Reg's Blog

SNFs: 3 Overnight Stay Requirement Returning

As the Public Health Emergency (COVID) ends, healthcare providers will revisit pre-pandemic policies as a slew of waivers expire. One waiver particularly impactful to hospitals and SNFs is the requirement of a 3 Overnight (3 Day Stay) for a patient to receive Part A Medicare benefits in a SNF. Recall, the rule pre-pandemic was that a person had to be admitted to an acute hospital with a stay of at least 3 overnights in the hospital prior to discharge to a SNF, in order to qualify for Medicare coverage applicable to the SNF stay. One little wrinkle, rarely experienced, is that the discharge could be to another location within a thirty-day window of the patient entering the SNF, and the patient still could qualify for Medicare benefits in the SNF. In other words, the patient could be sent home, and for whatever reason, subsequently enter the SNF within 30 days of the hospital discharge and still be eligible for Medicare SNF benefits.

While there has been support for the waiver of this requirement to remain via a continued policy change from CMS, it is now apparent that CMS will reinstitute the 3 overnight rule. The primary impetus for this? Of course, cost control. A study from the AMA, appearing in the JAMA Internal Medicine publication (released on Monday 4/24) basically provides CMS with its positional defense. The study is here for anyone interested: jamainternal_ulyte_2023_oi_230019_1681999138.05344

The study analyzed MDS data for patients admitted to a SNF between January 2018 and February 2020 (pre-pandemic) compared to admissions between March 2020 and September 2021 (pandemic period). During the pre- pandemic period, there were 130,400 care episodes per month, 59% of which were female.  During the pandemic period, there were 108,575 episodes, again 59% were female. Per the study: “All waiver episodes increased from 6% to 32%, and waiver episodes without preceding acute care increased from 3% to 18% (from 4% to 49% among LTC residents). Skilled nursing facility episodes provided for LTC residents increased by 77% (from 15 538 to
27 537 monthly episodes), primarily due to waiver episodes provided for residents with
COVID-19 in 2020 and early 2021 (62% of waiver episodes without preceding acute care).”

What was interesting to me is where the predominant utilization of the waiver for non-prior hospitalized patients occurred.  Per the study, the 80% v. 68% of the LTC waivers (non-prior hospitalized) were for-profit facilities.  These facilities had lower overall star ratings on average with the for-profit average at 2.7 stars v. the non-profit average rating of 3.2 stars. The same kind of variance was found looking at the staffing star ratings – 2.5 v. 3.0.  Skilled admission spending was $2.1 billion prior to the pandemic and $2.0 billion during but a big jump in LTC (Medicare covered) occurred from $301 million to $585 million.  Hospital spending remained relatively unchanged, despite lower overall patient volumes (COVID incentive payments making up outlay differences).

Here is the key takeaway from the study:

Key Points

Question: Did skilled nursing facility (SNF) care volume and
characteristics change when the public health emergency (PHE)
waiver for 3-day qualifying hospitalization was introduced in March 2020?

Findings: In this cohort study of SNF care provided for 4 299 863
Medicare fee-for-service beneficiaries from January 2018 to
September 2021, waiver episodes without preceding acute care increased from 3% to 18% during the PHE in 2020 to 2021. Among long-term care residents, such waiver episodes increased from 4%
to 49%, with 62% of episodes provided for residents with COVID-19.

Meaning: This study found that the use of SNF care for long-term
care beneficiaries without a preceding qualifying hospitalization
increased markedly during the PHE, primarily for care for patients with COVID-19.

So SNFs will return to a pre-pandemic point where coverage for SNF skilled services under Medicare will require a 3 overnight hospital stay as the Public Health Emergency ends.  The study cites cost as the main driver, but I also believe, that cost on an escalatory basis is more the concern.  As the pandemic has ended and hospital volumes are normalizing, we’ve seen SNF referrals increase. I noted this trend in a post on Monday…link is here: https://wp.me/ptUlY-vL What this means is that a shift toward more expensive post-acute care is happening and may be more longer-term in trend than not.  In other words, while a bias toward discharge to home health was prevailing pre-pandemic, the factors of reimbursement policy, staffing dynamics, and increasing patient acuity on discharge have moved the needle (so to speak) toward SNF discharge.  Staffing is of course, the main driver.

What does this mean for hospitals, if anything?  Maybe a bit of shift in consciousness about length of stay, inpatient admission, and discharge planning will occur.  The growing use of observation stays vs. inpatient admits was always a sore spot for SNFs and patients and families.  I saw lots of confusion a few years ago among SNFs and, then unfortunately families, when a patient arrived for admission and lo and behold, the majority of the stay was classified as observation vs. an inpatient admission, not meeting the 3-day inpatient admission requirement.

Medicare Advantage plans will also need to rethink some approaches in their care coordination.  While the preference may be a discharge to home health, admission acceptance is still on the lower side (lots of rejections).  it may just require a shift in focus from Med Advantage plans toward better coordinated SNF stays.  

For SNFs, the loss will be felt among facilities that were able to “skill” typically, long-term care Medicaid patients.  The missing revenue will be felt without a counterbalance pick-up readily available.  For good performing SNFs that have focused on building strong value propositions and positioned themselves well for value-based care, options are plentiful, but they had been prior to the pandemic. Staffing remains the challenge. My advice for these folk?  Get your care pathways together and your algorithms and be efficient in cost and length of stay.  Use your data to drive partnership referral bases with hospitals and in particular, Med Advantage plans.  Now is a good time to take advantage of the shifting policy dynamics.

April 26, 2023 Posted by Reg Hislop III | Health Policy and Economics, Policy and Politics - Federal, Skilled Nursing | 3 Day Stay, CMS, Compliance, Economics, Hospitals, Industry Outlook, Management, Medicare, Nursing Homes, Payment, PHE waivers, Policy, PPS, Reimbursement, SNF, Trends | Leave a comment