Critter Corner: Are We Nearing the End of Medicare’s Three-Day Rule?

Dear Ernie and Jannette,

I recently saw a tweet from Seema Verma, the Administrator for the Centers for Medicare & Medicaid Services (CMS). She made it sound like an end is in sight for Medicare’s Three-Day Rule. Do you know if this is true?

Thanks for your help!

N. Dinsite

Dear N. Dinsite,

For our readers, the tweet you are referring to was on August 4 and stated:

#Medicare beneficiary who requires skilled care in a nursing home? Better be admitted for at least three days in the hospital first if you want the nursing home paid for. Gov’t doesn’t always make sense. We’re listening to feedback.”

She sent this tweet at a time when a federal lawsuit against the rule, first filed in 2011, has finally gone to trial. Please see Mr. Farr’s article from today for more details.

Also, recently, a bipartisan bill was introduced that would count observation stays towards the three-day rule. The Improving Access to Medicare Coverage Act of 2019 would ensure Medicare covers this doctor-recommended post-acute care by counting the time spent under “observation status” towards the requisite three-day hospital stay for coverage of skilled nursing care.

Why Observation Status Has Increased Over the Past 10 Years

Hospitals have shifted millions of patients to observation in recent years, and this number has been on the rise. There could be two reasons for this:

  • CMS also has imposed strict limitations on when someone can be admitted to the hospital. In general, if an admitting physician expects a patient will be discharged within two days, observation is the default.
  • Observation status saves CMS money. Medicare typically pays nearly one-third less for an observation patient. And, if a patient is in “observation status,” Medicare does not cover the skilled nursing care that may follow the hospital stay, which again saves the government many millions of dollars per year (but negatively affects patients and their families).

We certainly hope for an end to the three-day rule and observation status altogether. However, given the reasons above, expert Howard Gleckman believes that “Verma may not end the three-day rule outright, but she seems like to be looking for ways to ease its impact. And that would be good news for many older adults.”

Hop this is helpful,

Ernie and Jannette

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