“There is a long history of policy analyses of the use of the 3-day prior hospital stay rule. It was introduced very early in the history of the Medicare SNF [skilled nursing facility] benefit at a time when most nursing homes (NHs) offered primarily custodial care and extended hospital stays were common. 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.
By the late 1970s, concerns about rising Medicare costs, particularly hospital costs, stimulated numerous efforts to rationalize policies that were inducing more hospitalizations; thus began the decades-old search for ways to reduce hospital transfers from NHs. A 2-state demonstration project studying the association of waiving the 3-day hospital stay requirement with Medicare hospital and SNF costs and outcomes was undertaken in Massachusetts and Oregon. Findings diverged substantially across the 2 states, and mortality and functioning did not differ, so Medicare chose not to change the policy. The short-lived Medicare Catastrophic Coverage Act, also eliminated the 3-day hospital stay requirement, creating the opportunity to assess its association with Medicare hospital and SNF costs. Two studies conducted at the time concurred in finding increased SNF use with little reduction in aggregate hospitalizations whether among direct NH admits or “conversions” of long-stay residents into skilled episodes. Indeed, the large increase in direct Medicare admissions into SNF contributed to higher Medicare costs but substantially reduced beneficiaries’ out-of-pocket payments, results not appreciated when the Medicare Catastrophic Coverage Act was repealed. While aggregate hospitalizations did not decline, whether those avoided by directly initiating an SNF stay among the long-stay population was not examined in detail, so the jury is still out on whether the increase in SNF days would be offset by avoiding a 3-day hospitalization.
The current pandemic-related experience with elimination of the 3-day hospital stay requirement adds to our knowledge about the use of the policy in the current environment when hospitalizations are rarer and shorter but costlier due to the intensity of services offered. The finding of Ulyte and colleagues that SNF conversions of long-stay residents into skilled care moderated considerably after large-scale vaccination efforts during the winter and spring of 2021 and after the pandemic abated suggests that general criteria of clinical need were being applied appropriately by NH staff around the country. It is true that for-profit and less staffed facilities relied on waivered SNF episodes more, and there was considerable interfacility variation in use. However, it would be more valuable to know how SNF episodes were concentrated across NHs after the worst of the pandemic passed temporally and geographically, since some COVID-19 hot spots continue to emerge even now after the end of the pandemic emergency. Thus, additional time and further analyses of the postpandemic use of the waiver and how it was used and by whom are clearly warranted.
Perhaps it is time to revisit the reasonableness of the 3-day prior hospital stay rule. Almost all Medicare Advantage plans have dropped it, largely because with their existing utilization review processes they are able to deflect hospital admissions and have greater flexibility in reimbursing NHs for their SNF-supported stays, all of which translates into savings for them. Furthermore, many accountable care organizations have received permission to waive the 3-day stay requirement, and the rapid growth of institutional special needs plans means that NHs running these plans have a strong disincentive to hospitalize their residents. Thus, the decades-old concerted effort to reduce incentives to hospitalize older individuals and those with frailty, such as NH residents, may have made the 3-day stay requirement obsolete. Updating and extending the analyses reported by Ulyte and colleagues into the period until the public health emergency is withdrawn in May or June of 2023 is something we should anxiously await.”
Full editorial, V Mor, JAMA Internal Medicine, 2023.4.24