News & Commentary

Medicare Advantage Takes On 3-Day Rule

Medicare Advantage (MA) allows for experimentation that traditional Medicare can’t indulge in. For instance, experimenting with the longstanding rule that for skilled nursing care to be covered the beneficiary must have a three-day inpatient hospital stay first.

As authors of a study in the August issue of Health Affairs point out, however, the rule dates from a time when the average hospital stay was two weeks, and evaluations to come up with discharge plans took much longer than three days.

MA plans can waive the three-day rule. The Brown University researchers who conducted this study compared 14 MA plans that waived the three-day rule with 14 that didn’t. The researchers looked at the period between Jan. 1, 2006, and March 31, 2011.

They found that hospital length of stay (LOS) for the group that waived the rule declined from 6.9 days to 6.7 days while it increased from 6.1 to 6.6 days for those that stuck with the rule. The researchers estimated that the 0.7 day difference would translate into a cost savings of about $1,500 for every hospital admission that involved a transfer to a skilled nursing facility.

A piece of history hovering over the three-day rule is the Medicare Catastrophic Coverage Act of 1988. When that law eliminated the three-day requirement, Medicare spending on nursing home care more than doubled, noted the authors. But they didn’t see any great influx of people into nursing homes when the MA plans eliminated the three-day rule. Why? In addition to tighter management, the MA plans did not reduce copayments for hospital and skilled nursing facilities, as happened with the 1988 law.

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