Medicare Compliance & Reimbursement

Government probe wants CMS to re-evaluate record growth, profits.

Big profits make big targets, at least as far as Medicare policy makers are concerned.

And annual Medicare spending on long-term care hospitals has soared 475 percent in the last decade, reaching 1.9 billion. Add that to a 275-percent increase in the number of facilities and that could spell a cold shoulder from Congress.

According to recent data from the Medicare Payment Advisory Commission, LTCHs are costing the program 4 to 5 times more than skilled nursing facilities - and for the same level of care. In a policy brief released Feb. 6, senior member of the Joint Economic Committee Pete Stark (D-CA) points put that no clinical patient criteria are in place, other than length of stay, to determine which patients belong at a lower-priced SNF.

Stark also called on the Centers for Medicare and Medicaid Services to decide whether more growth is good in this largely for-profit segment. Large LTCH chains Kindred Healthcare (formerly Vencor) and Select Medical have both seen "remarkable" earnings - up 19.5 percent from last year for Kindred and a whopping 91 percent for Select Medical, according to recent filings from the Securities and Exchange Commission, not to mention a 300-percent increase in their stocks.

In comparison, the profit margins for clinically equivalent SNFs and acute hospitals are pint-sized.

"It's time Congress questioned whether this growth reflects a true increase in clinical need or just a means to game robust profits from Medicare without adding value to the care provided to our seniors and people with disabilities," says Stark. "It is appropriate for Congress...to enact legislation temporarily placing a moratorium on the future growth of this provide category until these questions are answered."

"I plan to introduce legislation to do just that," Stark says, so long-term care hospitals should keep their eyes on Capitol Hill.