Long Term Care Hospital (LTCH)

Medicare Part A covers care in a long-term care hospital (LTCH). They are certified as acute care hospitals, but focus on patients who, on average, stay more than 25 days. Many of the patients in LTCHs are transferred there from an intensive or critical care unit. LTCHs specialize in treating patients who may have more than one serious condition, but who may improve with time and care, and return home.

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LTCHs are excluded from the Inpatient Prospective Payment System (IPPS) and must meet state licensure for their location.

By statute, there are no LTCH units; however, there are satellite and hospital-within-hospital LTCHs that are co-located with acute-care hospitals and other Medicare providers.

Veterans Administration Hospitals, non-participating hospitals and foreign hospitals are paid under special payment provisions and, therefore, are not subject to the LTCH prospective payment system rules.

The LTCH average length of stay (ALOS) is based only on the hospital's Medicare inpatients, counting total medically necessary, including both covered and non-covered days. The ALOS is calculated by dividing the total number of covered and noncovered days of care by the Medicare discharges occurring during that period. If the days of stay involve days of care furnished during two or more cost reporting periods, the total number of days of the stay are considered to have occurred during the cost reporting period during which the patient was discharged.


Medicare adopted a Medicare Severity Diagnosis Related Group (MS-DRG) classification system for the LTCH PPS, referred to as MS-LTC-DRG. The MS-LTC-DRGs are the same MS-DRGs used in the acute care hospital inpatient prospective payment, weighted to reflect the different resources used by LTCHs.

The LTCH DRG is determined by the grouping of ICD-10 codes based on the principal diagnosis, up to twenty-four additional diagnoses, and up to twenty-five procedures performed during the stay, as well as age, gender and discharge status of the patient on the claim.

Each bill must contain the complete diagnosis and procedure coding for purposes of the GROUPER software. Normal adjustments will be allowed to correct add any of this information if its missed on original submission.

LTCH providers submit one admit through discharge claim for the stay, however, that is usually done by submitting claims in 60-day increments and adjusting from the previously paid claim. This is because most LTCH claims are longer than 60 days in duration from admission to discharge. Final PPS payment is based upon the discharge bill. The patient's status will remain 30 (still patient) until discharge. The day a patient's benefits are exhausted is considered the discharge date for payment purposes. Once a patient's Medicare benefits exhaust, the LTCH can submit no pay bills until physical discharge or death.

Billing Type Brief Description
Ancillary Billing

Payment may be made under Part B for certain services, when furnished by a the LTCH to an inpatient of that hospital, when payment for these services cannot be made under Medicare Part A.

When coding LTCH PPS bills for ancillary services associated with a Part A inpatient stay, the bill type is 12X and the applicable/traditional revenue codes will continue to be shown in conjunction with the appropriate entries in the service units and total charges fields.

LTCH providers should also report:

  • Number of units based on procedure or service
  • Actual charge for each line item in total charges
  • Date of service for each line item (line item date of service) with appropriate HCPCS coding
Pre-Admission Services

Medicare billing rule for pre-admission services apply to LTCHs because they are classified as non-subsection (d) hospitals. Outpatient services immediately preceding hospital stay (24 hours prior to admission) are treated as inpatient services.

LTCHs are paid under a prospective payment method, they should not use the three-day rule for pre-admission services that inpatient acute care PPS providers do.

Benefits Exhaust

Benefits exhaust occurs when all days within the benefit period are taken. For LTCH claims, it is considered a discharge for payment. The last payment claim will be billed through the last benefit period day available and then from that point forward, no pay and ancillary claims will be sent in place of the covered 11X type of bill.

If the benefits exhaust prior to the patient being admitted to the LTCH, the LTCH should bill 110 no pay bills to Medicare until the beneficiary's death or discharge. If the benefits exhaust during the stay, the provider will bill through the last day benefits are available as payment 11X claims, making sure to use the A3-C3 Occurrence Code with the last date benefits are available to show a benefit exhaust/discharge from payment claims. Then, the provider will bill no pay bills every 60 days until death or discharge occur. No pay bills are sent as a 110 type of bill with all days, charges and units listed in noncovered.


Payment Calculations

Under the LTCH PPS payment system, CMS largely sets payment rates prospectively for inpatient stays based on the patient's diagnosis and severity of illness. A hospital receives a single payment for the case based on the payment classification, i.e., the MS-LTC-DRGs assigned at discharge.

LTCHs are required to meet the same Medicare Conditions of Participation (COPs) as acute care hospitals that are paid under the IPPS.

The enactment of the 2013 Bipartisan Budget Act established two distinct payment categories under the LTCH PPS:

  1. Standard payments for patient discharges meeting specific clinical criteria
  2. Site neutral payments for those discharges that do not meet the specified clinical criteria
Situation Brief Description
Site Neutral Payment Rate

Beginning October 1, 2015, LTCH discharges that do not meet specific criteria will be paid at a new site neutral payment rate.

The site neutral payment rate is the lower of:

  • IPPS comparable per diem amount (calculated under SSO policy)
  • Estimated costs of case (calculated by multiplying allowable charges by LTCHs cost to charge ratio

For a discharge to be excluded from the site neutral rate and paid the federal payment rate.

  • Discharge must not have principal diagnosis in LTCH of a psychiatric diagnosis or rehabilitation as indicated by grouping of discharge into one of the 15 "psychiatric and rehabilitation" MS-LTC-DRGs
  • Discharge must have been immediately preceded by a Subsection (d) hospital discharge. Meaning admission to LTCH occurred within 1 day of Subsection (d) hospital discharge
  • Patient discharged from LTCH must have either:
    • Spent at least 3 days in an intensive care unit during immediately preceding Subsection (d) hospital stay
    • Received at least 96 hours of respiratory ventilation services during LTCH stay that are generally identified by using ICD-10-PCS code 5A1955Z on LTCH claim
Standard Payment Provisions

Payment under the LTCH PPS is dependent on determining the patient classification, the weight of the LTC-DRG, and federal payment rate. These factors are used to calculate an unadjusted LTCH PPS rate, the product of the LTC-DRG relative weight and the standard Federal rate.

Other factors that affect payment are case-level adjustments that include short stay outliers, interrupted stays and high-cost outlier cases.

LTCH PPS also includes several facility-level adjustments.

  • Area wage index
  • Cost of living adjustment for LTCHs in Alaska and Hawaii

LTCH PPS does not include any of the following adjustments found in other prospective payment systems.

  • Rural location
  • Geographic reclassification
  • Disproportionate Share Hospital (DSH)
  • Indirect Medical Education (IME)

The inpatient hospital discharge claim should not have the following MS-LTC-DRGs since it will disqualify the provider from the standard LTCH PPS payment: 876, 880 – 887, 894 – 897, 945 or 946.

Short-Stay Outliers (SSOs)

A SSO assists in preventing inappropriate payments for situations that do not have a full episode of care. SSO payment adjustment to the standard federal payment may occur when the patient:

  • Experiences an acute condition that requires urgent treatment, then are discharged to another facility
  • Does not require level of care provided in an LTCH, then are discharged to another facility
  • Discharges to home
  • Expires within first several days of admission, or
  • Exhausts benefits during the stay

The adjustment applies when the length of stay is from 1 day through 5/6 of the average length of stay for the MS-LTC-DRG to which the case is grouped, and your payment is subject to SSO adjustment.

Medicare will not reimburse a full LTC-DRG when the patient is discharged before the appropriate number of days are met to reach a full DRG payment or the patient his/herself lacks the Medicare covered days in the benefit period to generate a full LTC-DRG.

Interrupted Stay

View the two interruption of stay policies in effect.

Three-Day or Less Interruption of Stay: The beneficiary is discharged from the LTCH to an acute care hospital, inpatient rehabilitation facility (IRF), skilled nursing facility (SNF) or home and readmitted to the same LTCH within three days of the discharge. The three-day or less period begins with the date of discharge from the LTCH and ends no later than midnight of the third day.

Medicare payment for any test, procedure or care provided on an outpatient basis or for any inpatient treatment during the "interruption" is the responsibility of the LTCH "under arrangements." If no additional Medicare services are delivered during the three-day or less interruption prior to readmission to the LTCH, the number of days away from the LTCH are not included in the total length of stay. If care is delivered on any day during the "interruption" where the LTCH pays "under arrangements," all of days of the "interruption" are included in the total length of stay.

Greater Than Three-Day Interruption of Stay: An LTCH patient is admitted upon discharge to an inpatient acute care hospital, inpatient rehabilitation facility, skilled nursing facility or swing bed and returns to the same LTCH within a specific period of time.

  • Acute care hospital: Between 4 and 9 consecutive days
  • IRF: Between 4 and 27 consecutive days
  • SNF: Between 4 and 45 consecutive days
  • Swing Bed: Between 4 and 45 consecutive days or less

They day count begins on the day of discharge from the LTCH, which is also the admission day to the other provider, and ends on the day of readmission to the LTCH.

Multiple interrupted stays should be entered as one claim but each interrupted stay should be evaluated individually for the rule regarding the appropriate number of days at the intervening facility.

If the length of stay at the receiving site of care exceeds the specified time, the return to the LTCH is a new admission. The original discharge to that site is treated as a discharge for payment purposes.

Co-Located Providers LTCHs that are co-located with other Medicare providers, and are subject to the interrupted stay policy. In addition, if such discharges and readmissions exceed 5% of the LTCH's total discharges during a cost reporting period, all such readmissions during that cost reporting period to be paid as one discharge, regardless of the time spent at the intervening facility.




Last Updated Dec 09 , 2023

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