In 2010, my office received a call from a Norwich, Conn., family whose 89-year-old father had fallen and broken his hip. After he was treated in the local hospital for four days, his doctor prescribed follow-on skilled nursing facility (SNF) care. Upon his arrival at the nursing home, his family was informed that they would have to pay more than $10,000 up front to cover the cost of his care: Because he had never been admitted to the hospital as an inpatient, Medicare would not cover the prescribed rehabilitative care that he needed to return home safely.
I know that hospitalists are already far too familiar with stories like this. Together, we can work to make sure it doesn’t happen again.
Support Is Growing
For me, that family’s story was a call for action. Shortly after speaking with the family, I introduced the Improving Access to Medicare Coverage Act (H.R. 1179). The bill is simple: It would restore the three-day hospital stay standard for SNF coverage, whether the stay is coded as inpatient under Part A or outpatient observation under Part B. Two Congresses later, support for the proposal is growing. In the 113th Congress, the bill has 137 bipartisan cosponsors, an indication of how widespread this problem is for Medicare beneficiaries.
The outdated Medicare law on skilled nursing care coverage is creating financial and healthcare dilemmas for families across the country. Under current law, beneficiaries must have a hospital inpatient stay of at least three days in order to qualify for Medicare coverage SNF benefits; however, more and more patients are being coded under observation status, and access to post-acute SNF care is diminishing. Patients are suffering, and healthcare providers are caught in the middle.
In fact, the Office of the Inspector General at the Department of Health and Human Services released a report last fall that showed that Medicare beneficiaries in 2012 had more than 600,000 hospital stays that lasted three nights, yet none were admitted as inpatients. Even though these beneficiaries likely received the same care inpatients received, their observation status designation disqualified them from Medicare coverage of the SNF benefit. For their families, prescribed follow-on SNF care would have an out-of-pocket cost averaging more than $10,000. For seniors on fixed incomes, that is a devastating financial penalty for a service that should be covered by their health plans.
Three days in the hospital—whether as an inpatient or under outpatient observation—should count for three days in the hospital when Medicare determines eligibility for skilled nursing coverage.
—Rep. Joe Courtney
There are many reasons for the growth in observation status treatments, but a primary driver is increasing scrutiny of admitting practices by recovery audit contractors (RACs). The consequences of RAC review processes have created difficult situations for hospitals, because admitting decisions are reviewable for three years, and hospitals can be hit with claw-back penalties for payments on behalf of patients RACs determine were incorrectly admitted. To prevent costly penalties and protracted appeals of individual cases, many hospitals feel an understandable amount of pressure to err on the side of treating patients under outpatient observation status covered under Part B.
The original intent of the three-day inpatient stay requirement was to serve as a tangible measure of medical necessity of SNF care. And, when the three-day inpatient stay prerequisite was written into law, long-term hospital observation stays were nonexistent. This intent has been lost in a changing system of hospital oversight under RACs and admitting practices.
The impact on patients and families is tragic.