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Reducing Long term care payments to hospitals

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A recent group of economists have suggested that cutting long term care payments would save taxpayers around $4.6 billion per year. How would they cut the costs? By getting rid of high cost payments for long term care to hospitals.

According to the National Bureau of Economic Research three major areas of importance that are not improving long term care hospitals are:

-Non-reducing mortality

-Non-reducing length of stay/care

-Costing patients higher payments

Liran Einav, one of the economics professor at Stanford University, did a recent study on long term care spending in hospitals and said, “When the government created long-term care hospitals in the early 1980s, they created an “unintended monster.”

A number of actions have been taken to try and eliminate high cost payments for long term care hospitals such as dual payment systems. This is where a facility would only receive high payment from patient if they met a criteria.

As said by Tamara Bannow, “Long-term care hospitals were created in the 1980s to protect 40 chronic disease hospitals from the prospective payment system. At the time, regulators feared the fixed payments wouldn’t be enough to cover those hospitals’ costs. That small group has since grown to more than 400 hospitals with $5.4 billion in annual Medicare spending as of 2014, the report found.”



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