Medicare 72-Hour Rule Still Frustrates and Confounds

72_Hour_Logo_ENGv2I first began writing this post in April of 2012, but  quickly abandoned the effort because I became certain that everyone knew about this issue and was planning accordingly. How wrong I was! In retrospect, it should not surprise that topics like this are evergreen. Eldercare is an island with its own customs, rules and language and until one has traveled to the island, one is blithely unaware.

Several times in the past two months, incredulous friends (and friends of friends) complained to me soon after learning that someone they know was unable to rely on Medicare's skilled nursing benefit because of the "72-hour" observation rule. With these experiences fresh in  my mind, I decided to revive the blog's draft version and publish.

Those who have Medicare Part A hospital insurance commonly assume that merely being present "in" a hospital will mean that Medicare will pay for a subsequent stay in a skilled nursing facility (SNF). Unfortunately, one does not always follow from the other: if the Medicare beneficiary does not meet the threshold requirement of being admitted to a hospital for three-consecutive midnights then he will not be able to receive Medicare reiumbursed services in a SNF. Of course, this is only a threshold requirement and in a prior post I reviewed the complete criteria which one must meet in order to qualify for a Part A stay in a SNF.

This problem has attracted the attention of CMS and a class action lawsuit,  filed in November 2011 against the federal government, alleges that the plaintiffs were were improperly classified as outpatients, (often referred to as "observational status") and therefore deprived of Medicare Part A coverage for their hospital stay and after care (here).

What is Observation status?

Observation services are defined in the CMS manuals as a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment, that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. This is no small matter and the decision to admit to a hospital is a complex medical judgement.

Typically, an elder or her advocate only find out about the problem of  observation status after touring a SNF in anticipation of the elders needed after care.  Typically a SNF's admissions director, will contact the hospital to obtain relevant information about the elders diagnosis and care needs, and it is during this data exchange that the elder's inpatient/outpatient status is revealed. A follow-up call to the elder's representative promptly ensues and the devastating news is shared. Of course, the SNF is happy to admit the elder as a private pay resident, but with nationwide average daily rate for a private room in a SNF stay now at $250 (and that amount varies widely across the nation), this often is an infeasible option.

With emphasis on increasing integration between centers of care delivery, this issue will most likely be resolved sooner rather then later. Meanwhile, advocacy groups and legislators will continue to press CMS to revisit and revise how the observation rule is implemented.  What do you think?

Learn more by reading the brochure "Are You a Hospital Inpatient or Outpatient" published by CMS and read criticism of the brochure (here). Learn more on Twitter @AgingInChicago


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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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