Keeping patients in LTACHs longer than necessary can increase reimbursement.
Two years ago, on Monitor Mondays and in the RACmonitor eNews, Ronald Hirsch, MD told the story of one of his patients, Carl, whose stay at a skilled nursing facility (SNF) seemed to be stretched to 20 days to maximize the revenue to the facility. For those who are not familiar with SNF payment, Medicare covers the first 20 days of a Part A SNF stay at 100 percent of approved charges, and days 21 to 100 are covered at 80 percent, requiring the SNF to collect from the patient or secondary insurer.
On this week’s Monitor Mondays, Hirsch, a permanent panelist on the long-running Internet broadcast, reported on a recent publication in the American Economic Review that suggests a similar phenomenon happens at long-term acute-care hospitals (LTACHs). In this article, the authors analyzed data on every Medicare patient hospitalized in a long-term acute-care hospital from 2004 to 2013. It ultimately revealed that patients seem to be kept in LTACHs to the point of maximal financial benefit for the facility, a day the authors deemed the “magic day.”
LTACHs are paid similarly to hospitals, with a diagnosis-related grouping-based payment system based on the diagnoses. Each MS-LTC-DRG has an associated average length of stay. But in order to get that full DRG payment, the patient’s length of stay must be at least five-sixth of the average length of stay. If it is less than that, then the hospital is paid a daily rate. For example, MS-LTC-DRG 207, Respiratory system diagnosis with ventilator support of greater than 96 hours, the most common MS-LTC-DRG billed, has an average length of stay of 31.8 days. The short stay outlier payment would be applicable until the patient’s stay exceeds 26.5 days.
The author’s complex analysis demonstrated that there is a large number of discharges from LTACHs that occur at this “magic day,” and it is suggested that it is not due to mere chance, but rather a systematic effort. In the article’s introduction, they reference a Wall Street Journal article from 2015 in which administrators were reportedly incentivized to get patients to reach that day. The authors even looked at data from prior to the implementation of the MS-LTC-DRG system and demonstrated a drastic shift in discharge patterns since that time – going from a normal distribution to one in which discharges appear to peak on the “magic day” (see page 3245).
Payment to LTACHs has received a lot of attention in the past few years. In 2016, the Centers for Medicare & Medicaid Services (CMS) added a site-neutral payment system to LTACHs, reducing payments for patients who had not spent three days in an intensive care unit or received mechanical ventilation for 96 or more hours. MedPAC has also been pushing for payment changes, even suggesting in 2016 that LTACHs get no payment updates.
This issue is certain to raise a few eyebrows in Congress and at CMS. The editors here at RACmonitor eNews and its contributors will be closely monitoring the response.
Medicare and Medicaid audits differ in process. Yet one thing remains the same, in practice: the administrative process has become so burdensome that many providers
The Centers for Medicare & Medicaid Services (CMS) sent a giant wave of panic through the industry this past week, when they announced that the
Please log in to your account to comment on this article.
Accurately determining the principal diagnosis is critical for compliant billing, appropriate reimbursement, and valid quality reporting — yet it remains one of the most subjective and error-prone areas in inpatient coding. In this expert-led session, Cheryl Ericson, RN, MS, CCDS, CDIP, demystifies the complexities of principal diagnosis assignment, bridging the gap between coding rules and clinical reality. Learn how to strengthen your organization’s coding accuracy, reduce denials, and ensure your documentation supports true medical necessity.
Denials continue to delay reimbursement, increase administrative burden, and threaten financial stability across healthcare organizations. This essential webcast tackles the root causes—rising payer scrutiny, fragmented workflows, inconsistent documentation, and underused analytics—and offers proven, data-driven strategies to prevent and overturn denials. Attendees will gain practical tools to strengthen documentation and coding accuracy, engage clinicians effectively, and leverage predictive analytics and AI to identify risks before they impact revenue. Through real-world case examples and actionable guidance, this session empowers coding, CDI, and revenue cycle professionals to shift from reactive appeals to proactive denial prevention and revenue protection.
Sepsis remains one of the most frequently denied and contested diagnoses, creating costly revenue loss and compliance risks. In this webcast, Angela Comfort, DBA, MBA, RHIA, CDIP, CCS, CCS-P, provides practical, real-world strategies to align documentation with coding guidelines, reconcile Sepsis-2 and Sepsis-3 definitions, and apply compliant queries. You’ll learn how to identify and address documentation gaps, strengthen provider engagement, and defend diagnoses against payer scrutiny—equipping you to protect reimbursement, improve SOI/ROM capture, and reduce audit vulnerability in this high-risk area.
Only ICD10monitor delivers what you need: updates on must-know changes associated with the FY26 IPPS, including new ICD-10-CM/PCS codes, CCs/MCCs, and MS-DRGs, plus insights, analysis and answers to your questions from two of the country’s most respected subject matter experts.
Get clear, practical answers to Medicare’s most confusing regulations. Join Dr. Ronald Hirsch as he breaks down real-world compliance challenges and shares guidance your team can apply right away.
Federal auditors are zeroing in on Inpatient Rehabilitation Facility (IRF) and hospital rehab unit services, with OIG and CERT audits leading to millions in penalties—often due to documentation and administrative errors, not quality of care. Join compliance expert Michael Calahan, PA, MBA, to learn the five clinical “pillars” of IRF-PPS admissions, key documentation requirements, and real-life case lessons to help protect your revenue.
During this essential RACmonitor webcast Michael Calahan, PA, MBA Certified Compliance Officer, will clarify the rules, dispel common misconceptions, and equip you with practical strategies to code, document, and bill high-risk split/shared, incident-to & critical care E/M services with confidence. Don’t let audit risks or revenue losses catch your organization off guard — learn exactly what federal auditors are looking for and how to ensure your documentation and reporting stand up to scrutiny.
Learn how to navigate the proposed elimination of the Inpatient-Only list. Gain strategies to assess admission status, avoid denials, protect compliance, and address impacts across Medicare and non-Medicare payors. Essential insights for hospitals.
Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →
CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24
