Post-Pandemic, SNFs Should Expect Government Scrutiny on Use of Three-Day Stay Waiver

In the early days of the COVID-19 pandemic, the federal government issued a range of waivers to help the health system care for patients without being overwhelmed.

One of those waivers removed a common barrier to skilled nursing care: the requirement that a patient have a three-day inpatient hospital stay for Medicare to cover the stay in a skilled nursing facility.

In issuing the waivers, Seema Verma, then-administrator of the Centers for Medicare & Medicaid Services (CMS), framed them as a way to free up hospital capacity amid a surge of COVID-19 patients.

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“Our actions allow hospitals to reserve beds for the most severely ill patients by discharging those who are less severely ill to skilled nursing facilities,” Verma said in March 2020.

SNF clients generally seemed comfortable making use of the three-day stay waiver during the pandemic, Fred Bentley, managing director at Avalere, told Skilled Nursing News. That was a striking trend, considering how rarely it had been used prior to the pandemic.

While cautioning that he did not have hard numbers in front of him, given the time lag for Medicare claims data, Bentley said the waiver was prominently used in the markets that were hit dramatically by COVID-19 enough to strain hospital capacity.

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“I think it starts to tie into the longer-term view of the three-day waiver and how it could fit in,” he said. “The patient or family, in a situation where they don’t have COVID, … needs institutional care and some level of therapy.”

Because SNFs typically have the capacity to manage this type of patient, if they could demonstrate they were able to maintain infection control protocols, they became “an interesting alternative to hospitals” for doctors and patients, Bentley said.

There was a real sense in which that was the intended use of the waiver. CMS specifically pointed to the three-day stay waiver as being intended to provide coverage for SNF services for those whose care access was affected by the pandemic in its emergency declaration blanket waivers.

“Using the authority under Section 1812(f) of the [Social Security] Act, CMS is waiving the requirement for a 3-day prior hospitalization for coverage of a SNF stay, which provides temporary emergency coverage of SNF services without a qualifying hospital stay, for those people who experience dislocations, or are otherwise affected by COVID-19,” the agency wrote.

It’s this portion of the three-day stay waiver that might fall under some scrutiny, particularly as CMS plans to take a close look at Medicare claims throughout 2020 with an eye to recalibrating the Patient-Driven Payment Model (PDPM).

The reimbursement overhaul for Medicare payments to SNFs that took effect in 2019 ended up increasing payments to nursing homes by about 5% in 2020. CMS pointed to the use of the waiver suspending the three-day stay requirement as an indicator that the increase couldn’t be attributed to COVID-19 changes alone.

“Even when removing those using a PHE-related waiver and those with a COVID-19 diagnosis from our dataset, the observed inadvertent increase in SNF payments since PDPM was implemented is approximately the same,” CMS noted.

SNFs will need to ensure they have well-documented reasons for using the three-day stay waiver, since the regulations around who is considered a skilled patient were unchanged, John Delossantos, president and CEO of JMD Healthcare Solutions, a SNF management service company based in Carmel, Ind., told SNN.

The three-day waiver does not necessarily pertain to COVID-19 patients, he noted, but rather was focused on all patients due to such factors as whether hospitals were taking in new patients or the effects of COVID on the hospital population.

“You have to have [it] very well-documented, because in the past when you had a three-day hospital stay, you got some supportive documentation from the hospital,” he said. “[The patients] came back, they had all this stuff that was wrong with them, a new diagnosis, doctors signing – you don’t have any of that when you skill in place.”

That means SNFs need to ensure they have top-notch documentation when they skill patients in-house, covering how the patient went from non-skilled to skilled.

“That is going to be a big thing that is being looked at right now,” he said. “And for those facilities that felt like they needed to skill patients just for the COVID-positive diagnosis – Medicare said this over and over, that may not necessarily be a good enough reason to say someone needs the skilled level of service.”

Bentley, who predicted in September 2020 at Skilled Nursing News’ virtual Rethink conference that the three-day hospital stay requirement would return, agreed with this, and he reiterated the prediction of the waiver’s return whenever the COVID-19 emergency comes to a close.

“I think what [CMS] wants to do is … take the data and look at it and try and suss out: Was this being used appropriately? Was this flexibility being abused?” Bentley told SNN.

If SNFs skilled COVID-19-positive patients due to the higher level of observation needed, they have to be clear in the documentation about why the observation is considered “skilled” under the Medicare guidelines, Delossantos cautioned.

“These blanket waivers made it look a little easier, but justifying that is going to be the next step in the process,” he said. “They gave everybody the benefit of the doubt because it was a horrible situation, and it was very hard to manage. And everybody understands that. But there is going to be some accountability for these claims in the upcoming year or so.”

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