AHCA/NCAL Urges CMS to Count Observation Stays Toward Medicare Three-Day Rule

Letter to Verma: CMS already has the authority needed to implement the solution to this issue.

Washington, D.C. – American Health Care Association and National Center for Assisted Living (AHCA/NCAL) President and CEO Mark Parkinson and NCAL Executive Director Scott Tittle submitted a letter urging Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma to use the Agency’s authority to count time spent under “observation status” in a hospital toward satisfying the three-day inpatient requirement for Medicare beneficiaries seeking access to needed skilled nursing care.  In the letter to Verma, Parkinson and Tittle write:

“AHCA/NCAL was encouraged by your recent comment on Twitter about the three-day stay issue and government not always making sense. You also noted you were listening and taking feedback on this red tape issue.  We wanted to be sure to share with you again our position on this issue, which we have been advocating for years. AHCA/NCAL is part of a national coalition of 33 provider and beneficiary organizations that are dedicated to preserving Medicare beneficiaries’ access to necessary skilled nursing care following a hospital stay, regardless of whether that stay was classified as inpatient or outpatient observation. 

“As you know, under current law, a Medicare beneficiary must spend at least three days as a hospital inpatient for Medicare to cover a subsequent stay in a skilled nursing center (known as the “Skilled Nursing Facility 3-day rule”). Each year thousands of beneficiaries are unable to access their skilled nursing benefit because of the administrative classification of their hospital stay, even if the stay is deemed medically necessary, and even if the stay spans three days or more.

“Most recently, a section of the Office of Inspector General (OIG) July 2019 report called for CMS to analyze the potential impact of counting time spent as an outpatient toward the three-night requirement for SNF services so that beneficiaries receiving similar hospital care have access to these services.  AHCA/NCAL believes that CMS already has the authority needed to implement the solution to this issue.

“AHCA/NCAL urges CMS to take action and eliminate a confusing policy barrier that each year needlessly prevents thousands of Medicare beneficiaries from accessing their benefit to high quality, post-acute care. CMS can fix this problem immediately by recognizing observation stays as qualifying stays for the purposes of the three-day stay requirement.”

Read the complete letter here.

Hospitals’ use of observation stays and the amount of time patients spend in observation status are both increasing. In December 2016, the Inspector General reported that 748,337 long hospital stays were called outpatient, including 633,148 outpatient stays of three or more days in FY 2014.

AHCA/NCAL continues to support efforts and legislation that ensures that time spent under “observation status” in a hospital counts toward satisfying the three-day inpatient hospital requirement for coverage of skilled nursing services under Medicare.

For more information about observation stays and the three-day stay requirement, visit the AHCA/NCAL website​.

The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) represents more than 13,700 non-profit and proprietary skilled nursing centers, assisted living communities, sub-acute centers and homes for individuals with intellectual and development disabilities. By delivering solutions for quality care, AHCA/NCAL aims to improve the lives of the millions of frail, elderly and individuals with disabilities who receive long term or post-acute care in our member facilities each day. For more information, please visit www.ahca.org or www.ncal.org.