Long-term care hospitals (LTCHs) furnish extended medical and rehabilitative care to individuals with clinically complex problems, such as multiple acute or chronic conditions, that need hospital-level care for relatively extended periods. We have previously written about how the Bipartisan Budget Act of 2013 (the “Budget Act”) reinstated a moratorium on the establishment of LTCHs between April 1, 2014 and September 30, 2017. (To view previous article, please click here.)

The moratorium prohibits an increase in the number of an LTCH certified beds with no exceptions. In addition, the moratorium prohibits the establishment of new LTCHs or satellites of existing LTCHs with some exceptions. To establish a new LTCH or a new LTCH satellite office during the LTCH moratorium, an LTCH must meet one of the following exceptions:

  • The LTCH began its qualifying period for payment as an LTCH before April 1, 2014.
  • The LTCH had a binding, written agreement for construction, renovation, lease, or demolition of an LTCH andhad expended at least 10% of the estimated cost of the project (or, if less than 10%, has spent at least $2.5 million) before April 1, 2014.
  • The LTCH has an approved Certificate of Need (CON) from a state where one is required that was issued before April 1, 2014.

Proposed regulations to implement the moratorium, including the above exceptions, were released on May 15, 2014.

In a recent memorandum to its State Survey Agency Directors, the Centers for Medicare & Medicaid Services (CMS) clarified the process by which the moratorium will be instituted. Importantly, the memo noted that CMS’s Regional Offices may not make a determination as to whether a new LTCH or LTCH satellite meets one of the exceptions “until the final regulations are released and further guidance is issued.” The Regional Offices will hold applications without processing until further notice. 

As a result of this policy, new LTCHs which meet the exceptions in that they began construction or received a CON before April 1, 2014 cannot be approved until final regulations come out sometime in the next year. When the rule is finalized, CMS will handle the determinations on a case-by-case basis. In the meantime, companies that continue construction of an LTCH do so at the risk that the LTCH will not ultimately receive Medicare and Medicaid certification.