LTACH Billing in 2026

The 25-Day ALOS Test, Site-Neutral Payment and TOB 11X Interim Claims

By Team Rcmaxis  ·  October 18, 2026  ·  12 min read

CMS raised the FY2026 standard LTCH PPS federal rate by a net 2.9% to $50,824 per discharge, but that number only applies to a case that actually qualifies as an LTCH-level stay. Miss the clinical criteria, and the same discharge gets paid at the site-neutral rate instead, the lesser of the comparable IPPS per diem or the estimated cost of the case, which routinely runs tens of thousands of dollars below the standard rate. On a 40-bed LTCH running near capacity, the gap between classifying cases correctly and not can be the difference between a sustainable facility and one bleeding margin every month.

Long-term care hospitals billing sits at an odd intersection: acute-level documentation requirements, a length-of-stay test baked into the facility's own Medicare certification, and a site-neutral payment system layered on top that pays the same discharge two completely different ways depending on what the chart shows. Getting it right starts well before the bill goes out.

Here's how the 25-day average length of stay test works, what separates a standard LTCH payment from a site-neutral one, how TOB 11X interim billing actually runs, and where OIG has found the most money leaking out of this payment system.

The 25-Day ALOS Test: What Keeps a Facility Classified as an LTCH

Before any individual claim gets paid at the LTCH rate, the facility itself has to keep qualifying as an LTCH. That means meeting Medicare's conditions of participation for acute care hospitals, plus maintaining an average length of stay greater than 25 days across its Medicare qualifying stays. CMS counts every inpatient day a Medicare patient spent in the facility toward that average, not just the days Medicare actually paid for, so a facility can't improve its average by excluding non-covered stretches of a long stay.

This is a facility-level test, run across the whole patient population, not a per-patient rule. One short stay doesn't disqualify a patient's claim from LTCH payment, but enough short stays can eventually pull the facility's average below the 25-day threshold, and a facility that falls below it risks losing its LTCH payment classification entirely, not just for the cases that ran short.

Standard LTCH Payment vs the Site-Neutral Rate

Not every discharge from an LTCH gets paid at the standard LTCH rate, even at a facility that comfortably clears the 25-day average. Medicare's site-neutral payment policy pays a case at the lesser of the comparable IPPS per diem amount (including any outlier payment) or 100% of the estimated cost of the case, when that specific case doesn't meet the clinical criteria for LTCH-level payment, most commonly an immediate prior stay with at least 3 days in an ICU or CCU, or at least 96 hours of ventilator services furnished at the LTCH.

The practical consequence: two patients admitted on the same day, to the same LTCH, with similar diagnoses, can generate radically different payments depending entirely on whether the immediately preceding acute stay included the required ICU time or ventilator hours. That makes the transfer record from the referring acute hospital one of the most financially important documents in the entire LTCH chart, and it needs to be captured and verified before or at admission, not reconstructed at billing time.

TOB 11X: How LTCH Interim Billing Actually Runs

Long stays need a billing mechanism that doesn't wait until discharge to generate cash flow, and that's what type of bill 11X (and its related codes) exists for. CMS allows LTCHs to submit interim bills in intervals of at least 60 days, though many facilities bill every 30 days in practice to keep revenue moving on long-stay patients.

Every interim claim that isn't the final one in the series needs patient status code 30 ("still a patient") in the discharge status field. Get that wrong, or submit an interim claim too early, and you're looking at a returned or rejected claim on a case where the clock on your cash flow is already the whole reason you're interim billing in the first place.

CMS also finalized a new monthly adjustment process (MM14416) to verify patient status and service dates on PPS interim bills, implemented October 5, 2026, with the underlying policy effective for discharges on or after October 1, 2024. If your interim billing workflow hasn't been updated to reflect that verification step, build it in now rather than finding out through a returned claim.

Compliance History: What OIG Has Found in LTCH Payment

LTCH payment integrity has drawn OIG attention for well over a decade, and the two recurring findings are worth knowing before you build (or audit) your own workflow. A 2014 OIG review of the interrupted-stay policy, covering 2010 and 2011 claims, found that Medicare paid $10.3 billion to 449 LTCHs for services billed on behalf of roughly 254,000 beneficiaries, and identified a specific vulnerability: a beneficiary who returns to the same LTCH after the facility's fixed-day period, or who receives services at another facility before returning, can generate payment for what's effectively a second stay rather than a continuation of the first. OIG also found that 46% of LTCHs CMS had determined to be co-located with another hospital hadn't notified their claims processing contractor of that status, which matters because co-located facilities face a stricter interrupted-stay threshold.

A separate, older line of OIG findings focused on short-stay outlier discharges, where reviewers raised concern that some patients discharged right around the short-stay outlier threshold could have been treated as effectively, and at lower cost, in an acute-care setting, and flagged that LTCHs have a financial incentive tied to the timing of that discharge decision. Neither finding is brand new, but both describe exactly the kind of pattern a modern audit still looks for: readmissions clustered right around a fixed-day threshold, and discharges timed suspiciously close to a payment cutoff.

Building the LTACH Billing Workflow

None of this works as a billing-department-only fix. The site-neutral determination depends on documentation captured at admission, the interim billing cadence depends on a clean discharge-status field on every claim but the last, and the facility-level ALOS test depends on admission and discharge decisions made well before anyone touches a claim form.

Build the admission checklist first: referring hospital ICU/CCU days, ventilator hours, and the date of the immediately preceding acute stay, captured and verified before the patient's first interim bill goes out. Build the interim billing calendar second, tied to actual admission dates rather than a generic monthly schedule, so no claim is submitted outside the required 60-day minimum interval. Review the facility-level ALOS and co-located status at least quarterly, not just at annual cost-report time.

• Capture site-neutral documentation at admission. Never reconstruct ICU/ventilator history from memory at discharge.
• Calendar interim claims by actual admission date. Don't default to a flat monthly cycle that might fall inside the 60-day minimum.
• Confirm patient status code 30 on every non-final interim claim. This single field causes a disproportionate share of interim claim rejections.
• Review facility ALOS and co-located status quarterly. Both are cheaper to fix early than to discover during a certification review.

Our guide to hospital outpatient billing covers the acute-care side of the referral chain, and our observation vs inpatient billing guide walks through the classification decisions that happen just before a patient is ever referred to an LTCH.

Frequently Asked Questions About LTACH Billing

What average length of stay does a hospital need to qualify as an LTCH?

An LTCH's Medicare patients must have an average length of stay greater than 25 days for qualifying stays, on top of meeting Medicare's conditions of participation for acute care hospitals. CMS counts every inpatient day for Medicare patients toward that average, not only the days Medicare actually paid for, so a facility can't quietly exclude long non-covered stretches of a stay from the calculation.

What is the LTCH site-neutral payment rate?

Cases that don't meet LTCH criteria, most often because the patient didn't have 3+ days in an ICU/CCU or didn't receive at least 96 hours of ventilator services during the stay, are paid at the lesser of the comparable IPPS per diem amount, including any outlier payment, or 100% of the estimated cost of the case. That's typically far below the standard LTCH PPS rate, which is why correctly classifying each case at admission matters for revenue.

How often can an LTCH submit interim bills?

CMS allows LTCHs to submit interim bills (type of bill 11X) in intervals of at least 60 days, though many facilities bill every 30 days as a practical cash-flow matter. The first interim claim uses bill frequency code 2, continuing interim claims use code 3, and the final claim at discharge uses code 4, with patient status code 30 required on every non-final interim claim.

What is the FY2026 standard LTCH PPS payment rate?

CMS increased the FY2026 standard LTCH PPS federal rate by a net 2.9% after productivity and budget-neutrality adjustments, from $49,383 to $50,824, for LTCHs that meet quality reporting requirements. Facilities that fail to meet quality reporting requirements take a 2-percentage-point reduction to that update.