Medicare Experiments With Dropping the Three-Day Hospital Stay Rule: 5 Things to Know

CMS is exploring whether or not dropping Medicare's nursing home coverage requirement of a preceding inpatient hospital stay of at least three days, according to a Kaiser Health News report.

Sean Cavanaugh, Medicare's deputy administrator, told Kaiser CMS is using new payment model pilot projects to determine whether eliminating the three-day rule improves quality and lowers costs. Here are five things to know from the report about the three-day rule and CMS' experiments to assess whether the requirement should stay in place.

1. The three-day requirement has led to problems for Medicare beneficiaries who were in the hospital under observation care rather than as inpatients, according to the report. Observation stays have been on the rise, and the number of observation patients who don't quality for Medicare nursing home care coverage increased by 88 percent during a six-year period, reaching 1.8 million in 2012.

2. The payment experiments that waive the three-day rule include the Medicare Pioneer Accountable Care Organization program. The Pioneer ACO project involves approximately 600,000 senior patients at more than 170 hospitals, according to the report. Under the Pioneer ACO model, patients who spent little or no time in the hospital can still receive nursing home care, which is covered by a set payment from Medicare shared by all of the patient's providers.

3. CMS' Bundled Payments for Care Improvement initiative is another experiment that eliminates the three-day rule. Under this initiative, which currently involves about 70 hospitals, Medicare provides a set fee for any of 48 procedures selected by a participating hospital. Patients admitted to hospitals involved in the initiative can qualify for a waiver to get nursing home coverage even if they don't have a preceding three-day hospital stay, according to the report.

4. Medicare Advantage plans, an alternative to traditional Medicare administered by private health insurers, are already allowed to disregard the three-day requirement. This year, 95 percent of Medicare Advantage plans waived the rule, according to an analysis conducted by health research firm Avalere Health for Kaiser.

5. Some have argued the Medicare program should get rid of the three-day requirement for nursing home coverage before the various payment experiments show results. For instance, Diane Paulson, a senior attorney at Greater Boston Legal Services who handles observation care appeals, told Kaiser nursing home care and other benefits should be covered if they are medically necessary. However, others have advocated for caution. Mark Froimson, MD, president of the Cleveland Clinic system's Euclid (Ohio) Hospital, told Kaiser it's important to ensure changing the long-standing requirement is safe.

More Articles on Medicare Payment:
How CMS' 2015 Payment Proposals Will Affect Hospitals, Physicians: 5 Things to Know From Moody's
Senate Issues Report on Medicare Audits: 3 Key Findings  
CMS' Medicare Recovery Audit Contractor Program: 8 Things to Know 


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