Long-term Acute Care Hospitals (LTACH/LTAC/LTCH)

Advis has been one of the leading pioneers in the development of long-term acute care hospitals. We have been recognized as an expert in the area of post-acute care, working with hospitals and health systems throughout the United States. Since 1990, Advis has been involved in the feasibility and then the development of more than 50 long-term acute care hospitals. Once developed, we have also assisted our clients in the management of these facilities.

Long-term acute care hospitals, also known by the industry acronyms “LTACH” or “LTAC” or by federal regulators as “LTCH”, have been part of the healthcare system since the early 1980′s. Today there are approximately 437 Medicare certified LTACHs.

Since 2007, Congress has passed a series of moratoriums that have prohibited the building of new LTACHs, developing LTACH satellite locations, or expanding current operations within existing facilities. Each time a new moratorium has been proposed, providers had a small window of time to submit plans to develop their units before the law was passed.

In late 2017, the most recent moratorium expired, creating the first opportunity in years for providers to bolster their post-acute care venue offerings by adding an LTACH. Although Congress may reinstitute the moratorium in the future, LTACHs once again represent a viable strategy to complete an effective and efficient continuum of care.

Recent changes brought us the end of the 25 percent threshold rule and new LTACH admission criteria which no longer restrict patient admissions from one source and set forth tangible criteria for proper admission into a long term acute care hospital.

Providers are strongly encouraged to use this window of opportunity to assess the feasibility of developing an LTACH or how expanding current LTACHs could improve overall operations.


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Learn more about Long-Term Acute Care Hospitals

Advis’s experience in the design and development of LTACH’s includes:

  • Feasibility analysis and program development
  • Medicare Certification and State Licensure
  • Governance structure
  • Continuum of Care Systems Integration
  • JCAHO Accreditation
  • Regulatory compliance
  • Strategic planning
  • Site selection
  • Physician credentialing

Feasibility Analysis

Advis focuses its analysis of the viability of the LTACH pursuant to five key areas:

  1. State and Federal Compliance
  2. Governance Structure
  3. Site Selection
  4. Needs Analysis
  5. Financial Impact

Advis will analyze and review data from the acute care hospital to determine bed need and the financial impact of developing a LTACH. We will also review this analysis of acute care hospital uncompensated care loss and its bed-need analysis, on a per DRG basis, in order to confirm bed-need complement and patient volumes by diagnostic group.

Once the analysis is completed, recommendations are provided to the hospital or health system to assist with future development.

Advis shall review all applicable federal government statutes, regulations, and requirements regarding the development/operations of the hospital, including LTACH designation as per guides of the Centers for Medicare and Medicaid (CMS), and shall structure the LTACH in a manner to comply with applicable federal laws and regulations, either as free-standing or hospital within a hospital designation. Some of the key areas of development under a contract with us will include:

  • Federal and state regulatory compliance
  • Organizational structure
  • Finance/reimbursement
  • Bed allocation
  • Product line structuring
  • Facility space utilization
  • Mock survey – Assure readiness for CMS certification and state licensure
  • Orientation and educational work sessions with clinical staff and physicians
  • Case management integration

We will also serve as liaison with the Fiscal Intermediary to assure a smooth working relationship before and after exemption. Advis will work in conjunction with the architect and/or contractor to advise as to space configuration for the LTACH to optimize the design for programmatic and marketing positioning and to assure compliance with applicable federal hospital regulations.

An organizational management structure will be recommended in compliance with federal regulations and to enhance productivity and promote an outcome-based philosophy amongst administrative and clinical staff.

We provide consultation both on- and off-site through the tenure of the project.

Once licensed as an acute care hospital and exempted as a LTACH, we are available to assist our clients in the management and oversight of the LTACH. Advis can provide management with a focus on:

  • Regulatory compliance
  • Financial management
  • Clinical program development
  • Census monitoring
  • Case management

LTACH Overview

A LTACH, as recognized by 42 CFR 412.23(e), generally provides diagnostic and medical treatment to patients with chronic disease or complex medical conditions whose average length of stay for Medicare patients exceeds 25 days. It is important to remember a LTACH is an acute care hospital. The only difference is the Medicare aggregate length of stay (at the end of the year) must be greater than 25 days. Not all patients will have a length of stay of 25 days but the target range is 18-35 days.

LTACHs have become essential to an effective continuum of care as a key venue within a health system. LTACHs are the mirror image of the short-term acute care hospital serving patients whose medical condition requires a stay longer than the CMS prescribed DRG.

While LTACHs are not limited in the diagnoses that may be treated, most LTACHs specialize in one or more product lines. For example, LTACHs developed by Advis typically offer specialty programs for medically complex, cardiac, pulmonary and complex rehabilitation patients. LTACHs offer programs for and specialize in, a patient population that the other post-acute settings do not offer. It’s a venue for those patients with acute care needs requiring a long length of stay.

Acute care hospital beds and intensive care unit beds do not specialize in treating long-staying patients who have acute-level care needs. Acute and ICU programs are not designed specifically for a long-staying patient population and for diagnoses that are commonly treated by a LTACH. For example, five to six days is a typical average length of stay of many acute care hospitals.

LTACHs treat patients who stay between 18 and 35 days and, on average, have a greater severity of illness and more comorbidities than acute care hospital patients.

The high acuity level demonstrated by the LTACH patient population also differentiates LTACHs from inpatient rehabilitation hospitals/units and skilled nursing facilities/units. Both LTACHs and rehabilitation facilities are equipped to treat patients who require rehabilitative treatment. However, rehabilitation facilities are required to treat patients within specific diagnostic categories and those who can tolerate three hours of therapy per day, five days per week. LTACHs are an ideal care venue for patients who fall outside of these requirements.

The average LTACH patient has many comorbidities, and it is not uncommon that such patients cannot tolerate the therapy requirements of rehabilitation facilities. Thus, LTACHs are ideal venues in which to treat patients with both rehabilitation treatment needs and a high level of acuity.

Due to acuity levels, LTACH patients are also not appropriate for skilled nursing facilities. LTACH patients, like acute care hospital patients, require approximately eight hours of direct nursing per day and daily physician contact. Conversely, most skilled nursing patients receive four direct nursing hours per day and do not have contact with a physician on a daily basis.

  • Extends the continuum of care
  • Diminishes short-term acute hospitals DRG revenue loss
  • Recognition by Managed Care Payment Structure
  • No limitation on type of diagnoses
  • No limitation on age
  • No limitation on scope of services provided
  • Ability to cross-utilize services and resources within the health system continuum
  • Medically complex
  • Respiratory infections and disorders including Tracheostomy
  • Ventilator dependent
  • Cardiac/Cardiovascular conditions
  • Renal disease
  • Oncology
  • Wound care
  • Rehabilitation related diagnoses with complex or tertiary needs
  • Extended post-surgical care

Just like a short-term acute care hospital, the LTACH patient must have the medical necessity requiring an acute level of inpatient care. Once a patient no longer meets these criteria, discharge planning should move the patient to the next appropriate level of care including discharge to home if appropriate.

During the first six months, while the LTACH is in its initial data collection period, the LTACH is paid under the short-term DRG’s. This period of time is generally referred to as the “penalty period” since the LTACH will experience a significant revenue loss given all Medicare patients must have an aggregate length of stay of more than 25 days yet the payment under short-term DRG is generally based on a length of stay between 4-7 days.

Once the hospital has completed its Six Month Data Collection period and has met the greater than the 25-day length of stay requirement for its Medicare patients, it becomes reclassified as a LTACH. The payment for LTACHs is reimbursed through specific long-term care DRGs (LTC-DRGs). These LTC-DRGs have the same definitions as the short term acute DRGs but have a much higher relative weight applied to a higher base rate payment to compensate for longer staying patients. They also have a much longer anticipated length of stay.

For example, in 2013 the National Base Rate for a LTACH hospital was $40,397.96. In comparison. the National base rate for a short-term acute care hospital in 2013 was $5,348.76. Individual facilities rates are determined by applying the LTACH National base rate to the specific location’s wage index. These rates are modified by CMS each year and are in effect from October 1st through September 30th of the following year.

As a PPS acute care hospital, reimbursement for physician services in a LTACH is identical to that of a PPS short-term acute hospital. The physician bills under Part B for Medicare patients or submits bills in the identical format to short stay acute, for commercial or managed care payors.

The same physician fee is generated, and the format and process for billing are the same. The physician will, of course, have to go through the credentialing process at the LTACH, just as he or she would at any other facility.


All LTACHs, just like short-term acute care hospitals, must have a credentialed medical staff. Any physician willing to practice at the LTACH must undergo the credentialing process and be credentialed by the LTACH.


The Free-standing Model requires the LTACH to have its own building and be separate from the campus of another hospital. Free-standing, as the label implies, are self-contained hospitals that are not located in or on the campus of another hospital. The free-standing model requires the LTACH have its own building and be separate from the campus of another hospital.


The Hospital within a Hospital Model requires compliance with specific federal rules and regulations. The hospital within a hospital model requires compliance with specific federal rules and regulations including issues of “control.” The hospital within a hospital is separate and distinct from its host but located within leased space. Hospitals within hospitals typically purchase a number of services from its host, but the two entities must maintain the requisite degree of separateness.

A free-standing LTACH is ideal for development if there is an existing free-standing hospital facility that can be designated for use as a LTACH, or if there is a facility available that can be converted to meet hospital licensure at a reasonable cost.

Although Part 482 Conditions of Participation applies to a free-standing LTACH as well as a hospital within a hospital, the hospital within a hospital requirements do not apply to the free-standing LTACH. The free-standing LTACH must, however, be treated and governed as any other hospital within the system. In addition, it must have its own CEO and medical staff, as would any acute care hospital.

If no such facility exists, however, and a floor or a wing consisting of at least 25 beds is available, then a “hospital within a hospital” model is a viable option.

The hospital within a hospital regulations can be found at 42 CFR § 412.22(e). A hospital within a hospital is defined as a hospital that occupies space in a building also used by another hospital, or in one or more separate buildings located on the same campus as buildings used by another hospital.

The following criteria apply to hospitals within hospitals in order to be excluded from the prospective payment system:

  1. Separate Governing Body—The LTACH must have a governing body that is separate from the governing body of the host hospital. The LTACH’s governing body may not be under the control of the host hospital or of any third entity that controls both hospitals.
  2. Separate Chief Medical Officer—The LTACH must have a single Chief Medical Officer who reports directly to the LTACHs governing body and who is responsible for all medical staff activities of the hospital. The Chief Medical Officer of the hospital may not be employed by or under contract with either the host hospital or any third-party entity that controls both hospitals.
  3. Separate Medical Staff—The LTACH must have a medical staff that is separate from the medical staff of the host hospital. The LTACHs medical staff is directly accountable to the governing body for the quality of medical care provided in the hospital, and adopts and enforces by-laws governing medical staff activities, including criteria and procedures for recommending to the governing body the privileges to be granted to individual practitioners.
  4. Chief Executive Officer—The LTACH has a single Chief Executive Officer through whom all administrative authority flows, and who exercises control and surveillance over all administrative activities of the hospital. The Chief Executive Officer may not be employed by, or under contract with, either the host hospital or any third-party entity that controls both hospitals. CMS wants to ensure the LTACH operates as its own entity and is not a unit.

LTACHs play a valuable role in a healthcare system’s continuum of care. LTACHs treat patients with long-term care hospitalization needs that cannot be as well met in any other healthcare setting. Thus, a LTACH within a healthcare system is positioned to benefit a significant number of patients. LTACHs can also provide benefits to the short-term acute care hospitals it serves through the reduction of uncompensated acute care as well as allows for additional short-term bed turnover.

A LTACH is an ideal operation to stem losses due to extended lengths of stay and increased patient acuity. The LTACH should reflect the patient diagnostic population of the short term acute in harmony with the mission and philosophy of the health system and its medical staff. Together, the LTACH and short-term acute hospital form the continuum of care with appropriate reimbursement reflective of each venue’s purpose and anticipated length of stay.

Advis provides all components of establishing the LTACH including:

  • Feasibility
  • Development and
  • Management

The expertise of Advis, in conjunction with the hospital/health system, directs and maintains the LTACH as a vital and contributing venue responsive to the needs of the patient, family, and community.