New Bill Would Close “3-Day-Stay” Loophole for Medicare Coverage

A bipartisan bill that would close the “three-day-stay” loophole for Medicare coverage was introduced Thursday in the House and Senate.

The Improving Access to Medicare Coverage Act of 2013, which eases access to Medicare coverage in skilled nursing facilities following a hospital stay under observation status, was introduced in the Senate by Sen. Sherrod Brown (D-Ohio) and in the House by Reps. Joe Courtney (D-Conn.) and Tom Latham (R-Iowa). 

As it is now, seniors who need skilled nursing care following a hospital stay with an “observation” classification face the possibility that their care won’t be covered by Medicare Part A, as current coverage requirements call for three days under an “in-patient” status, known as the “three-day-stay” rule. 


What often happens is that individuals aren’t told while they’re in the hospital whether they’re being admitted as an inpatient, or under observation. Then when they transition to a skilled nursing facility, they’re forced to pay for those services out of pocket because Medicare won’t cover their care.

The new legislation would change the requirement so that time spent under observation status in a hospital would count toward satisfying the three-day stay minimum and ease the burden on patients to qualify for Medicare coverage. 

“When an individual is in the hospital, the only thing that should be on her mind is a healthy recovery,” said Mark Parkinson, President and CEO of the American Health Care Association/the National Center for Assisted Living (AHCA/NCAL). “We should not allow technical tasks such as coding interfere with providing the best care possible in all facilities. As an advocate for seniors and those individuals requiring skilled nursing care, our Association commends Sen. Brown and Reps. Courtney and Latham for supporting this effort and focusing on the most important matter: quality care.”


Similar legislation was introduced in 2011, but didn’t end up receiving committee consideration. Last August, a CNN:Money article called the rule “ripe for elimination” in light of the shortening length of hospital stays due to medical advances and hospitals trying to cut costs. 

“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,” said Rep. Courtney at the time. “But Medicare should be able to cover rehabilitative services.” 

Written by Alyssa Gerace