CMS Services Can Save 4.6B By Stopping Discharges To Long-Term Hospitals

CMS services can save up to 4.6 billion dollars just by stopping discharges to long-term care hospitals, a new study reported. Patient health would not be adversely affected.


Under the current system, Medicare spending on post-acute care totaled $59 billion in 2014. This is patient care that is usually provided by skilled nursing homes (SNFs), or home health agencies. However, years ago, a regulatory carve-out for several dozen specialty hospitals gave long-term care hospitals (LTCH) the opportunity to make some big money.  In 2014, LTCH’s  totaling more than 400 hospitals garnered $5.4 billion in Medicare spending.



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CMS Services: Trying To Cut Waste


CMS has unsuccessfully tried many times to close the loopholes that allow LTCHs, to get larger payments compared to other post-acute care providers, such as skilled nursing homes.

Of the $5.4 billion spend on LTCHs in 2014,  85% was incremental spending, not patient care. Cutting this amount saves Medicare about $4.6 billion per year, with no adverse effect on patient care,” the study concluded.

Moreover, according to the National Academy of Sciences, about 30% of healthcare services are wasteful, thereby pushing up costs. This study also points to long term care hospitals as a significant source of wasteful spending.

A large amount of waste can be eliminated just by treating more patients at home. Today, we have smart healthcare technologies such as telemedicine and remote monitoring. This gives more  more patients time to recuperate and receive excellent care at home.

Indeed, a recent study in JAMA Internal Medicine found that acute hospital-level care in the home plus 30 days of post-acute transitional care gave better clinical outcomes. This is in comparison to LTCH’s. Furthermore, patients reported a higher level of satisfaction.


Just to to give you an idea how wasteful this program is, look at these statistics:

  • Per-day rates for LTCH care averaged $1,400 in 2014 versus $450 for a skilled nursing home, the alternative for about four-fifths of LTCH patients — a $33,000 increase in net Medicare spending per acute care hospital discharge, according to the study.
  • Eliminating LTCHs, which account for just 1% of Medicare spending, would allow patients requiring post acute care to shift to SNF’s at significantly lower cost to tax payers.

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