Medicare’s Required Three-Day Hospital Stay May Be No More
By Steven Lavenda, Partner, Advisory Services
After 11 years of litigation, a court ruling in Barrows v. Becerra cleared the way for thousands of Medicare beneficiaries to appeal non-coverage of nursing home care following a hospital stay.
The issue for the past decade has centered on a hospital’s use of “observation” status for patients receiving services. Patients who were not formally admitted to the hospital were denied coverage for skilled nursing facility care under Medicare Part A because they did not have the required three-day, in-patient hospital stay.
There was no formal process to appeal the denial until, in 2019, a judge ruled that Medicare beneficiaries should have the right to appeal the classification of “observation” stays and resulting coverage determinations. The Centers for Medicare & Medicaid Services (CMS) appealed the decision, and on January 25, 2022, the U.S. Court of Appeals for the 2nd Circuit upheld the original ruling.
That could mean a boon for skilled nursing facilities, which have long claimed that CMS costs them patients by encouraging hospitals to code patients for stays shorter than three days. With a formal appeals process in place, hospitals may be less likely to code for shorter inpatient stays.
Medicare’s so-called 72-hour rule is already being waived in many cases as a temporary way to make healthcare more accessible during the COVID-19 public health emergency (PHE). A bill filed in Congress on June 1, 2021, aims to permanently provide Medicare Part A coverage for patients whose three-day hospital stay includes some days under observation status.
Provider advocacy groups have long supported a permanent waiver of the three-day rule, while the Medicare Payment Advisory Commission (MedPAC) has supported allowing up to two outpatient observation days to count toward a three-day stay. Consumers and senior advocacy groups that brought the class action suit against the Department of Health and Human Services (HHS) praised the fairness of the recent decision.
As part of its January 25th ruling, the U.S. Appeals court for the 2nd circuit ordered HHS to establish an appeals process for patients to challenge hospital decisions to label their stays as “for observation only.” It will be available to current and future patients. The Court also ordered HHS to develop an expedited process for beneficiaries previously denied Part A coverage despite having spent three days in the hospital under observation or receiving care.
Although HHS can further appeal this decision, the hope within the skilled nursing facility industry is that HHS will bring this matter to a close. According to the Center for Medicare Advocacy, the number of beneficiaries in the original suit is estimated to be in the hundreds of thousands with claims dating as far back as 2009.
If you have any comments or questions, please do not hesitate to contact a Marcum Advisor.
