Fed up with the uncertainty and confusion surrounding Medicare’s rules for when a patient should be admitted to the hospital or classified as under observation status, hospitalist leaders are urging Congress to address one key piece of the issue – the 3-day inpatient hospitalization requirement for coverage of a skilled nursing facility stay.
Earlier this year, a small group of lawmakers introduced bills in both the House and Senate to alter the requirement that Medicare beneficiaries must be hospital inpatients for at least 3 days in a row to qualify for Medicare coverage of their stay in a skilled nursing facility (SNF). Under the proposals, time spent in observation status at the hospital, which Medicare considers to be "outpatient" treatment, would be counted toward Medicare’s 3-day requirement.
UPDATE: "CMS changes observation status rules"
Dr. Ron Greeno
The bills (H.R. 1179/S. 569), introduced in March, are slowly gaining steam on Capitol Hill, said Dr. Ron Greeno, chief medical officer at Cogent HMG and chairman of the Society of Hospital Medicine’s Public Policy Committee.
Dr. Greeno said there are a number of reasons why he’s optimistic that the bills will move faster than some other health care issues currently before Congress. For starters, the bills have at least some bipartisan support and the legislation is circulating in both houses of Congress. Another reason the bills could be successful in Congress is that the issue is easy to understand and will help seniors, a key voting demographic.
"It’s very hard for legislators at this point to say that they aren’t going to correct this really clear inequity in the system," Dr. Greeno said.
Forced to choose
The biggest impact of the current 3-day requirement falls on Medicare patients who are facing either a significant cost burden or potentially less than ideal care. Patients who don’t meet the 3-day inpatient requirement must pay out of pocket for their SNF stay or come up with a less comprehensive plan of care at home.
"We try to piecemeal a plan together that may not be entirely safe for them," said Dr. Ann M. Sheehy, head of the division of hospital medicine at the University of Wisconsin and a member of SHM’s Public Policy Committee. "I certainly think that we end up sending patients home that are more likely to be readmitted."
But the legislation could hit a snag in Congress due to cost.
"It will increase the number of patients who qualify to have their SNF care covered by Medicare and so there’s a cost," Dr. Greeno said. "I don’t think there would be any resistance to either of these bills if it didn’t come with a pretty hefty bill. That’s where the push-back will come."
The Congressional Budget Office, which produces cost estimates on legislative proposals, has not yet scored the cost of the bill, Dr. Greeno said, but it’s safe to say the price tag will be significant over the next decade since it will qualify more patients for the SNF benefit. That leaves lawmakers to agree on a way to offset the cost, something that has already stalled progress on other issues with bipartisan support, such as repealing Medicare’s Sustainable Growth Rate (SGR) formula.
If the 3-day rule legislation passes this year, it will be a "huge victory" and send the signal that Congress is serious about reforming observation status, said Dr. Sheehy. But it will still leave hospitalists and other admitting physicians with a set of dysfunctional rules on when to employ observation status, she said.
The problem, Dr. Sheehy said, is that observation status has expanded dramatically in recent years as Medicare auditors have returned hundreds of millions of dollars to the Medicare program by deeming many inpatient admissions as inappropriate. Perhaps as a result of the aggressive auditing by Medicare, the number of Medicare beneficiaries classified as receiving observation services for more than 48 hours has grown from about 3% in 2006 to about 8% in 2011, according to the CMS.
Clint Thayer, UW Department of Medicine
Dr. Ann M. Sheehy
"Observation status right now is so dysfunctional because it has expanded greatly under audits to include so many patients that it’s almost hard to envision a way that it can become functional again," Dr. Sheehy said. "It’s so far from where it was intended to be that I don’t know how it could be fixed."
Two midnights
In May, the agency proposed to simplify the current observation rules by creating a "time-based presumption" of medical necessity for hospital inpatient services based on the patient’s length of stay. The plan was floated as part of the 2014 Hospital Inpatient Prospective Payment System proposed rule.