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Long‑term Acute Care Hospitals Cite Prior Authorization, Payment Rules for Shrinking Access
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Summary
Long‑term acute care hospitals (LTACs) told the House Ways and Means Health Subcommittee that tightened payment rules and Medicare Advantage prior‑authorization practices have reduced access and contributed to LTAC closures.
WASHINGTON — Leaders of long‑term acute care hospitals told the House Ways and Means Health Subcommittee that recent payment changes and Medicare Advantage prior‑authorization practices have reduced patient access to specialized post‑acute care and contributed to industry shrinkage.
Paul Donghilly, president and CEO of Madonna Rehabilitation Hospitals, described how the high‑cost outlier fixed‑loss threshold for LTACs doubled between fiscal year 2023 and fiscal year 2025, raising the amount a facility must lose before receiving an extra payment from about $38,000 to roughly $77,000. Donghilly said the change has pushed some LTACs from modest margins into negative territory and discouraged admission of high‑cost patients.
"When an individual is on a ventilator and requires additional high‑cost services, losing $77,000 before receiving an outlier payment ... would deter that LTAC from admitting them," Donghilly testified.
Donghilly and other witnesses also testified that Medicare Advantage plans deny a large share of prior‑authorization requests for LTAC and inpatient rehabilitation facility admissions, triggering time‑consuming appeals that delay transfers. He said that in practice, two clinically similar patients — one in fee‑for‑service Medicare, one in Medicare Advantage — can have substantially different access because MA plans often require prior authorization and deny requests more frequently.
Members from both parties raised bills to address access concerns. Representative Hearn noted bipartisan legislation introduced as the Patient Access to Long Term Care Hospitals Act and other bills intended to clarify LTAC payment policies and expand admission pathways, such as permitting direct admission from critical access hospitals. Witnesses urged Congress to consider legislative fixes to the outlier methodology, to allow direct admissions from small hospitals, and to strengthen enforcement of MA rules.
Witnesses warned that unless payment policy and MA practices change, LTAC closures will continue and access to specialized services — including ventilatory, dialysis and other high‑resource care — will be limited. The subcommittee did not take a vote; members may submit follow‑up questions for the record.
