24 Nov No 3 Day Rule
There was no formal process to appeal the rejection until a judge ruled in 2019 that Medicare beneficiaries should have the right to appeal the classification of “observation stays” and the resulting coverage provisions. 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 decision. This is due to Medicare`s three-day rule. This rule refers to care provided in a qualified care facility. Medicare Part A covers care in a qualified care facility only if the person is first hospitalized for three days. The problem is that Part A of Medicare is the only part that covers this additional service. This is not the case with Part B of Medicare. Many medical procedures, including surgeries that required several days or weeks in hospital in 1965, now require limited hospital stays or can even be performed on an outpatient basis. As a result of these procedures, patients may require qualified nursing or rehabilitation services offered by an NSF. As acknowledged by the Centers for Medicare & Medicaid Services (CMS) in 2014, provider stakeholders have long supported a permanent waiver of the three-day rule in the rules proposed by Responsible Care Organizations (ACOs), while the Medicare Payment Advisory Commission (MedPAC) has argued that up to two days of outpatient observation count as one three-day stay. Consumers and seniors` rights groups who filed the class action lawsuit against the Department of Health and Human Services (HHS) praised the fairness of the latest ruling.
As a health insurance agency owner with over 10 years of experience, I have expertly supported thousands of Medicare beneficiaries. What I`ve learned is that most retirees are extremely confused about their health insurance options, and rules like this don`t help. I believe that being in the hospital for three days, regardless of the type of stay assigned to the person, should always allow them to be covered by medicare in case they need to go to a qualified care facility. When a person is hospitalized under health insurance, he or she is assigned either as admitted or under observation. This wording makes the difference with regard to the three-day rule. People under observation are classified as outpatient, which is covered by Part B of Medicare. The so-called Medicare 72-hour rule is already being lifted in many cases to make health care more accessible to public health (PHE) during the COVID-19 emergency. A bill introduced in Congress on June 1, 2021, aims to provide permanent Medicare Part A coverage to patients whose three-day hospital stay includes a few days of observation. This rule has been criticized, but it still applies. For those who qualify, the payment structure for Part A coverage is divided into three sections: Due to changes in medical care in the half-century since the original health insurance legislation came into effect, it may now be medically appropriate for some patients to receive qualified care and/or rehabilitation services provided by NSFs without prior hospitalization. or in the case of a hospital stay of less than 3 days.
It may be medically appropriate for patients to go to SNFs earlier due to changes in medical care, as the length of hospital stay is shorter than it was decades ago, and the types of patients who stayed 3 days in a hospital hospital in 1965 no longer stay 3 days in a hospital hospital. This is why we have repeatedly expressed our interest over time to test alternatives to the SNSF 3-day rule.  This is where the rule becomes even trickier. The person must be hospitalized for three or more consecutive days, and these three days do not count the day of discharge or the time before admission that he or she can spend in an emergency room or on ambulatory observation. Coverage under the three-day rule has changed during the pandemic. Medicare granted an exemption to those who could not stay home because of Covid-19. This derogation was an attempt to help health systems maintain high levels of care without being so overwhelmed. This freed up space in the hospital and also allowed people to access care in a qualified care facility that otherwise might not have been able to do so. Beneficiaries still had to be hospitalized to be covered, but did not have to stay the three days. There are two important exceptions to the three-day rule: administrative and legislative measures have not mitigated problems related to compliance status. In October 2013, the CMS adopted the “two-midnight rule,” which sets out temporal criteria to clarify when physicians should admit inpatients or ambulatory patients. CMS also intended to reduce the number of long outpatient stays and short inpatient admissions.
The HHS Office of the Inspector General reported in 2016 that the two-midnight rule had not met these targets and that hospital stays had decreased in fiscal year 2014, while outpatient stays had increased.   Public Law 116-260, pp. 1629-1700 (December 21, 2020), rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR133SA-RCP-116-68.pdf Whether the three-day rule of the specialized care facility will change permanently is still open. While such issues are confusing to many, it`s always best to speak to a knowledgeable insurance agent for clarification if you have any questions. You can better explain rules like these within the Medicare system, allowing you to be better prepared for any challenges you face and make sure you have the right plan for your specific health care needs. However, if the SNSF does not give you this warning and you remain at the SNSF for treatment even though you have not complied with the three-day rule, the institution will not be able to charge Medicare for your stay. Due to the use of the waiver during the pandemic, the question now arises as to what to do with the three-day rule. Is it necessary to be admitted for three days instead of just being observed in the hospital? The abolition of the three-day hospitalization requirement corresponds to the reality of modern medicine.
 National Association of ACOs, NAACO`s Overview of the 2018 Medicare ACO Class, www.naacos.com/assets/docs/pdf/Overivew2018MedicareACOCohortFinal043018.pdf While the traditional Medicare program maintains the three-day requirement, Medicare Advantage (MA) plans are legally allowed to waive the three-day requirement and most do. Currently, approximately 39% of Medicare beneficiaries receive their health care through PA plans, either because MA is the only option offered by their former employers or unions as a health retiree or because they choose MA. Congress is expected to repeal the three-day hospitalization requirement for several reasons. • You pay a daily coinsurance premium of $185.50 (2021) for days 21 to 100.  Ann Sheehy, W. Ryan Powell, Farah Kaiksow. “Thirty-Day Re-observation, Chronic Re-observation, and Neighborhood Disadvantage” (Dec. 1, 2020), www.mayoclinicproceedings.org/article/S0025-6196(20)30858-2/pdf; “Compliance status may disproportionately burden Medicare beneficiaries in the most vulnerable neighborhoods” (CMA Alert) (December 17, 2020), medicareadvocacy.org/observation-status-may-disproportionately-burden-medicare-beneficiaries-in-the-most-vulnerable-neighborhoods/ The medical needs of Medicare-eligible individuals are constantly changing. Sometimes care requires a simple visit to the doctor. In other cases, a person may need to be hospitalized with the possibility of an extended stay.
Those who need additional care in a qualified care facility after discharge from hospital may find this difficult. The Notice of Eligibility for Care Act, 2015 (NOTICE) requires hospitals to inform patients of their ambulatory observation status if they receive outpatient treatment for more than 24 hours.  As of March 2017, hospitals are required to use the Medicare Ambulatory Notice of Observation (MOON) and verbally explain their status and consequences to patients on observation status. The MOON does not grant patients the right to hear and does not count time spent in hospital for the purposes of SNSF coverage. When Medicare went into effect in 1965, it limited coverage in a Qualified Care Facility (NSF) under Part A to beneficiaries who had been hospitalized in an acute care hospital for at least three consecutive days prior to discharge to an NSF.  The benefit, called long-term care, was literally considered a limited extension of a hospital stay.