Faced with costly discharge bottlenecks, hospitals want Congress to pay for patients' extended stays

The hospital lobby is looking to secure temporary per diem Medicare payments from Congress it says are needed to offset increased costs and missed revenues caused by patients who are ready to leave the hospital but have nowhere to go.

Per a new report (PDF) from the American Hospital Association (AHA), the average hospital length-of-stay has increased by 19.2% from 2019 to 2022 as well as by nearly 24% for patients being discharged to a post-acute care provider.

That increase isn’t just due to patients getting sicker during the course of the pandemic. When adjusting by case-mix index, average length-of-stay was still up 15.4% for discharges to post-acute care providers. Adjusted average stays were even higher when discharging to a skilled nursing facility (20.2%) or a psychiatric hospital (28.9%), according to data from Strata Decision Technology cited in AHA’s report.

Rather, acute care hospitals, long-term care hospitals and rehabilitation facilities alike are facing discharge logjams due to industrywide workforce shortages. Post-acute care facilities in need of more hands have been forced to limit their capacity and new patient transfers, which AHA said places “incredible strain” on hospitals, further wears down staff and threatens patient recovery.

“Delays in patient discharges create bottlenecks in the healthcare system, adding to the already overwhelming challenges facing our hospitals and caregivers,” AHA president and CEO Rick Pollack said in a release accompanying the report. “Temporary relief to overburdened hospitals and other providers will help ensure patients get the most appropriate care and will relieve stress on front-line healthcare workers.”

AHA wrote in the report that hospitals have been “left to bear the burden” of caring for stranded patients while noting that the organizations don’t currently receive any additional reimbursement for extra days spent in a hospital bed.

The group’s solution to the issue—alongside its other policy asks during the lame duck session—is a temporary per diem Medicare payment targeting acute, long-term care, rehabilitation and psychiatric hospitals.

“This per diem payment would be made for cases identified and assigned with a specific discharge code that fall under such type of long stays where the patient is documented to be ready for discharge but is unable to be discharged appropriately,” AHA wrote in its report. “The solution could be modeled after an existing per diem Medicare payment mechanism and be temporary with a cap on payments.”

Labor and discharge challenges have been constants throughout the pandemic, often reaching a head during periods with intense local or national surges of COVID-19.

Hospitals and health systems have underscored recent lobbying efforts with consistent messaging on a $135 million projected year-over-year increase in nationwide costs and potential service shutdowns. Just last week, the Texas Hospital Association warned that more than a quarter of its rural hospitals are at risk of closure.

That said, the pain hasn’t been felt evenly across the nation’s health systems. Though October ushered in the industry’s tenth consecutive month of negative margins, a recent Kaiser Family Foundation report found that operating margins for the country’s three largest for-profit health systems have surged over their pre-pandemic numbers.