The Three-Day SNF Rule: A Legislative and Regulatory Analysis

Balancing patient advocacy with access to Part A Medicare skilled nursing benefit.

The ambiguities of Medicare regulations often create conundrums for case managers and physician advisors as we try to advocate for our patients while remaining compliant.

One area that often creates a dilemma in balancing patient advocacy with compliance is access to the Part A Medicare Skilled Nursing Facility (SNF) benefit.

The Medicare program was enacted in 1965. The program included the current Part A SNF benefit of 100 days of coverage per benefit period, with days 1 to 20 provided without a copayment. Access to this benefit was initially limited to patients who had a three-day inpatient hospital stay within the previous 14 days, which was later modified to the current requirement of 30 days. As recently as 1972, the average length of stay for a hospitalized patient was 12 days, so reaching that three-day requirement was not difficult. In fact, it was not until the Recovery Audit Contractor (RAC) demonstration project began in 2005 that the qualifications for inpatient admission were carefully scrutinized; prior to that time, patients needing skilled care were often admitted as inpatients for three days in order to access the benefit. Interestingly, until 1980, Medicare beneficiaries could not access their home health benefit without a three-day inpatient hospital admission.

The average inpatient length of stay for Medicare beneficiaries in 2016 is 5.5 days. Medical advancements have led to more efficient care. As an example, while patients with heart attacks were often kept on bedrest in the hospital for over a week in the “old days,” with the advent of stenting and 90-minute door-to-balloon programs, it is now possible to discharge such a patient in 24-48 hours. With average life expectancy increasing, we are also seeing more frail patients who experience a sudden change in condition, such as after a fall with a non-surgical fracture, or after outpatient surgery, who would clearly benefit from care in a SNF, but are unable to access it due to the three-day requirement. I doubt anyone would argue against the notion that this requirement is obsolete and potentially harms beneficiaries, so why hasn’t it been eliminated?

It is not from lack of trying. For almost a decade, a consortium of organizations, including the American Case Management Association and the Center for Medicare Advocacy, have lobbied Congress to pass the Improving Access to Medicare Coverage Act, a bill that has been introduced by U.S. Rep. Joe Courtney of Connecticut year after year. That bill would count days spent as an outpatient with observation as part of the three-day Part A SNF requirement. Yet year after year, the bill languishes in the House.

But history may give us a clue about the hesitancy of the Centers for Medicare & Medicaid Services (CMS) to support such a proposal. Enacted in January 1989, the Medicare Catastrophic Coverage Act of 1988 eliminated the three-day stay requirement, along with extending the coverage period and adjusting copayments. Overall, these changes led to an increase in Part A SNF spending, from $964 million in 1988 to $2.8 billion in 1989. Not surprisingly, the law was repealed a year later.

CMS does have a model upon which it could expand Part A SNF coverage without risking bankruptcy of the Medicare Trust Fund: by using guidelines like those required for access to Inpatient Rehabilitation Facilities (IRFs). Coverage for IRFs requires that patients be able to tolerate three hours of therapy a day, and because of the complexity of their nursing, medical management, and rehabilitation needs, that they can reasonably be expected to benefit from an inpatient stay and an interdisciplinary team approach to the delivery of rehabilitation care. Similarly, CMS could develop guidelines that enable access to Part A SNF benefits for patients without a three-day inpatient stay who, for example, have had an acute change in their health and would benefit from skilled care and are able to tolerate two hours of therapy a day. CMS could require consultation with a rehabilitation medicine physician and specific documentation requirements, as they do with IRF admissions.

But while we wait for a solution to the three-day requirement problem, we need to be sure our patient has the mandatory inpatient stay of three or more days. A recent post on a discussion forum raised a question about counting those days. In the example, the patient was in the emergency department in the evening, and the admission order was written prior to midnight, but the patient was not transported to their inpatient bed until after midnight, raising the question of whether that first day counts as an inpatient day. Does it?

CMS tells us that a “Medicare beneficiary is considered an inpatient of a hospital if formally admitted as an inpatient pursuant to an order for inpatient admission by an ordering practitioner.” That means an inpatient admission order is required (unless you are declaring intent, as described in a previous article). But what is formal admission? CMS never tells us. Since we do not have a definition of “formal admission” from CMS, we need to determine if there is a way to know if that day will be counted. And in this situation, our coding and billing staff can help us.

Every visit is billed to Medicare in a standard format known as the UB-04. On that form there is a field for the date and time of inpatient admission and a field for the statement covers date, which will indicate the date of discharge. If a Part A SNF claim is submitted, the CMS common working file will take the inpatient admission date and the discharge date and calculate the number of inpatient days. If there are three or more days, the Part A SNF claim will be paid.  

That means one needs to determine what date the coding and billing staff use when preparing the claim. In our example, if they use the date of the admission order, that first day will count. If they use the first entry by the nurse on the inpatient unit, the first day will not count. And if they look elsewhere, perhaps at the time the registration staff changes the patient’s status in the registration system or the date that the Important Message from Medicare is signed, that first day may or may not count.

Anecdotally, the majority of hospitals use the date and time of the admission order. And that makes sense. Even though the patient may still be in the emergency department, that admission order signifies that the admitting physician has determined that inpatient admission is warranted and has agreed to assume care of the patient from that point forward. This same concept also applies to the counting of hours of observation services; once the order is given, the care transitions from emergency department care to observation care, even if the patient remains in the same bed, in the same area.

Of course, the three-day SNF policy is not all about counting days off a calendar, because the Medicare Benefit Policy Manual tells us that “in order to qualify for post-hospital extended care services, the individual must have been an inpatient of a hospital for a medically necessary stay of at least three consecutive calendar days.” But I am going to leave the question of defining medical necessity and the varying medical necessity standard for days one and two, compared to day three, for another time.

EDITOR’S NOTE

Read the OIG report on this issue released on Wednesday.

Program Note:

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