Health Beat: This Simple Rule Change Could Lower Medicare Costs

It’s time for the federal program to eliminate a rule that prevents timely transfers of patients from hospitals to skilled nursing facilities.

Medicare is the predominant insurance for anyone 65 or older, and almost all hospitals and most physicians participate in the program. But the cost of health care has increased to almost 18 percent of the gross domestic product, and there are efforts afoot to lower the overall cost of care for everyone.

A large chunk of the costs are incurred in the last few years of life, so care for older patients is a big focus of the efforts.

One part of the solution involves skilled nursing facilities, which provide services like physical therapy, medication management, complicated wound care, use of feeding tubes and management of any type of breathing assistance with a machine.

These services are cheaper than regular hospital care, but there’s a catch known as the three-day rule.

Medicare’s three-day rule can keep patients in the hospital longer than they need to be.

Medicare will only pay for skilled nursing care if a patient has already been in the hospital for three days. This results in either patients being denied coverage and being sent home instead, or more likely being kept in the hospital longer just to meet the three-day requirement, and thus incurring more costs for those extra days while occupying a bed that could be used for someone else.

In an experiment, some health systems have been exempted from the three-day rule, and they’re reportedly saving millions of dollars as a result.

Which raises the question: Why hasn’t the three-day rule been completely eliminated?

Hospitals across the nation are facing cuts as reimbursements fail to keep up with the overall cost of care. Many smaller ones are closing.

Hawaii hospitals would benefit from elimination of the the rule. Currently the three-day requirement keeps patients in the hospital, and delays in transfers lead to higher costs for the hospitals without reimbursement to match. Also, even one day could change the availability of a bed at a skilled nursing facility, and lead to further costly hospital days until another one is open.

Queens Hospital Same Day Surgery sign.

The rule change would also benefit patients who have same-day surgery and then need a skilled nursing facility.

Cory Lum/Civil Beat

Patients who have same-day surgery and need a few days in a skilled nursing facility would be eligible for admission right after their hospital procedure. Patients who are admitted with pneumonia, cellulitis or other conditions that could be started on a treatment protocol in one to two days could be sent to such a care facility, with an extra day or two in the hospital avoided.

The bottom line of the hospitals would improve, as other patients could be admitted, and skilled nursing facilities might see a higher rate of admissions to boost their bottom lines as well.

Patients would not be kept in the hospital longer than they need to be, or discharged home because Medicare would not cover their skilled nursing facility care.

For hospitals that have extra beds available, opening up a wing to provide skilled nursing care care would also lower costs as the staffing needs and overall charges are lower than a standard hospital floor. This keeps the flexibility of having the location be changed to a regular hospital floor if demand increases, but also would help to streamline the discharge process if patients are transferred to another floor, and not to another location.

Some health systems have been exempted from the three-day rule, and they’re reportedly saving millions of dollars as a result.

The biggest boost would be for those hospital systems that already have a skilled nursing facility, or a close partnership with one, so that the transfer process is seamless.

The health systems that are already benefitting from being exempted from the rule volunteered to be part of payment reform experiments through the federal Centers for Medicare and Medicaid Services.

The advantages of eliminating this rule could be even greater over time.

The initial report from the 2016 cohort of health systems was just released, and each of those centers may see further improvements in the years to come. As more and more patients are being treated in hospitals and sent home with care plans in place, the need for interim facilities is only going to increase.

Eliminating the three-day rule won’t fix all of the problems associated with health care costs, but it is a proven approach that all heath care providers deserve to benefit from.


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