Effect of Site-Neutral Payment Policy on Long-Term Acute Care Hospital Use

Objective: To assess the projected effect of the Centers for Medicare and Medicaid Services new site-neutral payment policy, which aims to decrease unnecessary long-term acute care hospital (LTACH) admissions by reducing reimbursements for less-ill individuals by 2020. Design: Observational. Setting: National 5% Medicare data (2011–12). Measurements: We examined the proportion of site-neutral LTACH admissions. Regional LTACH market supply was defined as LTACH beds per 100,000 residents, categorized according to tertile. We conducted a hospital-level analysis to compare the projected effect of site-neutral payment on “propensity score” matched high- and low-LTACH-use hospitals. Results: Forty-one percent of LTACH admissions would be subjected to site-neutral payment. The proportion of site-neutral admissions was large, varied considerably according to LTACH (median 40%, interquartile range 22–60%), and was only modestly greater with greater market supply (Pearson correlation coefficient=0.23, p<.001; coefficient of determination=0.10). The site-neutral payment policy would affect 47% of admissions from the highest-supply regions, versus 30% from the lowest-supply regions (p<.001); and 43% from high-use hospitals versus 36% from propensity score-matched low-use hospitals (p<.001). Conclusion: A considerable proportion of LTACH admissions will be subjected to lower site-neutral payments. Although the policy will disproportionately affect high-use regions and hospitals, it will also affect nearly one-third of the current LTACH population from low-use hospitals and regions. As such, the site-neutral payment policy may limit LTACH access in existing LTAC-scarce markets, with potential adverse implications for recovery of hospitalized older adults. J Am Geriatr Soc 66:2104–2111, 2018.