Meadowbrook Care Center

Calls to Count Observation Stay Toward CMS’s Medicare Three-Day Rule

Today, the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) President and CEO Mark Parkinson and NCAL Executive Director Scott Tittle call on the Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma to use the Agency’s authority to count time spent under “observation status” in a hospital toward satisfying the three-day inpatient requirement for Medicare beneficiaries seeking access to needed skilled nursing care.

Medicare patient in Hospital Photo Credit: Agency for Healthcare Research and Quality

In the August 28th letter to Verma, Parkinson and Tittle write: “AHCA/NCAL was encouraged by your recent comment on Twitter about the three-day stay issue and government not always making sense. You also noted you were listening and taking feedback on this red tape issue.  We wanted to be sure to share with you again our position on this issue, which we have been advocating for years. AHCA/NCAL is part of national coalition of 33 provider and beneficiary organizations that are pushing CMS to allow Medicare beneficiaries’ access to necessary skilled nursing care following a hospital stay, regardless of whether that stay was classified as inpatient or outpatient observation.

“As you know, under-current law, a Medicare beneficiary must spend at least three days as a hospital inpatient for Medicare to cover a subsequent stay in a skilled nursing center (known as the “Skilled Nursing Facility 3-day rule”). Each year thousands of beneficiaries are unable to access their skilled nursing benefit because of the administrative classification of their hospital stay, even if the stay is deemed medically necessary, and even if the stay spans three days or more,” say Parkinson and Tittle.

“Most recently, a section of the Office of Inspector General (OIG) July 2019 report, urged CMS to analyze the potential impact of counting time spent as an outpatient toward the three-night requirement for SNF services so that beneficiaries receiving similar hospital care have access to these services.  AHCA/NCAL believes that CMS already has the authority needed to implement the solution to this issue, add Parkinson and Tittle.

“AHCA/NCAL urges CMS to take action and eliminate a confusing policy barrier that each year needlessly prevents thousands of Medicare beneficiaries from accessing their benefit to high quality, post-acute care. CMS can fix this problem immediately by recognizing observation stays as qualifying stays for the purposes of the three-day stay requirement.”

Fixing a Policy Problem

According to AHCA/NCAL a Washington, DC-based group representing over 13,700 nonprofit and proprietary skilled nursing centers, assisted living communities, sub-acute centers and homes for disabled persons, hospitals’ use of observation stays and the amount of time patients spend in observation status are both increasing. In December 2016, the Inspector General reported that 748,337 long hospital stays were called outpatient, including 633,148 outpatient stays of three or more days in FY 2014.

AHCA/NCAL continues to support efforts and legislation that ensures that time spent under “observation status” in a hospital counts toward satisfying the three-day inpatient hospital requirement for coverage of skilled nursing services under Medicare.

Just over two months ago, the Energy and Commerce Health Subcommittee took a close look at the use of observation stays to qualify for CMS’s three-day requirement. The National Observation Stays Coalition, of which AHCA/NCAL is a member, submitted a statement for the record at the hearing entitled, “No More Surprises: Protecting Patients from Surprise Medical Bills.”  The Coalition was established to address the surprise medical billing issue of the observation stays matter.

Reducing Out-of-Pocket Expenses

Recent Capitol Hill and Trump Administration efforts have focused on eliminating burden and unanticipated/surprise medical bills, caused by CMS’s three-day inpatient hospital requirement, that significant increase out-of-pocket-costs and patient-provider relationship.

In the Coalition’s statement, it is noted that the observation stays matter is one such area that should be addressed as part of comprehensive efforts to eliminate surprise medical bills.  Counting observation status toward the 3-day inpatient requirement in the Medicare program is a common-sense policy to fix this issue and it does not affect hospital care. But it does protect beneficiary’s ability to receive needed post-acute nursing home care.


Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top