SNFs Renew Push to Change Three-Day Stay Rule

Skilled nursing facility (SNF) operators and industry advocates are urging the Centers for Medicare & Medicaid Services (CMS) to change a rule related to the way hospital stays are classified.

The Observation Stays Coalition—a group formed in 2010 that includes organizations such as the American Health Care Association (AHCA) and AARP—is leading the charge against the three-day stay rule, which requires patients to undergo a three-day hospital stay as an inpatient before Medicare will pay for subsequent SNF care.

The rule, which was first created in the 1960s when hospital stays were longer, is now outdated for a number of reasons, according to Dana Halvorson, a senior director at AHCA. For example, hospitals are increasingly putting patients under observation stays, which don’t count toward the three-day rule.


During an overnight observation stay, doctors can run tests and administer drugs, causing confusion among some patients.

“When patients do get into a hospital, the first question on their mind normally is not about inpatient or observation status,” Halvorson told Skilled Nursing News. “And when they get to a SNF…they could really be in for a shock if they did not have those inpatient days.”

In some cases, patients have had to pay thousands of dollars out of pocket once they get to a SNF, according to Dan Holdhusen, director of governmental relations for the Good Samaritan Society. Headquartered in Sioux Falls, S.D., Good Samaritan is a non-profit provider of skilled nursing, senior living and home-based services in two dozen U.S. states.


Seniors in need of skilled nursing services have also simply foregone it entirely due to the associated costs.

“When individuals become aware that they’re not able to draw on their Medicare benefits, then they’ll sometimes forego an institutional stay and go home,” Holdhusen said. “That’s not a good situation.”

Fixes fall short

There have been some recent efforts to fix the problem. A 2015 law known as the NOTICE Act requires hospitals to inform patients receiving observation care for more than 24 hours that they are outpatients, not inpatients.

Though the NOTICE Act is a step in the right direction, it’s still not enough to fix the problem, Halvorson said.

“The issue is, sometimes [patients are] filling out so many forms in the hospital… you might not even know what you’re signing and still have that surprise after,” she added.

AHCA has also urged CMS and the U.S. Department of Health and Human Services (HHS) to allow observation stays to count toward the three-day stay rule.

“We feel that CMS has the authority to address the regulatory side,” Halvorson said. “They could fix this, and we have made arguments for it.”

Still, with the recent resignation of HHS Secretary Tom Price and ongoing the uncertainty surrounding who might replace him, a quick fix may not come any time soon.

Legislation lifeline

Another hope is that legislation currently making its way through Capitol Hill could address the problem. Lawmakers on both sides of the aisle in the U.S. House of Representatives and Senate have backed legislation that would make observation stays count toward the three-day stay rule.

Despite that legislation, AHCA and the larger coalition behind it still sees a long road ahead.

“I continue to remain optimistic that, with the Hill attention we have, and as we have reached out to agencies, we can raise awareness on this,” Halvorson said. “We’re going to keep hammering away at this.”

Written by Tim Regan

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