Critics call the three-day inpatient stay requirement for patients to qualify for Medicare coverage at a skilled nursing facility archaic, irrelevant, and a threat to patient safety.
Skilled nursing facilities and their partners are pushing hard to reform a half-century-old law that requires a hospital-inpatient stay spanning three midnights to qualify patients for Medicare coverage at nursing homes.
Led by the American Health Care Association, which represents 13,500 long-term and post-acute care facilities, a coalition of nearly three dozen national organizations is seeking to change the law,, contending the three-day stay requirement is outdated and denies Medicare beneficiaries access to medically necessary services.
"On average, hospital stays are much shorter than they were in the 1960s, but the three-day stay requirement still applies to all Medicare patients. … As the hospital stays become shorter, the effect of the three-day rule is to block more and more Medicare beneficiaries from being able to access the skilled nursing facility benefit," says James Michel, senior director of Medicare reimbursement and policy at AHCA.
Under Medicare law, a patient must be categorized as an inpatient at an acute-care hospital for at least a span of three midnights to qualify for Medicare Part A coverage of SNF stays. Patients categorized as under observation at a hospital are considered outpatients under the law, and days under observation do not count toward the three-day stay requirement.
The Improving Access to Medicare Coverage Act of 2017 would allow Medicare beneficiaries to count observation days toward the three-day stay requirement. The 34-member Observation Stays Coalition includes several physician and patient-advocacy organizations, but hospital groups such as the American Hospital Association have not joined the coalition.
The legislation has 21 bipartisan co-sponsors in the Senate and 71 bipartisan cosponsors in the House.
Richard Salter, co-owner of Salter Healthcare, a Massachusetts-based post-acute care organization that operates three SNFs, says the three-day stay requirement is detrimental to Medicare beneficiaries.
"It's dramatically reducing the number of admissions to SNFs. In some cases, people are being sent home from hospitals unsafely," he told HealthLeaders recently.
In March, a new law went into effect that requires hospitals to give notice to Medicare beneficiaries on observation status that their outpatient categorization could affect Medicare coverage. The Medicare Outpatient Observation Notice is an inadequate protection for most elderly hospital patients, Salter says.
"Basically, what they get is a notice that says, 'We are going to observe you, rather than treat you, and that will affect your ability to get post-acute care in certain settings.'
One of the House sponsors of the Improving Access to Medicare Coverage Act, U.S. Rep. Joe Courtney, D-CT, recently co-authored an editorial in the Journal of Hospital Medicine calling for reform of the inpatient-stay requirement.
In it, Courtneyand his co-author, Ann Sheehy, MD, MS, claim the Office of Inspector General reported a $10,503 beneficiary out-of-pocket cost per uncovered SNF stay following an observation hospitalization in 2012.
They also say several key changes in hospital stays since Medicare was launched in 1965 make a change necessary. Among them:
- Average hospital length of stay for patients 65 and older in 1965: 14.2 days
- Average hospital length of stay for patients 65 and older today: 5.2 days
- From 2006 to 2014, Medicare beneficiary outpatient visits at hospitals, including all observation stays, increased 44.2% nationally
The editorial also cites a research article in the Journal of Hospital Medicine that examines the potential safety threat posed by the three-day requirement. The researchers reviewed actual discharge rates from two hospitals to SNFs when hospitalists recommended that a patient receive care at a nursing home.
"Fewer than 20% of previously community-dwelling hospitalist patients followed recommendation for post-acute facility stay after observation hospitalization, and more than 40% cited financial concerns as the reason for declining. Patients recommended for SNF also were more likely to be rehospitalized in the subsequent 30 days after discharge, confirming this as a vulnerable patient population," the researchers wrote.
"The three-day rule is becoming increasingly irrelevant as a utilization management tool," Michel says. "It is archaic. It is a vestige of a Medicare program that looked very different when it was established compared to today."
Two-Pronged Effort
The Access to Medicare Coverage Act faces a daunting hurdle in Congress, Michel says. "The reality is, the three-day rule acts as a barrier to Medicare covering services for beneficiaries who might otherwise need to get care in a skilled nursing center. So, any easing of that rule is going to result in increased spending, which creates a barrier in Congress."
The Congressional Budget Office has yet to score the legislation.
AHCA is also pursuing a regulatory strategy at the Centers for Medicare & Medicaid Services (CMS), Michel says.
"The inpatient and outpatient designations were established in regulations. They were not established in statute. So, in our interpretation, CMS can define inpatient status and outpatient status however the agency likes. We are suggesting that CMS consider observation stays as inpatient stays, only for satisfying the SNF three-day stay rule, not for billing or payment."
Christopher Cheney is the CMO editor at HealthLeaders.