Medicare Compliance & Reimbursement

Outdated regulation covering nursing home stays still applies.

Medicare rules can at times be very confusing and, if miscalculated, very costly. This is especially true of the "3-Day Rule," which dates back to 1966. Many call obsolete today but is still being used by the Centers for Medicare & Medicaid Services as a cost-saving measure for nursing home stays following hospitalizations.

In his post on www.omaha.com, Michael Vitez of The Philadelphia Inquirer, tells of Fran Bogom, 86, a resident of the Abramson Center for Jewish Life in Horsham, who broke her arm on Jan. 3 when she dozed off and fell from her bed as she was watching TV.

A widow with mild dementia, Bogom was taken to the Abington Memorial Hospital emergency room at 9:21 p.m. Doctors decided to keep her overnight under observation and to determine the further course of action on the morning after, a decision which technically made Bogom an outpatient.

Had Bogom been covered by Aetna, Blue Cross or another private insurer, she would have been immediately approved for a move to a nursing home, but Bogom had Medicare.

Because of a regulation dating back to 1966, Medicare would not pay for Bogom's rehabilitation in a nursing home unless she first stayed at Abington hospital for three days.

Bogum's family feared that if her stay was less than three days, she would have to pay the nursing home bill herself, which might add up to $5,000, even $10,000. In fact, it turned out to be far more.

At Abington -- where Bogom was brought -- six nurses inspect patient charts daily to ensure the best care and to make sure each has the documentation to satisfy Medicare. And just to be doubly sure, there's also a utilization committee that reviews whether people like Bogom need to be there, according to the post.

The morning after she was brought in, on Jan. 4, a physician visited Bogom and formally admitted her to the hospital. The physician ordered a workup to make sure neither stroke nor heart attack had caused the fall. She wanted to put Bogom, still disoriented and unable to walk, through physical therapy.

According to a copy of the physician's report available on Vitez's post, she wrote in the medical record on Tuesday: "Patient without complaints other than arm pain. ... Will require snf (skilled nursing facility) upon discharge. If bed available may discharge today."

The one thing doctors at the hospital were sure about was Bogom could not go back home because she now needed 24-hour care.

Vitez quotes Kevin Zakrzewski, a primary-care physician who also heads the utilization review committee, "She needed somebody to help with meals, toileting, bathing and rehabilitation. That is not what is considered hospital level of care. Compare that to someone who has a heart attack."

But the staff also understood she couldn't go home because she didn't have the support.

"So the hospital is really stuck," Zakrzewski said. "And now the patient and family are also stuck."

He imagined a Medicare auditor asking Abington, "This patient was ready to be discharged on day two. Why didn't you discharge her?"

"Then they're revoking payments to the hospital, and we're eligible for a fine," he said.

Many hospitals share Abington's concern.

"The incentive for not admitting somebody and not keeping them for the full three days has actually grown even more as people anticipate the RAC [recover audit contractor] audit," said Carolyn F. Scanlan, chief executive officer of the Hospital and Healthsystem Association of Pennsylvania is quoted in Vitez's post as saying.

Scanlan called the three-day rule "quite obsolete."

Seen in context, when Congress created the nursing-home benefit in 1966, it was to be a final step before going home after a long hospitalization. At this point, the recovering patient would not need a hospital. A nursing home's rehab unit would cost less.

Back then, Congress wanted everyone to understand that this nursing-home stay was meant to be temporary and was not for frail elders who could no longer take care of themselves.

The fear then was that families would put an elderly loved one in the hospital for a day just to qualify for Medicare's nursing home benefit, which pays for up to 100 days of care. Families would save thousands of dollars, it says in the post.

So as a logical step, the three-day rule was created. This rule also stipulates the stay must be "medically necessary" so patients don't linger in the hospital just to get the rehab benefit.

The Centers for Medicare & Medicaid Services has authority to end the rule -- but only if this does not increase the cost.

Medicare spent $25 billion in 2009 on this short-term nursing-home benefit, CMS said. Covering beneficiaries such as Bogom after one day, or two, would increase that burden.

Hence, the three-day rule remains.

(Editor's note: To read Vitez's complete post, visit: www.omaha.com/article/20100723/LIVING01/707219925.)