Medicare Patients at Some Hospitals Get Special Exemptions

Traditionally, Medicare has required that its beneficiaries have at least three days in the hospital to qualify for follow-up nursing home care. The Centers for Medicare and Medicaid Services (CMS) is testing the effectiveness of that requirement by exempting patients at some hospitals participating in certain Affordable Care Act (ACA) pilot projects. These projects have been set up to test ways to improve Medicare service while reducing or stabilizing costs.


Medicare has applied the waiver of the three-day rule even to patients kept for observation, which is considered an outpatient service. Until the waiver, no matter how long observation patients stayed, it didn’t count toward Medicare’s requirement for short-term nursing- home coverage.


The experiment has a rational basis. Experts have noted that getting patients into skilled-nursing facilities expedites their care and prevents them from clinically declining at home—and potentially another admission. And if patients spend less time in the hospital, it frees up resources for sicker patients and saves money for Medicare (nursing home  or home-health care is less expensive than a hospital stay).


One of the payment experiments involves about 600,000 Medicare beneficiaries at more than 170 hospitals participating in Pioneer Accountable Care Organizations. Under this pilot, patients who spend little or no time in the hospital can still qualify for Medicare’s nursing-home benefit.  (Susan Jaffe, Kaiser Health News, “Some seniors win Medicare exemptions for nursing-home coverage in pilot program,” Washington Post, July 20, 2014)


CMS has similar experiments underway with hospitals that are part of the bundled payment care initiative.


Hospital officials participating in the pilot programs say the waiver should be used conservatively to ensure that patients don’t leave the hospital prematurely, are not kept longer than necessary and enter a nursing home only if they have the potential for short-term rehabilitation. (Susan Jaffe, Kaiser Health News, “Some seniors win Medicare exemptions for nursing-home coverage in pilot program,” Washington Post, July 20, 2014)


A Medicare spokesperson said if these tests are successful, the Secretary of Health and Human Services has the authority to expand the tests.


Observation Status


Medicare’s three-day rule has frustrated seniors who don’t qualify for nursing-home coverage because they were in the hospital under observation rather than being admitted, noted Susan Jaffe from Kaiser Health News in her Washington Post article. The number of observation patients ineligible for Medicare-covered nursing-home care has shot up by 88 percent in just six years, to 1.8 million in 2012, she wrote.


As reported in earlier posts here, patients must be in the hospital over two midnights in order to qualify as an inpatient rather than as a patient under observation. The two-midnight rule has generated a great deal of controversy and has been delayed.




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