 

and we do not believe that the decision to concur or noncur with our 

recommendations requires a full review of these data and analyses. After 

the release of the final report, OIG will provide CMS with all appropriate 

data and analyses to support CMS’s efforts to address the vulnerabilities 

identified by our evaluation. 

With regard to our first recommendation, CMS concurred contingent on 

OIG’s providing information that indicates that existing program 

safeguards are not preventing inappropriate payments. CMS stated that it 

would need to review OIG’s data to determine whether it agrees that 

inappropriate payments were made. Our analyses indicate that 

inappropriate payments did occur. After issuing the final report, we will 

provide the appropriate information in a separate memorandum. We 

encourage CMS to review this information and the agency’s existing 

safeguards to determine whether additional action is needed to prevent 

future inappropriate payments for interrupted stays. 

With regard to our second recommendation, CMS stated that it 

nonconcurred at this time. CMS agreed that LTCH prospective payment 

system policies should not provide incentives for LTCH readmission 

decisions to be based on financial benefit. However, CMS stated that it 

cannot agree that additional analyses are warranted until OIG provides it 

with information to enable additional financial review. CMS stated that it 

would need to investigate ownership and/or control relationships between 

referring hospitals and the LTCHs in question and evaluate whether there 

is a pattern of behavior over several years. CMS also stated that it would 

need further information from OIG suggesting that Medicare payment 

policy is influencing LTCH readmission decisions. We will provide CMS 

with ownership information for LTCHs as well as data and analyses 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 24 
 

concerning readmissions between LTCHs and hospitals for the 2 years 

included in this evaluation. We will not conduct or provide any additional 

analyses at this time. We continue to recommend that CMS conduct 

additional analyses to determine the extent to which financial incentives 

influence readmission decisions. 

With regard to our third recommendation, CMS nonconcurred and stated 

that it is examining whether the 5-percent readmission threshold will 

continue to be necessary under the new LTCH payment system, which 

will begin in FY 2016. OIG reiterates that CMS should enforce the 

current policy until the new prospective payment policy is in effect. Not 

doing so would prevent CMS from collecting any overpayments 

associated with the current policy during the period—more than a year— 

before the new policy takes effect, in addition to any overpayments that it 

has failed to collect since the current policy was implemented in 2003. 

Further, OIG believes that CMS currently does not have the information 

necessary (e.g., number of co-located LTCHs, identity of co-located 

LTCHs and host facilities, number of discharges to host facilities) to 

determine whether the 5-percent threshold should remain in effect under 

the new payment system. We will refer to CMS the information that we 

collected regarding co-located LTCHs and host facilities, and we 

encourage the agency to use this information when making this 

determination. 

With regard to our fourth recommendation, CMS stated that it 

nonconcurred at this time. CMS said that it cannot determine what, if any, 

appropriate actions are necessary with regard to LTCHs with a high 

number of readmissions immediately after the fixed-day day period or 

following multiple short intervening-facility stays because neither 

necessarily indicate improper practice or inappropriate payment. Our 

report states that payment for these readmissions may be appropriate; 

however, having a high number of either type of readmission raises 

questions as to whether financial incentives—rather than beneficiaries’ 

medical conditions—drove readmission decisions. We will refer to CMS 

the LTCHs, intervening facilities, and claims associated with these 

readmissions to determine the most appropriate action for the LTCHs that 

we identified. 

With regard to our fifth recommendation, CMS concurred on the condition 

that it can validate OIG’s assertion that hospitals were overpaid because 

CMS did not apply the 5-percent readmission threshold. CMS requests 

that OIG provide specific information for each of the identified claims, 

including the overpayment amount. We will provide specific claims 

information, but we are unable to provide an overpayment amount for 

these claims. The 5-percent readmission threshold policy requires that 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 25 
 

certain claims be adjusted after an LTCH exceeds the threshold to reflect 

an interrupted stay rather than a separate readmission. This adjustment 

could trigger other payment adjustments (e.g., a high-cost outlier payment 

or the reversal of a short-stay outlier payment), and OIG cannot calculate 

the exact overpayment amounts in these cases. Further, CMS was unable 

to provide its methodology for calculating these overpayments, suggesting 

that it has not made these calculations since the current prospective 

payment policy was implemented in 2003 and thus has missed the 

opportunity to collect 7 years of potential overpayments. We encourage 

CMS to use the information that we refer to it to calculate and collect 

overpayments made to LTCHs that exceeded the 5-percent readmission 

threshold. 

We support CMS’s efforts to address these issues and encourage it to 

continue making progress in these areas. For the full text of CMS’s 

comments, see Appendix E. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 26 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX A 

 Number of LTCHs by State, 2010 and 2011 

State 

Number of 

LTCHs* 

Percentage of 

LTCHs 

Texas 82 18% 

Louisiana 39 9% 

Ohio 25 6% 

Pennsylvania 23 5% 

California 20 4% 

Florida 20 4% 

Michigan 19 4% 

Georgia 15 3% 

Massachusetts 15 3% 

Indiana 14 3% 

Oklahoma 14 3% 

Missouri 12 3% 

Mississippi 10 2% 

North Carolina 9 2% 

Tennessee 9 2% 

Alabama 8 2% 

Arkansas 8 2% 

Arizona 8 2% 

Colorado 8 2% 

Illinois 8 2% 

New Jersey 8 2% 

Kentucky 6 1% 

Nevada 6 1% 

South Carolina 6 1% 

Virginia 6 1% 

Kansas 5 1% 

Wisconsin 5 1% 

Maryland 4 1% 

New York 4 1% 

Connecticut 3 1% 

Idaho 3 1% 

New Mexico 3 1% 

Utah 3 1%

 Washington, 

D.C. 2 <1% 

Continued on next page 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 27 
 

 

Appendix A (Continued) 

State 

Number of 

LTCHs 

Percentage of 

LTCHs 

Iowa 2 <1% 

Minnesota 2 <1% 

North Dakota 2 <1% 

Nebraska 2 <1% 

Washington 2 <1% 

West Virginia 2 <1% 

Alaska 1 <1% 

Delaware 1 <1% 

Hawaii 1 <1% 

Montana 1 <1% 

Oregon 1 <1% 

Rhode Island 1 <1% 

South Dakota 1 <1% 

 Total 449 100% 

*This column indicates the number of LTCHs that billed Medicare in both 

2010 and 2011. 

Source: OIG analysis of 2010 and 2011 Part A Inpatient Standard
 

Analytical Files, 2013. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 28 
 

 

 

APPENDIX B 

Example of Total Payments to an LTCH for 

a Stay With a 3-Day-or-Less Interruption for 

MS-LTC-DRG 207 

Total payments to LTCH: $80,158.22 

Continued LTCH stay 

Length: 20 days 

Payment to LTCH for 

MS-LTC-DRG 207: 

$80,158.22 

Stay of less than 3 days at an 

intervening facility 

Length: 2 days 

LTCH pays intervening facility for

services provided under 

arrangements 

LTCH stay 

Length: 30 days No payment to LTCH 

*Payments reflect FY 2011 LTCH Prospective Payment System rates and do not include any potential case-level 

or facility-level adjustments. 

Source: OIG analysis of interrupted-stay policy and 2011 LTCH Prospective Payment System Reimbursement
 

Rates, 2013. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 29 
 

 

APPENDIX C 

Number of LTCHs With a High Number of Readmissions Immediately After 

the Fixed-Day Period by State, 2010 and 2011 

State 

Number of LTCHs with a 

High Number of 

Readmissions Immediately 

After the Fixed-Day Period 

Texas 10 

California 6 

Ohio 6 

Florida 4 

Massachusetts 4 

Illinois 3 

Louisiana 3 

Oklahoma 3 

Michigan 2 

North Carolina 2 

Tennessee 2 

Virginia 2 

Alabama 1 

Colorado 1 

Kentucky 1 

Mississippi 1 

Montana 1 

Nebraska 1 

Nevada 1 

New Jersey 1 

New Mexico 1 

New York 1 

Utah 1 

Wisconsin 1 

 Total 59 

Source: OIG analysis of 2010 and 2011 Part A Inpatient 

Standard Analytical Files, 2013. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 30 
 

 

 

APPENDIX D 

Number and Percentage of Co-Located LTCHs by MAC Jurisdiction, 2010 

and 2011 

MAC 

Number LTCHs 

That Reported 

Being Co-Located 

Number of 

Co-Located 

LTCHs 

Number of 

LTCHs 

Percentage of 

Co-Located 

LTCHs That 

Reported 

Being 

Co-Located 

Percentage of 

LTCHs That 

Are 

Co-Located 

A 65* 105 121 62% 87% 

B 10 18 20 56% 90% 

C 1 2 8 50% 25% 

D 3 10 11 30% 91% 

E 5 17 19 29% 89% 

F 2 9 14 22% 64% 

G 2 72 109 3% 65% 

H 0 3 7 0% 43% 

I 0 4 6 0% 67% 

J 0 4 7 0% 57% 

K 0 4 11 0% 36% 

L 0 6 12 0% 50% 

M 0 8 14 0% 57% 

N 0 67 90 0% 74%

 Total 88** 329 449 27% 73% 

*The 65 LTCHs that reported their co-located status in this jurisdiction did so to a different MAC. 

**MACs reported that 99 LTCHs had notified them of being co-located. Of these 99, 88 LTCHs were co-located and submitted
 

claims to Medicare in 2010 and/or 2011. 

Source: OIG analysis of MAC responses, co-location information, and 2010 and 2011 Part A Inpatient Standard Analytical 

Files, 2013.
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 31 
APPENDIX E 

Agency Comments 

r<iO"'<'l:s ll DEPARTMENT OF HEALlli & HUMAN SERVJCES Centers for Medicare & Medicaid Services

Administrator 

Washington, DC 20201 

DATE: 	 MAR Z 8 Z014 

TO: 	 Daniel R. Levinson 


l.llspecte>r General 


FROM: 	 Mar{Tyn U!vemrer 


Admltustrator 


SUBJECT: 	 Office of Inspector General (OIG) Draft Report: Vulnerabilities in 

Medicare's Interrupted Stay Policy (OEI-04-12-00490) 

The Centers for Medicare & Medicaid Services (CMS) thanks OIG for the opportunity to review 

and comment on the above subject draft report. OIG's objectives for this study were to--(1) 

describe billing of interrupted stays and readmissions in long-term care hospitals (LTCHs); (2) 

determine the extent to which Medicare made inappropriate payments for interrupted stays in 

LTCHs; (3) determine the extent to which LTCHs readmitted beneficiaries immediately after the 

fixed-day period or after multiple short intervening facility stays, resulting in an additional 

L TCH payment; and ( 4) determine the extent to which co-located L TCHs reported their colocated status and exceeded the 5-percent readmission threshold. 

The OIG analyzed data from Long Term Care Hospitals (LTCHs) and intervening facility claims 

in 2010 and 2011 to identify inappropriate payments for interrupted stays in LTCHs. 

Additionally, OIG identified LTCHs with a high number of readmissions immediately after the 

fixed-day period and after multiple short intervening facility stays. OIG also identified colocated LTCHs billing in 2010 and 2011 and determined whether they reported their status and 

whether they exceeded the 5-percent readmission threshold. OIG concluded that CMS has 

vulnerabilities in the LTCH interrupted stay policy, including inappropriate payments, financial 

incentives to delay readmissions, and potential overpayments to co-located LTCHs. OIG 

concluded that in 2010 and 2011, Medicare inappropriately paid $4.3 million to LTCHs and 

intervening facilities for interrupted stays. Additionally, 59 LTCHs had a high number of 

readmissions immediately after the fixed-day period and 24 L TCHs had a high number of 

readmissions following multiple short intervening facility stays. Medicare paid $12 million and 

$3.1 million, respectively, for these readmissions. While OIG indicates that these readmissions 

may be appropriate, they raised concerns about whether financial incentives, rather than 

beneficiaries' medical conditions, may have influenced readmission decisions of some L TCHs. 

They also found that CMS did not know the co-located status of most LTCHs, preventing it from 

applying a payment adjustment to the 35 percent of co-located LTCHs that exceeded the 

5-percent readmissions threshold. 

We note that recently enacted legislation establishes a new LTCH Prospective Payment System 

(PPS) payment structure beginning in fiscal year (FY) 2016 that specifies clinical criteria for 

Vulnerabilities in Medicare's Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 32 
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 33 
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 34 
 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 35 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Dwayne Grant, Regional 

Inspector General for Evaluation and Inspections in the Atlanta regional 

office, and Jaime Durley, Deputy Regional Inspector General. 

Sarah Langford served as the lead analyst. Other Office of Evaluation and 

Inspections staff from the Atlanta regional office who conducted the study 

include Rachel Bessette. Central office staff who provided support 

include Althea Hosein, Scott Manley, and Christine Moritz. 

Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals (OEI-04-12-00490) 36 
Office of Inspector General

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.