History of the 3-day hospital stay requirement for SNF coverage

An interesting article by Mor (2023) examines the history of the requirement for a 3-day hospital stay for Medicare to cover a skilled nursing facility (SNF) transfer. The 3-day requirement:

…was introduced very early in the history of the Medicare SNF benefit at a time when most nursing homes (NHs) offered primarily custodial care and extended hospital stays were common.2 To ensure an adequate medical evaluation, hospitalization was deemed critical, so direct admissions to SNF for medical treatment were considered inappropriate. Direct admissions from home to NHs were for custodial care and not post short-term care, and when long-stay NH residents became sick, the lack of available resources in most NHs made it necessary to hospitalize them. There are several avenues into an NH that can be affected by the 3-day rule. First, admission directly into an NH for an SNF stay is not allowable within traditional Medicare, meaning that admission without entering the hospital requires private payment or Medicaid, for those already eligible. Second, hospital stays shorter than 3 days do not generate a Medicare-covered SNF stay. Finally, NH residents whose existing medical conditions worsen cannot be classified as skilled care (and receive Medicare reimbursement) without hospital admission. As is clear, each of these policy features might stimulate more hospitalizations.

Demonstrations to waive the 3-day requirement for SNF transfer in Massachusetts and Oregon in the late 1970s had mixed results so Medicare decided not to change this rule. Passage of the Medicare Catastrophic Coverage Act did briefly waive the requirement and studies found that this resulted in a “…large increase in direct Medicare admissions into SNF contributed to higher Medicare costs but substantially reduced beneficiaries’ out-of-pocket payments.” Nonetheless, the Catastrophic Coverage Act was eventually repealed.

During COVID-19 public health emergency, the 3-day rule was also waived. Ulyte et al. (2023) found that the share of SNF stays without a 3-day stay increased due to the waiver but “overall SNF care costs did not increase substantially; for LTC [long-term care] residents.”

The author notes that most Medicare Advantage plans have waived the 3-day rule–in large part because they have more extensive utilization review processes already in place–and many accountable care organizations (ACOs) have also waived the 3-day rule.

You can read the full article here. Interesting throughout.