Study: Three-Day Hospital Requirement for Post-Hospital Care In a Skilled Nursing Facility Increases Medicare Costs

In order to qualify for Medicare Part A coverage of a post-hospital stay in a skilled nursing facility, the traditional Medicare program requires that the beneficiary first be hospitalized as an inpatient for three consecutive days, not counting the day of discharge.  This requirement has been in place since the Medicare program was enacted more than 50 years ago, when the length of stay in an acute care hospital for people age 65 and over was 13 days.[1]  Today, the average length of stay for all patients is less than five days.[2]

The Improving Access to Medicare Coverage Act of 2017 (H.R. 1421, S.568) is federal legislation that would count all time spent in a hospital – whether inpatient or outpatient “observation.”[3]  Although there is strong bipartisan support for this pending legislation,[4] the Congressional Budget Office (CBO) has not given the bills an official “score” – meaning that the CBO has not determined how much the legislation would cost.  Congress generally wants legislation to be “paid for” and will not pass a bill unless it has been scored by the CBO.

A new study of the three-day requirement finds that the three-day inpatient hospital requirement increases Medicare spending by adding costs for both skilled nursing facilities and rehospitalizations.[5]  The analysis is based on 2.9 million inpatient hospital discharges in four states (Arizona, Florida, New York, and Washington) between 2004 and 2013.

The Center for Medicare Advocacy questions some of the statements and assumptions made in the research – e.g., that patients may prefer to go to a skilled nursing facility for unnecessary care because the care is “free.”  Nevertheless, the analysis provides support for the conclusion that the three-day inpatient requirement, by itself, imposes costs on the Medicare program that may not be necessary. 

Certainly medical care in 2018 is different from medical care in 1965 and health care conditions that required extensive hospitalization 52 years ago may be treated quite differently today.  Medicare Advantage plans are permitted to waive the three-day hospital requirement and many demonstration projects similarly waive the requirement, although the Medicare Payment Advisory Commission is (inexplicably) considering a recommendation to add an inpatient hospital requirement to all post-hospital settings.[6]