Medicare’s 3-Day Stay Rule for Skilled Nursing Coverage “Ripe for Elimination”

A bipartisan congressional bill seeks to change the way Medicare determines whether or not a skilled nursing or rehabilitation stay following a hospitalization qualifies for coverage, but a legislation tracker website only gives it a 1% chance of becoming law.

Currently, when Medicare beneficiaries are discharged to a skilled care facility for rehabilitation, Medicare’s coverage only kicks in if beneficiaries have been coded as an in-patient at a hospital for at least three days, known as the three-day stay rule. 

recent CNN:Money article had this to say:


Many argue that the decades-old three-day rule is ripe for elimination, since medical advances have shortened hospital stays. The American Medical Association has called for it to end; in May, Medicare told the AMA in a letter that the agency hasn’t found a way to do that under current law.

Medicare does not require hospitals to tell you your admission status, except when you’re transferred from inpatient to observation. “People are told as they leave the hospital to bring their checkbooks to the nursing home,” says Toby Edelman, an attorney at the Center for Medicare Advocacy.

Faced with unaffordable bills, some seniors forgo needed care altogether, says Elise Smith of the American Health Care Association, a nursing home trade group.


House Representative Joseph Courtney’s (D-Ct.) bill, Improving Access to Medicare Coverage Act of 2011, wants to prevent that from happening.

“The bill will deal with a problem which is growing all across the country,” said Courtney during a Wednesday press conference on the legislation.

In the last few years, there has been a trend toward patients who are admitted and treated at hospitals finding their cases put into an “observation care” coding category, rather than “inpatient,” the representative explained. This trend is growing more and more according to data from the Medicare Payment Advisory Committee, he said, and affects the payment given by Medicare to the hospital.

“The problem is, when [patients are] in that coding system, they’re disqualified from getting Medicare coverage when they’re released from the hospital for rehabilitative care,” said Courtney. 

H.R. 1543/S. 818, which has 35 bipartisan cosponsors in both the House and the Senate, seeks to change that.  

“My legislation says, ‘Three days is three days.’ We don’t care how it gets coded between the government at the hospitals—that’s an issue for them to work out between themselves,” Courtney said. “But Medicare should be able to cover rehabilitative services.” 

The legislation has the support of AHCA, which is concerned that Medicare beneficiaries’ access to skilled nursing facility care is constrained by the increased use of observation stays. The concern is that without qualifying for Medicare coverage, patients receiving skilled nursing and rehabilitation services will not get as much care as they need because they can’t afford to pay for it on their own. 

Basically, the bill seeks to address the situation by deeming an individual receiving “outpatient” observation services in a hospital to be an “inpatient” with respect to satisfying the three-day stay requirement, says AHCA.

Currently, Courtney’s bill, whose cosponsors include Senators Olympia Snowe (R-Me.) and John Kerry (D-Mass.) and Rep. Tom Latham (R-Ia.), has been referred to the House Committee on Energy and Commerce and Committee on Ways and Means, and the Senate Committee on Finance, to determine whether it will continue on for House and Senate consideration. 

Unfortunately for the bill, which was introduced in both the House and the Senate on April 14, 2011, its chances of success are slim., a tool powered by Civic Impulse, LLC that provides legislative tracking, gives it only a 1% chance of being enacted, based on factors including its status as a bill re-introduction.

View the bill text

Written by Alyssa Gerace

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