Long-term Acute Care Hospital (LTACH) Fraud

Medicare uses the Long-Term Acute Care Hospital Prospective Payment System (LTACH-PPS) to determine the rate of Medicare payment for each patient at a Long-Term Acute Care Hospital (LTACH). In order to qualify as a LTACH, the hospital’s average length of stay for Medicare patients must exceed 25 days. Hospitals that do not meet this requirement during a given cost reporting period will be reimbursed at the same rate as a general acute care hospital, which is typically lower.

The LTACH-PPS assigns each discharged patient to one of 510 Diagnosis-Related Groups (LTACH-DRGs), each of which carries a predetermined payment amount that reflects the relative average cost for Medicare patients in that category. Additional payments may be justified under the LTACH-PPS for individual patients whose cost of care greatly exceeds the DRG payment or because of other patient-specific factors.

Types of LTACH Fraud

Fraudulent Medicare billing under the LTACH-PPS can take several forms with the commonality of circumventing regulations or falsifying information in order to increase Medicare reimbursement. One such form of LTACH Medicare fraud is the practice of LTACH-DRG upcoding, which involves misrepresenting patients’ diagnoses at discharge so that they are assigned to a higher-paying LTACH-DRG. Upcoding undermines the LTACH-PPS structure and results in excess payment by Medicare, which is a violation of the False Claims Act.

Some LTACH facilities may also attempt to circumvent the “interrupted stay” regulation that prevents the LTACH from collecting a second DRG payment when a patient is readmitted to the same LTACH within a certain number of days. This regulation is intended to ensure that patients are not discharged before they are medically ready and to prevent LTACHs from transferring patients between partner facilities to receive a DRG for each site. Noncompliance with or evasion of the “interrupted stay” regulation may also be held to be a violation of the False Claims Act.

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