Medicare: Payments for Certain Long-Term Care Hospitals that Specialize in Spinal Cord Treatment
Released: 2018-12-13T00:00:00

Letter

Background

Spinal Cord Injury

Spinal cord injuries are complex, lifelong injuries that typically result from acute traumatic damage to the spinal cord or nerves within the spinal column. In spinal cord injury patients, certain nervous system functions may be impaired temporarily or permanently lost, depending on the level and severity of the patient’s injury. In addition to lower level nervous system functioning, spinal cord injury patients may develop secondary medical complications that can further decrease functional independence and quality of life, including, but not limited to:

Autonomic dysreflexia: a condition that may result in life threatening hypertension—high blood pressure—due to impaired nervous system response, below the level of spinal cord injury.

Depression: a medical mood disorder—commonly affecting about one in five spinal cord injury patients—that can cause physical and psychological symptoms (including changes in sleep and appetite, and thoughts of death or suicide).

Impaired bowel and bladder functioning: potential inability to move waste through the colon and control, stop or release, urine—which can lead to other life-threatening illnesses (such as autonomic dysreflexia) and/or infections.

Pressure ulcers: a common complication affecting up to 80 percent of spinal cord injury patients that results from an area of the skin or underlying tissue that is damaged due to decreased blood flow, which can occur after extended periods of inactive sitting or lying, among other ways. Pressure ulcers—also known as pressure sores or wounds—can occur years after initial injury and may also result in life- threatening infections or amputation.

Spasticity: a common condition that affects 65 to 78 percent of spinal cord injury patients and can result in symptoms ranging from mild muscle stiffness to severe, uncontrollable leg movements.

Syringomyelia: a rare disorder that occurs when cerebrospinal fluid— normally found outside of the spinal cord and brain—enters the interior of the spinal cord to form a cyst known as a syrinx. This cyst expands and elongates over time, destroying the center of the spinal cord. Symptoms can develop slowly and can include numbness, pain, effects on bowel and bladder function, or paralysis. While this condition can occur as a result of a trauma, such as a spinal cord injury, the majority of cases are associated with a complex brain abnormality.

Brain Injury

Acquired brain injuries occur after birth and are not hereditary, congenital, degenerative, or a result of birth trauma. Acquired brain injuries result in changes to the brain’s neuronal activity, which can affect the physical integrity, metabolic activity, or functional ability of nerve cells in the brain. Acquired brain injuries can be either non-traumatic or traumatic in nature: non-traumatic brain injuries are caused by an internal force—such as in the case of stroke, tumors, or drowning—and traumatic brain injuries are caused by an external force—such as in the case of car accidents, gunshot wounds, or falls. The severity of brain injury can often result in changes to physical, behavioral, and/or cognitive functioning. For example, according to one source, nearly 50 percent of all people with a traumatic brain injury experience depression within the first year after injury, and nearly two-thirds experience depression within 7 years post- injury. Depression can develop as a result of physical changes in the brain, emotional response to the injury, and other unrelated factors—such as family history. Due to impaired cognitive functioning, traumatic brain injury patients may also experience difficulty communicating, concentrating, and processing and understanding information.

Medicare Payment in LTCHs

Acute care hospitals and LTCHs are paid under different Medicare payment systems by law. Acute care hospitals are paid under the inpatient prospective payment system (IPPS). LTCHs are paid under the LTCH PPS. Under both systems, Medicare classifies patients based on Medicare diagnosis groups, which organize patients based on their conditions and the care they receive. Medicare payments for LTCHs are typically higher than payments for acute care hospitals, to reflect the average resources required to treat Medicare beneficiaries who need long-term care.

Traditionally, all LTCH discharges were paid at the LTCH PPS standard federal payment rate. The Pathway for SGR Reform Act of 2013 modified the LTCH PPS by establishing a two-tiered payment system— such that certain LTCH discharges continue to be paid at the standard rate and others are paid at a generally lower, site-neutral rate. In its March 2013 report, MedPAC described concerns regarding growth in the number of LTCHs and the extent to which some of their patients may otherwise be treated appropriately in less costly settings. To continue to be eligible for the standard rate, the discharge must generally have a preceding acute care hospital stay with either an intensive care unit stay of at least 3 days or an assigned diagnosis group based on the receipt of at least 96 hours of mechanical ventilation services in the LTCH, unless an exception applies. Discharges that do not qualify for the standard rate are to receive a blended site-neutral rate—equal to 50 percent of the site-neutral rate and 50 percent of the standard rate—for discharges in cost reporting periods beginning in fiscal years 2016 through 2019, and the full site-neutral rate for discharges in cost reporting periods beginning in fiscal year 2020.

Beginning with cost reporting periods in fiscal year 2020, if fewer than half of an LTCH’s discharges meet the statutory requirements to be paid at the standard rate, the LTCH will no longer receive any payments at that rate for discharges in future cost reporting periods until eligibility for receiving payments under that rate is reinstated. Under this scenario, all discharges in succeeding cost reporting periods would be paid at the generally lower rate that an acute care hospital would receive for providing comparable care until eligibility for receiving payments at the standard rate is reinstated. According to officials from HHS, the department intends to establish a process for how hospitals would have their eligibility for receiving payments at the standard rate reinstated as part of the fiscal year 2020 rule-making cycle. Since the two qualifying hospitals are currently only excepted from the statutory two-tiered payment structure for cost reporting periods beginning during fiscal years 2018 and 2019, these two hospitals must also meet the statutory 50 percent threshold in fiscal year 2020 and beyond in order to receive the standard rate for any future discharges until reinstated. See table 1 for more information on Medicare’s LTCH PPS payment policies.

The Two Qualifying Hospitals: Craig Hospital and Shepherd Center

Two LTCHs have qualified for the temporary exception to site-neutral payments, according to CMS officials. Craig Hospital is a private, not-for- profit facility that has specialized in medical treatment, research, and rehabilitation for patients with spinal cord and brain injury since 1956. Craig Hospital is classified as an LTCH for the purposes of Medicare payment, and is licensed as a general hospital by the state of Colorado— which does not have separate designations for LTCHs. Craig Hospital has been selected as one of 14 NIDILRR Spinal Cord Injury Model Systems and one of 16 Traumatic Brain Injury Model Systems and is accredited by the Joint Commission.

Shepherd Center is a private, not-for-profit facility that specializes in medical treatment, research, and rehabilitation for people with traumatic spinal cord injury and brain injury—as well as neuromuscular disorders, including multiple sclerosis. Shepherd Center is classified as an LTCH for the purposes of Medicare payment, and as a specialty hospital—which includes LTCHs—by the state of Georgia. Shepherd Center is also currently designated as a NIDILRR Spinal Cord Injury Model System and is accredited by the Joint Commission. Shepherd Center also has several CARF International accredited specialty programs. Specifically, it has CARF-accredited inpatient rehabilitation specialty programs in spinal cord injury and brain injury—for adults, children, and adolescents; and interdisciplinary outpatient medical rehabilitation specialty programs in spinal cord injury and brain injury—for adults, children, and adolescents, among others.

More than half of the Medicare discharges in fiscal year 2013 at the two qualifying hospitals—43 of 75 at Craig Hospital and 47 of 88 at Shepherd Center—were within the diagnosis groups designated in section 15009(a) of the 21st Century Cures Act. (See table 2 below for more information.) Patients treated for these diagnosis groups may receive treatment for spinal disorders and injuries; medical back problems; degenerative nervous system disorders; skin grafts for skin ulcers; acquired brain injuries, such as traumatic brain injuries; or other significant traumas with major complicating and comorbid (simultaneous) conditions.

Both qualifying hospitals have a variety of specialized inpatient and outpatient programs to help treat the complex health care needs of their patients, including those covered by Medicare. For example, both hospitals have wheelchair positioning clinics that can help prevent skin complications, such as pressure ulcers, that can occur in spinal cord patients. Both hospitals also have programs for those patients who need ventilator support such as diaphragmatic pacing—support for patients with respiratory problems whose diaphragm, lungs, and nerves have limited function—and ventilator weaning programs. In addition to clinical programs, both qualifying hospitals also provide transitional support, such as providing counseling and education to families of patients with these injuries.

Most Medicare Beneficiaries Who Receive Services at the Two Qualifying Hospitals Need Specialized Follow- Up Care to Manage Long-Term Effects of Catastrophic Injury

We found that most Medicare beneficiaries at the two qualifying hospitals need specialized services to manage the chronic, long-term effects of a catastrophic spinal cord or brain injury. Most of these patients are younger than 65 and ineligible for Medicare at the time of their initial injury, according to officials from the qualifying hospitals. Instead, according to officials, these patients typically become eligible for Medicare 2 years or more after their initial injury due to disability. Medicare beneficiaries at the two qualifying hospitals typically need care to manage comorbidities or the associated long-term complications of their injury. Officials from Craig Hospital said a significant number of their Medicare beneficiaries have comorbid conditions—such as diabetes or cardiac problems—upon admission, that can be further complicated by their injury. The officials said managing these comorbidities is as much of a medical challenge as managing the spinal or brain injury. Officials from both qualifying hospitals noted their Medicare beneficiaries who have a spinal cord or brain injury also frequently seek care after initial injury to address secondary complications resulting from their injury, including urinary tract infections; respiratory problems; and pressure ulcers.

While the qualifying hospitals primarily treated traumatic spinal cord or brain injuries, we found that their Medicare populations differed from each other during the period from fiscal year 2013 to 2016. Specifically,

Craig Hospital. Our review of Medicare claims data indicates more than 50 percent of the 246 Medicare discharges during this time were associated with Medicare diagnosis groups for spinal cord conditions. Specifically, during this time, Craig Hospital’s Medicare discharges were commonly assigned to three diagnosis groups covering spinal procedures and spinal disorders and injuries. For example, officials from Craig Hospital told us that about 60 percent of Medicare beneficiaries in fiscal year 2016 required surgical care for a spinal cord injury. According to officials, most of these patients received surgery for syringomyelia—a complication in spinal cord patients that generally develops years after their initial injury. These officials told us that Craig Hospital provided the pre- and post-operative care for those patients in fiscal year 2016; however, currently, Craig Hospital is only responsible for pre-operative assessments. The remaining 40 percent of their Medicare beneficiaries in fiscal year 2016 received care for new spinal cord injuries.

Shepherd Center. Our review of Medicare claims data indicates the most common diagnosis group of the 365 Medicare discharges during this time—fiscal year 2013 to fiscal year 2016—related to treatment for skin grafts that can be associated with pressure ulcers, among other things. Shepherd Center officials confirmed that most of their Medicare beneficiaries received treatment for a pressure ulcer that occurred after initial injury which, as previously noted, can be so severe as to result in life-threatening infections. According to officials, most of their post-injury Medicare beneficiaries receive post-operative care and other wound management services following surgery to treat pressure ulcers, to ensure that the site will not tear again and to avoid reoccurrence. Other diagnosis groups for Medicare patients at Shepherd Center included those for spinal disorders and injuries and extensive operating room procedures unrelated to principal diagnosis. According to officials, beneficiaries in these diagnosis groups received treatment for a range of conditions, including traumatic injuries, urinary tract infections, neurogenic bladder and bowel or respiratory complications. Officials told us the hospital also served Medicare beneficiaries recovering from other acquired brain injuries, such as stroke, and paralyzing neuromuscular conditions, such as multiple sclerosis.

Stakeholders we interviewed—including providers at other facilities— noted that traumatic spinal cord and brain injury patients—including those covered by Medicare—require significant levels of care due to the complexity of their injuries as well as the immediate and long-term complications that can occur from the injuries. For example, most stakeholders told us these patients often require lifelong care due to the complexity and reoccurrence of comorbidities or secondary complications. Some of these stakeholders noted, for example, spinal cord and brain injury patients often face mental health or psychosocial conditions, such as depression or anxiety. Some stakeholders also emphasized that many spinal cord injury patients risk secondary complications that may not occur until years after injury, such as pneumonia, pressure ulcers, and other infections. A few stakeholders told us spinal cord and brain injury patients are often among the most complex patients they treat. As such, patients with spinal cord or brain injuries often require interdisciplinary care that covers a wide range of specialties—including physiatry (rehabilitation medicine), neurology, cardiology, and pulmonology—as well as specialized equipment or technology, such as eye glance tools to control call systems or the television.

Medicare Policies May Have Modest Effects on Payments to the Two Qualifying Hospitals Depending on the Types of Patients Treated and Other Factors

Simulations of Medicare Payments to Qualifying Hospitals Illustrate Potential Effects of Payment Policies

Simulations of Medicare payments illustrate the potential effects of Medicare’s site-neutral payment policies, which were required by law, on the qualifying hospitals. Specifically, our simulations calculated what the qualifying hospitals would have been paid for Medicare patient discharges that occurred in two baseline years—fiscal year 2013 (baseline year 1) and fiscal year 2016 (baseline year 2)—if applicable payment policies from future years (2017 through 2021) were applied to those discharges. We selected two baseline years to account for differences in data, such as the number of discharges, between fiscal year 2016—the most recent year of complete data available at the time we began our analysis—and fiscal year 2013. Table 3 below provides a summary of Medicare discharges and payments to the qualifying hospitals during these two baseline years. Variation in utilization and patient mix across the baseline years allows the simulations to cover a range of possible changes in payments for the two hospitals.

Our simulations indicated how Medicare’s payment policies could have affected these baseline payments to each qualifying hospital:

Fiscal Year 2017 Blended Site-Neutral Rate Policy: Discharges that do not meet criteria to receive the standard rate are to receive a blended site-neutral rate—equal to 50 percent of the site-neutral rate and 50 percent of the standard rate. We found that while some of the baseline discharges would qualify for the standard rate, most discharges would have been paid at the blended site-neutral rate. Specifically, 8 to 20 percent of Craig Hospital’s baseline Medicare discharges would have qualified for the standard rate, resulting in simulated payments of about $3.86 million (baseline year 1) and $3.22 million (baseline year 2) under blended site-neutral rate policy.

For Shepherd Center, between 23 percent and 40 percent of baseline Medicare discharges would have qualified for the standard rate, resulting in simulated payments of about $5.16 million (baseline year 1) and $5.31 million (baseline year 2). Each of these simulated payments is an increase compared to actual payments made in the baseline years.

Fiscal Years 2018 and 2019 Temporary Exception: The qualifying hospitals are receiving the standard rate for all discharges, due to the temporary exception. As a result, simulated payments under the temporary exception are about $3.74 million (baseline year 1) and $3.18 million (baseline year 2) for Craig Hospital and about $5.64 million (baseline year 1) and $5.75 million (baseline year 2) for Shepherd Center, which is an increase compared to actual payments made in the baseline years.

Fiscal Year 2020 Two-Tiered Payment Rate: The temporary exception for the qualifying hospitals no longer applies; therefore, the site- neutral rate will apply to discharges not qualifying for the standard rate. We found that both qualifying hospitals would receive some payments at the standard rate, but that most of their discharges would be paid at the lower, site-neutral rate—assuming similar caseloads (e.g., patient mix). As a result, simulated baseline year payments at Craig Hospital are about $3.47 million (baseline year 1) and $3.03 million (baseline year 2), and simulated baseline payments to Shepherd are about $4.42 million (baseline year 1) and $4.55 million (baseline year 2). The simulated payments therefore decrease compared to those in fiscal year 2019, and also generally decrease compared to actual payments made in the baseline years.

Future Years Under 50 Percent Threshold: Under statute, unless 50 percent or more of the hospital’s discharges in cost reporting periods beginning during or after fiscal year 2020 qualify for the standard rate, no subsequent payments will be made to a hospital at that rate in each succeeding cost reporting period. Most of the baseline year discharges did not qualify for the standard rate, and therefore simulated payments are based on the generally lower comparable acute care rate. However, simulated payments stayed about the same between fiscal year 2020 and 2021, in part due to differences in calculations for high-cost outlier payments. A high-cost outlier payment is made to hospitals for those cases that are extraordinarily costly, which can occur because of the severity of the case and/or a particularly long length of stay. Specifically, simulated payments were about $3.49 million (baseline year 1) and $3.02 million (baseline year 2) for Craig Hospital and about $4.24 million (baseline year 1) and $4.16 million (baseline year 2) for Shepherd Center. Without the high-cost outlier payments, the simulated payments would have decreased by at least $2 million. If the mix of patients at Craig Hospital and Shepherd Center changes so that they meet the 50 percent threshold in fiscal year 2020, then simulated payments for fiscal year 2021 could be higher. As of September 2018, Craig Hospital officials told us that they expect to meet the 50 percent threshold with their current patient mix. Shepherd Center officials told us they do not expect to meet the 50 percent threshold.

See figures 1 and 2 below for the results of our simulations.

Our simulations of payments assume the number and type of Medicare discharges at the two qualifying hospitals remain the same as those in fiscal years 2013 and 2016. However, the full effect of payment policy on future Medicare payments to the qualifying hospitals will depend on three key factors that are subject to change: 1. Severity of patient conditions: Medicare payment is typically higher for more severe injuries, such as a traumatic injury with major comorbidities or complications, relative to less severe injuries. In the two baseline years we used for our simulations—fiscal year 2013 and fiscal year 2016—more than half of the Medicare discharges at the qualifying hospitals were associated with conditions with multiple comorbidities and complications, as indicated by the diagnosis groups, and this level of severity is reflected in the simulation results. Future payments to qualifying hospitals will depend on the extent to which the severity of patient conditions changes over time. 2. Volume of discharges meeting criteria for the standard rate: As previously noted, for a hospital to receive the standard rate for a discharge, the discharge must meet certain criteria, such as having a preceding acute care hospital stay with either an intensive care unit stay of at least 3 days or an assigned diagnosis group based on the receipt of at least 96 hours of mechanical ventilation services in the LTCH. Our simulations reflect that in the two baseline years, about 23 percent of the fiscal year 2013 discharges and about 40 percent of the fiscal year 2016 discharges met the criteria to receive the standard rate for Shepherd Center; and about 8 percent of the fiscal year 2013 discharges and about 20 percent of the fiscal year 2016 discharges met the criteria for Craig Hospital. Changes to these amounts could affect future payments to the qualifying hospitals. In particular, if 50 percent or more of either hospital’s discharges beginning in fiscal year 2020 meet the standard rate criteria, then the hospitals would be eligible for payments at the standard rate in fiscal year 2021, which may result in higher payments compared to our simulations. 3. Payment adjustments: LTCHs may receive a payment adjustment for certain types of discharges, such as short-stay outliers, interrupted stays, or high-cost outliers. In particular, most discharges at Craig Hospital received high-cost outlier payments (additional payments for extraordinarily costly cases) during the two baseline years—76 percent in fiscal year 2013 and 85 percent in fiscal year 2016. At Shepherd Center, at least 40 percent of discharges during the two baseline years received high-cost outlier payments—about 42 percent in fiscal year 2013 and about 58 percent in fiscal year 2016. The amount of future payments to qualifying hospitals will depend on the extent to which they continue to have a high proportion of discharges with high-cost outlier payments.

Qualifying Hospitals and Some Stakeholders Reported that Payment Policies May Result in Fewer Services Provided and Fewer Patients Served by LTCHs

In addition to the effect on payments, officials from both qualifying hospitals and some stakeholders we interviewed noted that the LTCH site-neutral payment policies may result in fewer services provided and fewer patients served by the qualifying hospitals and other LTCHs. For example, officials from Craig Hospital told us they stopped providing post- operative care to patients requiring spinal surgery, such as patients with syringomyelia, in 2016—instead referring them to other facilities—in part because these discharges do not meet the criteria for the standard rate. As of September 2018, they told us they do not plan to provide this care in the future unless the temporary exception is extended. Officials from Shepherd Center told us while they have not yet made changes to services they offer to Medicare patients, they may limit which Medicare beneficiaries they serve in the future. For example, they told us that most of their Medicare beneficiaries were admitted from home or sought care in their outpatient clinic. When the temporary exception expires after fiscal year 2019, hospital officials expected that these patients will not qualify for the standard rate. Shepherd Center officials said they may not be able to serve similar patients in future years.

MedPAC officials and some stakeholders—a specialty association and health care providers with experience treating patients with similar conditions at other LTCHs—told us that some LTCHs have changed the services they offer and the patients they treat to increase the proportion of discharges that qualify for the standard rate. For example,

MedPAC officials cited reports that indicate how some LTCHs have adjusted to the site-neutral policies. For example, a 2018 MedPAC report indicated that LTCHs in one large for-profit chain were able to make adjustments so that, as of September 30, 2016, close to 100 percent of their Medicare discharges met the criteria to receive the standard rate.

A representative from an LTCH association told us that many LTCHs have adjusted their patient mix by increasing the number of discharges that meet criteria for the standard rate and turning away some Medicare beneficiaries to reduce the number of discharges subject to the site-neutral rate. The representative noted that certain LTCHs have already been able to adjust their patient mix because they have existing programs in place that focus on chronic, critically ill patients who would have a preceding acute care hospital stay. The representative told us that some LTCHs specialize in care for patients who do not meet the criteria to receive the standard rate and would generally be paid at the site-neutral rate; therefore, changing their patient mix is not a viable strategy for these LTCHs. According to the stakeholder, as of February 2018, about two-thirds of all LTCHs are above the 50 percent threshold.

Providers from another LTCH told us that before the site-neutral payment policy went into effect, only about 40 to 45 percent of its discharges met criteria for the standard rate. However, they worked to ensure most patients referred to the LTCH would qualify for the standard rate. Officials told us patients who do not meet the criteria for that rate typically either stay longer in the acute care hospital or are transferred to a different post-acute care setting, such as a skilled nursing facility. Officials noted that, in both cases, the patient may not receive the specialized services often required for their injuries, including those patients with spinal cord or brain injuries.

A provider we interviewed from another LTCH said that, historically, the LTCH has accepted patients who acquire pressure ulcers at home following discharge, but they may choose not to continue this practice because the patients’ discharges would not meet the criteria to receive the standard rate.

A few of these stakeholders told us some LTCHs are in markets that do not have alternative providers of care, such as skilled nursing facilities, for patients who do not meet the criteria. These LTCHs may have difficulty adjusting their patient mix to avoid site-neutral payments. For example, a provider from one LTCH said his facility continues to take “site-neutral patients” because those patients often do not have another option to receive the specialized services they need. The provider emphasized concerns about the long-term viability of caring for those patients at the facility, because their care is paid at lower rates.

Similarities and Differences May Exist Between the Two Qualifying Hospitals and Other Facilities that Treat Medicare Patients with Spinal Cord and Brain Injuries

The Two Qualifying Hospitals Treat Patients with Conditions Different Than Those at Most Other LTCHs, and Treat Fewer Medicare Patients

Our review of Medicare claims data, other information, and interviews with stakeholders indicated the two qualifying hospitals treated Medicare beneficiaries with different conditions than most of those treated at other LTCHs. Our analysis of Medicare claims data indicates Craig Hospital and Shepherd Center treat very few patients in the Medicare diagnosis groups that are most common to other LTCHs. Specifically, for several years, MedPAC has reported that LTCH patient discharges are concentrated in a relatively small number of diagnosis groups. For example, in March 2018, MedPAC reported that 20 diagnosis groups accounted for over 61 percent of LTCH discharges at both for-profit and not-for-profit facilities, in fiscal year 2016. However, in fiscal year 2016, these diagnosis groups accounted for approximately 30 percent of Medicare discharges—26 out of 88—at Shepherd Center, and most of these discharges fell within a single diagnosis group which covers a range of conditions. Craig Hospital did not discharge any Medicare beneficiaries assigned to these 20 diagnosis groups, in fiscal year 2016. The seven diagnosis groups that were used in the statutory criteria to except Craig Hospital and Shepherd Center from site-neutral payments were also not among these 20 diagnosis groups. For more information on the 20 diagnosis groups common to LTCHs in fiscal year 2016, see Appendix III, table 5.

Our review of Medicare claims data and other information indicates the two qualifying hospitals also treat a relatively small number of Medicare beneficiaries, a key distinguishing factor from most other LTCHs. In March 2018, MedPAC reported that, on average, Medicare beneficiaries account for about two-thirds of LTCH discharges. However, Medicare claims data and other information provided by the two qualifying hospitals indicate Medicare beneficiaries account for a significantly smaller proportion (about 8 percent) of patients discharged from Craig Hospital and Shepherd Center in 2016. Specifically, 40 of the 486 patients discharged from Craig Hospital in fiscal year 2016 and 75 of the 912 patients discharged from Shepherd Center in calendar year 2016, were Medicare beneficiaries. Officials from the qualifying hospitals told us they treat few Medicare patients primarily because of the younger average age of persons with spinal cord injuries and acquired brain injuries.

While patients with spinal cord and brain injuries may receive care in other LTCHs, most stakeholders we interviewed also suggested the two qualifying hospitals treat patients that are different from those treated at most other LTCHs, and can offer specialized care. Officials from the two qualifying hospitals told us that, relative to most other facilities—including most traditional LTCHs—they offer a more complete continuum of care to meet the needs of patients at different stages of spinal cord and brain injury treatment, without the need to transfer to different facilities. Officials also stated that, unlike most traditional LTCHs, they are able to offer more specialized care for patients with spinal cord and brain injuries, including more comprehensive rehabilitation services. Stakeholders we interviewed generally agreed that the two qualifying hospitals have developed expertise in treating spinal cord and brain injury patients and offer intensive rehabilitation services that are not provided in most other LTCHs. In addition, officials from the Colorado Department of Health Care Policy & Financing noted that Craig Hospital treats a patient population that is different from most other LTCHs in the state of Colorado. Specifically, according to officials, in comparison to other LTCHs in the state, Craig Hospital treats: (1) a higher percentage of patients with more severe conditions, (2) more patients from outside the state of Colorado, (3) fewer patients requiring ventilator weaning or requiring wound care— conditions typically characteristic of LTCH patients—and (4) patients that are, on average, younger than most other LTCHs in the state of Colorado. In addition, a 2014 study of LTCHs conducted for the Georgia Department of Community Health found Shepherd Center was “distinctly different” from other LTCHs in the state of Georgia, and most LTCHs nationwide.

Patients with Conditions Treated at Qualifying Hospitals Could Also Receive Care in IRFs, But Differences in Payment Systems and Data Limitations Make a Direct Comparison Difficult

Most stakeholders we interviewed suggested some IRFs provide specialty care to patients with catastrophic spinal cord, acquired brain injuries, or other paralyzing neuromuscular conditions. Most of the stakeholders we interviewed noted that—like the two qualifying hospitals—some IRFs have the expertise to treat patients with catastrophic spinal cord, acquired brain injuries, or other paralyzing neuromuscular conditions patients and thus, may also treat patients with similar conditions. According to CMS officials, IRFs are specifically designed to provide post-acute rehabilitation services to patients with spinal cord injuries, brain injuries, and other neuromuscular conditions. CMS officials noted that patients with these conditions typically respond well to intensive rehabilitation therapy provided in a resource intensive inpatient hospital environment and to the specific interdisciplinary approach to care that is provided in the IRF setting. Stakeholders also noted that patients with spinal cord injuries, brain injuries, and other neuromuscular conditions may receive care in other settings. However, some stakeholders noted that some of these providers—such as skilled nursing facilities—generally do not offer the specialized care these patients generally require.

Differences in payment systems and data limitations make it difficult to directly compare the attributes of Medicare beneficiaries discharged from the two qualifying hospitals and IRFs, including the costs of care they receive. Medicare uses separate payment systems to pay LTCHs and IRFs, for care provided to beneficiaries. LTCHs are paid pre-determined fixed amounts for care provided to Medicare beneficiaries, under the LTCH PPS. Medicare beneficiaries treated in LTCHs are assigned to diagnosis groups (MS-LTC-DRGs) for each stay—based on the patient’s primary and secondary diagnoses, age, gender, discharge status, and procedures performed. IRFs are also paid pre-determined fixed amounts for care provided to Medicare beneficiaries, but under a separate system—IRF PPS. Medicare beneficiaries treated in IRFs are assigned to case-mix groups—based on age, and level of motor and cognitive function—and then further assigned to one of four tiers (within these groups) based on the presence of specific comorbidities that may increase their cost of care. According to CMS officials, because the payment groups and assignments to those groups are different, it is difficult to directly compare LTCH patients, classified in diagnosis groups, with IRF patients, classified in case-mix groups. See Appendix II for more information on these payment systems.

MedPAC has previously reported the differences in patient assessment tools used by post-acute care providers undermines Medicare’s ability to compare the patients admitted, costs of care, and outcomes beneficiaries achieve in these settings, on a risk-adjusted basis. MedPAC has also reported that while similar beneficiaries can receive care in each setting, payments can differ considerably for comparable conditions, due to differences in payment systems. It has made recommendations to address these issues. The Improving Medicare Post-Acute Care Transformation Act of 2014 also requires the Secretary of HHS to collect and analyze common patient assessment information and, in consultation with MedPAC, submit a report to Congress recommending a post-acute care PPS. Such efforts may make future comparison of beneficiaries, costs of services, and outcomes of care across these settings possible.

Some Information Suggests Similarities and Differences Between Qualifying Hospitals and IRFs that Specialize in Spinal Cord and Brain Injuries

While data limitations make a direct comparison difficult, based on our review of other data and information, and interviews with stakeholders, we identified similarities and differences between the qualifying hospitals and certain IRFs that provide specialty treatment for catastrophic spinal cord injuries, acquired brain injuries, or other paralyzing neuromuscular conditions. Key similarities and differences include the following: Volume of services. Our review of Medicare claims data, other information, and interviews with stakeholders indicate that—similar to the two qualifying hospitals—some IRFs treat a high volume (at least 100) of patients with complex spinal cord injury, brain injury, and other related conditions. Officials from the two qualifying hospitals, as well as some other stakeholders we interviewed—including officials from the Christopher & Dana Reeve Foundation and the Brain Injury Association of America—emphasized the importance of facilities treating a high volume of patients with these specialized conditions, which can be an indicator of expertise in treating these patients. Our review of Medicare claims data for 1,148 IRFs in fiscal year 2016 identified 21 IRFs that treated at least 100 Medicare beneficiaries with non-traumatic and traumatic spinal cord injuries and 109 IRFs that treated at least 100 Medicare beneficiaries with non-traumatic and traumatic brain injuries.

Our review of Medicare claims data indicated that, similar to the two qualifying hospitals—some IRFs also treat a high volume of patients with “catastrophic” injuries—traumatic brain injury, traumatic spinal cord injury, and major multiple traumas with brain or spinal cord injuries. Specifically, we identified 25 IRFs that treated a high volume (at least 100) of Medicare beneficiaries with catastrophic injuries, in fiscal year 2016. In the absence of patient assessment data from the facilities, we did not independently evaluate the level and severity of these patients’ injuries, which can vary due to the presence of other co-morbid conditions. The Medicare case mix indexes we reviewed for these 25 IRFs indicated that, relative to other IRFs, most of these facilities treat patients who are more resource intensive.

Specialty accreditation and designation as model systems. Like Shepherd Center, some IRFs receive CARF-accreditation for specialty programs to treat spinal cord and brain injuries. According to most stakeholders, this accreditation indicates expertise in treating these patients, as CARF International has established standards using evidence-based practices, among other factors. Officials from the two qualifying hospitals also noted CARF International has a specific focus on quality and outcomes. However, officials from Shepherd Center noted similarities in care and services offered at CARF-accredited facilities would depend on the specialties for which they are certified.

Most of the stakeholders we interviewed also noted that designation as a NIDILRR model system is an indicator of similar expertise in treating patients with spinal cord and brain injuries. According to the Model Systems Knowledge Translation Center, spinal cord injury and brain injury model systems are recognized as national leaders in medical research and patient care and provide the highest level of comprehensive specialty services from the point of injury through eventual re-entry into full community life. While stakeholders we interviewed from NIDILRR model systems indicated the model system designation is focused primarily on research, rather than clinical care, most noted that model systems’ research often complements the facilities’ clinical efforts to address the unique needs of these patients. Officials from HHS’s Administration for Community Living also noted that all model system grantees must provide a continuum of care—emergency care, acute medical care, acute medical rehabilitation, and post-acute care—and that can happen in various provider types. According to officials from the qualifying hospitals and stakeholders from one other NIDILRR model system we interviewed, Craig Hospital and Shepherd Center are the only two LTCHs currently classified as spinal cord injury model systems; 12 of 14 spinal cord injury model systems are IRFs.

Specialized programs and services. Similar to the two qualifying hospitals, some IRFs may also offer specialized programs and services for patients with brain and spinal cord injuries, but the availability of these programs and services may vary by facility. Officials from some of the IRFs that responded to our information request—which included both NIDILRR facilities and IRFs with CARF-accredited programs—told us they provide specialized programs and services for patients with similar conditions as those treated at two qualifying hospitals, and sometimes compete with the two qualifying hospitals for the same patients. For example, each IRF reported having interdisciplinary treatment teams; the capacity to provide medical management of medically complex and high acuity patients with spinal cord injury, traumatic brain injury, or other major multiple traumas associated with a brain or spinal cord injury; family education and training; and skin and wound programs or services, among other services. However, the availability of certain services—including but not limited to ventilator-dependent weaning programs, diaphragmatic pacing, and outpatient programs for spinal cord and traumatic brain injury patients—varied by facility.

Staff with specialized training and clinical expertise. Similar to the two qualifying hospitals, most facilities that responded to our information request also reported having physicians, nurses, and physical and occupational therapists with specialty training in medical rehabilitation, spinal cord, and/or brain injury. However, the number of staff with these trainings, varied by facility. In comparison to the other facilities that responded to our information request, the number of nurses and physical and occupational therapists with these specialty trainings were generally higher at Craig Hospital and Shepherd Center. According to an American Spinal Injury Association consumer guideline that the Christopher & Dana Reeve Foundation typically provides to spinal cord injury patients and families, programs should regularly admit persons with spinal cord injury each year, to develop and maintain the necessary skills to manage a person with spinal cord injury, and a substantial portion of those admitted should have traumatic injuries.

Out-of-state Admissions. Officials from the two qualifying hospitals emphasized they admit a significant number of patients from out-of-state, and our review of information provided by the qualifying hospitals and a select group of IRFs indicated the qualifying hospitals admit a higher percentage of patients from out-of-state. Specifically, information provided by these IRFs indicates that less than a quarter of patients admitted to these facilities, in 2016, were from out-of-state. Information provided by Craig Hospital and Shepherd Center indicate that about half of their patients were admitted from out-of-state in 2016. Officials from the Colorado Department of Health Care Policy & Financing also noted Craig Hospital treats a higher percentage of out-of-state patients, compared to IRFs in the state.

Ability to treat medically complex patients. Officials from the two qualifying hospitals told us they treat more medically complex patients and provide a more complete range of medical services to spinal cord and brain injury patients, not provided by most IRFs. Specifically, officials from the two qualifying hospitals both noted they are able to treat patients much sooner in their recovery process than most IRFs, due to their LTCH status. Officials from the Shepherd Center noted that they have a 10-bed intensive care unit which allows them to take patients with certain injures that some IRFs may not be equipped to admit—such as patients requiring advance medical management and advanced level procedural services and monitoring. Information provided by Shepherd Center indicated that, in calendar year 2017, approximately 20 percent of all inpatients were admitted to this unit and 13 percent of all inpatients were internally transferred to this unit after developing medical complications. According to officials, Craig Hospital does not have an intensive care unit, but noted their ability to similarly care for medically complex patients—including telemetry (e.g., specialized heart monitoring) and one-to-one nursing care, if necessary. Most stakeholders we interviewed agreed that both qualifying hospitals’ LTCH status provides certain advantages over IRFs, such as the ability to admit some medically complex patients earlier in the recovery process and longer lengths of stay. Stakeholders from most of the IRFs we interviewed also reported having the flexibility to admit some medically complex patients requiring more advanced level monitoring and resources earlier in the recovery process—such as patients with disorders of consciousness.

Officials from the two qualifying hospitals also said they offer a continuum of care that can meet patient’s changing needs, without the need to transfer them to different facilities. Information provided by Craig Hospital indicated that 83 percent of patients treated at its facility, in 2016, were discharged to home, 13 percent were discharged to another post-acute care facility, and 3 percent were discharged to an acute care hospital. In 2016, approximately 91 percent of patients treated at Shepherd Center were discharged to home, 7 percent were discharged to another post- acute care facility, and 2 percent were discharged to an acute care hospital. Information provided by the IRFs that responded to our written request varied by facility, but—similar to the two qualifying hospitals— each facility discharged more than 65 percent of patients to home.

IRF payment criteria. CMS and most other stakeholders we interviewed noted that two Medicare payment policies applicable to IRFs, but not LTCHs, may contribute to their different patient populations. Specifically, to be classified for payment under Medicare’s IRF PPS, at least 60 percent of the IRF’s total inpatient population must require intensive rehabilitative treatment for one or more of 13 conditions—which includes both spinal cord and brain injury. To be admitted to an IRF, Medicare beneficiaries must reasonably be expected to actively participate in and benefit from the intensive rehabilitation therapy program, typically provided in IRFs. According to HHS, per industry standard, the intensive rehabilitation therapy program is often demonstrated by providing three hours of rehabilitation services per day for at least five days per week, but this is not the only way such intensity can be demonstrated. Officials from the two qualifying hospitals told us they generally use Medicare’s intensive rehabilitation requirement as a minimum standard for their rehabilitation patients—even though they are not held to this requirement, for the purposes of Medicare payment—but noted that some of their patients may not meet this requirement, due to their medical complexity.

Length of stay and site-neutral payment requirements, for LTCHs. As previously noted, LTCHs—including the two qualifying hospitals—must have an average length of stay of greater than 25 days; IRFs are not subject to this requirement. The average length of stay for patients discharged from the Craig Hospital was about 60 days, in fiscal year 2016, and the average length of stay for patients discharged from Shepherd Center was about 53 days, in calendar year 2016.

Stakeholders from the IRFs that responded to our information request reported average lengths of stay ranging from 14 to 31 days, for patients discharged in fiscal year 2016; the ranges of lengths of stay were slightly higher for spinal cord injury and traumatic brain injury inpatients for the IRFs, during the same period. LTCHs are also generally subject to site- neutral payment policy that is not applicable to IRFs and may decrease LTCHs payments for certain discharges, under Medicare.

Other services provided. In addition to these Medicare specific differences, a few stakeholders we interviewed also noted the two qualifying hospitals receive additional funding from their strong philanthropic donor base that may allow them to provide other services and resources, not covered by Medicare or offered at some IRFs. For example, while a few IRFs that responded to our information request reported offering housing for families of injured patients, the two qualifying hospitals offer up to 30 days of free housing to families of newly injured rehabilitation patients, if both the family and patient live more than 60 miles from the hospital. Officials from Shepherd Center told us their revenues are supplemented by investment income and donor funds. Craig Hospital has also established a foundation that supports the hospital in achieving its goals through philanthropy.

Agency Comments

We provided a draft of this report to HHS. HHS provided technical comments, which we incorporated as appropriate. We also provided the two qualifying hospitals summaries of information we collected from them, to confirm the accuracy of statements included in our draft report. We incorporated their comments, as appropriate.

We are sending copies of this report to the Secretary of Health and Human Services and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-7114 or at farbj@gao.gov. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix IV.

Appendix I: Methodology for Simulating Payments to Qualifying Hospitals

This appendix describes our methodology for conducting simulations of payments for the two qualifying hospitals.

Simulations of Payments

We used Medicare claims data to conduct simulations of payments for the two qualifying hospitals. We first identified discharges at each hospital in two baseline years—federal fiscal years 2013 and 2016. We selected fiscal year 2016 because it was the year with the most recent data available at the time of our analysis, and we selected a second baseline year because data for 2016 was different than data for other recent years. For example, the number of discharges for one qualifying hospital declined by nearly half between fiscal years 2013 and 2016. We chose fiscal year 2013 because data from that year was used to help determine which hospitals are subject to the temporary exception.

To identify how to appropriately calculate the long-term care hospital (LTCH) payment for each of these discharges in future payment years, we reviewed applicable federal regulation and documents from the Centers for Medicare & Medicaid Services (CMS) and the Medicare Payment Advisory Commission (MedPAC), and interviewed officials from both organizations. See table 4 for the relevant components in the formulas, such as Medicare severity long-term care diagnosis related group (MS-LTC-DRG) weights, identified from final rule tables.

When conducting these simulations, we made the following assumptions:

For simulated payments for payment policies in effect for fiscal years 2017 and 2018, we used the base rates, relative weights (e.g., the MS-LTC-DRG weights), geometric mean length of stay, wage index, geographic adjustment factor, fixed-loss amounts, and outlier thresholds that were published in the final rule tables for LTCH and inpatient prospective payment system (IPPS) hospitals—also known as acute care hospitals—for each respective year. At the time we began our analysis, this information was not known for fiscal years 2019 through 2021. We chose to use the fiscal year 2018 rates when conducting simulations for payment policies in those years because historical trends showed that annual changes were minimal—about 1 percent. Therefore, to the extent that these values continue to change over time, our findings may understate or overstate the amount that the qualifying hospitals would have been paid in our baseline years based on these future payment policies.

The site-neutral payment policy did not apply to discharges from the fiscal year 2013 baseline year. Therefore, we examined Medicare claims data to determine whether each discharge would have met the criteria to receive the LTCH standard rate in that year. Specifically, we determined whether each discharge had an acute care hospital stay that immediately preceded their LTCH stay. We then determined whether the time at the acute care hospital included three or more days in the intensive care unit or whether there was a code on the LTCH claim that indicated at least 96 hours of mechanical ventilation services were provided. Per Medicare’s payment policy, we assumed any discharge that met these two criteria would qualify for full LTCH payment rate, unless the case was a psychiatric or rehabilitation stay, as identified by the following MS-LTC-DRG codes: 876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945, or 946.

Under statute, unless 50 percent or more of the hospital’s discharges beginning during or after 2020 qualify for the standard rate, no subsequent payments will be made to a hospital at that rate. Therefore, when calculating simulated payments for fiscal year 2021, we applied the 50 percent threshold. At the time of our analysis, CMS had not yet finalized this policy through rule-making. As of November 2018, CMS officials told us that it is unlikely that any payment adjustment under this provision would apply until 2022 because the percentage cannot be determined until after an LTCH’s cost reporting period has ended and data have been submitted.

Shepherd Center’s fiscal year is different than the federal fiscal year.

Therefore, the variables used to determine whether discharges in federal fiscal year 2016 met criteria to receive the standard rate were not available to use for some of the discharges that year. Of those discharges, we assumed that the same percentage of discharges that met the criteria to receive the standard rate in Shepherd’s fiscal year—30 percent—met the criteria in federal fiscal year 2016.

When calculating site-neutral payments, we assumed that each discharge would be paid at a rate comparable to that for acute care hospitals—the IPPS comparable amount rate. Site-neutral payments may also be based on the estimated cost-of-care, if it is lower than the IPPS comparable amount rate. However, over 90 percent of discharges at the qualifying hospitals were paid at the IPPS comparable amount rate in fiscal year 2016.

Per CMS’s recommendation, we applied the cost-to-charge ratio that was effective October 1, 2017, for each qualifying hospital, regardless of discharge date. For Craig Hospital this value was 0.442 and for Shepherd Center this value was 0.464. According to CMS officials, in general, these values do not change significantly when they are updated during the fiscal year. Therefore, they believe that using the values effective at the start of the fiscal year is a reasonable assumption.

We excluded indirect medical education adjustments and disproportionate share hospital payments that are part of the IPPS comparable amount rate because, according to CMS, they were unlikely to have much impact for these hospitals.

CMS reviewed each of these assumptions and agreed they were reasonable for purposes of our analysis. CMS also verified that we were correctly applying the formulas for calculating these payments and using the appropriate values from the final rules.

Appendix II: Calculating Medicare Payments for Long-Term Care Hospitals and Inpatient Rehabilitation Facilities

Figures 3 and 4 illustrate the methodology for calculating Medicare payments under the long-term care hospital (LTCH) prospective payment system (PPS) and the inpatient rehabilitation facility (IRF) PPS, respectively, as reported by the Medicare Payment Advisory Commission (MedPAC).

Appendix III: List of Common Diagnosis Groups for Long-Term Care Hospitals (LTCH)

Appendix III: List of Common Diagnosis Groups for Long-Term Care Hospitals (LTCH)

In its March 2018 annual report to the Congress, the Medicare Payment Advisory Commission (MedPAC) reported that 20 diagnosis groups accounted for over 61 percent of LTCH discharges at both for-profit and not-for-profit facilities, in fiscal year 2016. Table 5 provides a list of these 20 diagnosis groups.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contacts

Acknowledgments

In addition to the contact named above, Will Simerl, Assistant Director; Kathy King; Amy Leone, Analyst-in-Charge; Todd Anderson; Sam Amrhein; LaKendra Beard; Rich Lipinski; Jennifer Rudisill; and Eric Wedum made key contributions to this report. Also contributing were Leia Dickerson, Diona Martyn, Vikki Porter, and Lisa Rogers.