On October 10, 2014, the Director of Survey and Certification Group at the Centers for Medicare & Medicaid Services (CMS) finally issued guidance to Regional Offices and State Survey Agency Directors on the implementation of the moratorium on the establishment of new Long-Term Care Hospitals (LTCHs). (Please click here to view the CMS Memorandum Ref: S&C: 15-03 Hospitals.) The guidance provided in the memorandum is critically important because CMS Regional Offices were not permitted to make any determinations 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” and therefore have been holding LTCH applications since the moratorium took effect on April 1, 2014. (Please click here to view article “CMS: Build an LTCH at Your Own Risk.”)

By way of brief background, 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. (Please click here to view article "The Impact of Bipartisan Budget Act of 2013 on LTACHs.") 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.

With the recent issuance of guidance, LTCH providers that believe they meet one of the exceptions can now seek official approval. Specifically, entities that believe they will qualify for an exception on the basis of having a CON or on the basis of having a binding agreement with an outside party and having made the requisite minimum expenditures may seek an advance preliminary determination from CMS that the project qualifies for an exception to the moratorium before they submit a Form CMS-855A application to participate in Medicare as a hospital or to be reclassified as an LTCH. The Form CMS-855A may not be submitted before a hospital or LTCH satellite is operational and actually seeing patients, or, in the case of a new LTCH, before the hospital has completed its qualifying period. CMS is aware that an entity may need such an advance preliminary determination in order to qualify for continued financing of the project. In such cases, the entity must submit all the required documentation supporting the project’s eligibility for an exception to the moratorium to the Medicare Administrative Contractor (MAC), which will inform the CMS Regional Office (RO) of the provider’s submission.

For entities seeking advance preliminary determination based upon expenditure, the approval process requires that MACs review and evaluate the documentation concerning binding agreements/actual expenditures for projects under development and make a recommendation to the RO on whether the exception criteria have been met. The RO will communicate the results of the MAC review to the provider as described below. Meanwhile, for entities seeking advance preliminary determination based upon receipt of a CON, the RO will be the initial reviewer and evaluator of the CON documentation with the assistance of the State Survey Agency.

If it is determined as a result of this preliminary review that the project qualifies for one of those two exceptions, the RO letter to the entity will indicate that the project meets the criteria for an exception to the LTCH moratorium and must also state that this determination of meeting the moratorium exception criteria does not constitute a representation that the project will be approved for participation in Medicare as an LTCH or LTCH satellite. The results of the review of the documentation to meet an exception will be communicated by the RO to the entity seeking the advance determination. Additionally, the ROs must submit a copy of all letters approving the establishment of a new LTCH or LTCH satellite during the moratorium, as well as all letters providing an advance determination of meeting one of the exception requirements, to Emily Lipkin at emily.lipkin@cms.hhs.gov.

LTCH providers should be aware that there are many other criteria that the project would have to meet for LTCH certification, such as satisfactory completion of the application process, certification as a hospital, demonstration of the required length of stay, etc., which can only be evaluated by CMS after the provider submits its completed Form CMS-855A application to enroll in Medicare, along with all other documentation normally required for Medicare certification. When the entity eventually submits its complete enrollment and certification application to CMS, it must include the advance preliminary determination letter. In such cases, it will not be necessary at that time for the MAC and RO to conduct a new review of the hospital’s eligibility for an exception to the moratorium.