Experiment Over: Future of Nursing Home 3-Day Stay Waiver in Doubt Post-PHE

While the Centers for Medicare & Medicaid Services (CMS) has been winding down certain waivers tied to the public health emergency (PHE), the agency has been noticeably silent about what could be the most impactful of the pandemic-related waivers – suspension of the three-day stay requirement.

Industry leaders aren’t holding out much hope that the waiver will stick around on a more permanent basis. So far, CMS has decided to discontinue select waivers, including one that allowed temporary nurse aides (TNAs) to work longer on the front lines prior to taking their certification exam.

Suspension of the three-day stay requirement allows Medicare patients to be discharged to a skilled nursing facility without having to stay at a hospital for at least three days.

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Without the waiver, patients transferred from a hospital to a SNF in fewer than three days would have incurred out-of-pocket costs. The federal agency initially waived the requirement to free up hospital beds at the onset of the pandemic.

A decision on the waiver depends on data, Former CMS Administrator Seema Verma told Skilled Nursing News. If CMS can prove with almost two years of data that there was an increase in cost to the health care system, it’s “unlikely” the waiver will be maintained in any meaningful way.

If data shows it promoted greater flexibility, lower costs and improved quality, the pendulum could swing the other way, she said.

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“I think there are a lot of different potential outcomes that can come out of this. We need the data to tell us what’s the best path forward,” Verma told SNN.

ATI Advisory Managing Director Fred Bentley expects CMS to discontinue the waiver entirely, but there is legislation out there to make it permanent.

Accountable care organizations (ACOs) and Medicare Advantage also have plans in place to bypass the requirement, the American Health Care Association and National Center for Assisted living told SNN in an email.

It’s possible that about two-thirds of Medicare beneficiaries can already avoid the requirement if need be – 47% of Medicare patients are enrolled in an MA plan, and 43% of Medicare fee-for-service (FFS) beneficiaries are enrolled in ACOs. CMS aims to have all Medicare FFS patients in an ACO by 2030, according to AHCA/NCAL.

In the meantime, the U.S. Department of Health and Human Services has promised to give states 60 days notice when the PHE is ending.

“Given the multiple surges experienced to date as well as the currently rising numbers of cases and hospitalizations due to BA.2, it would not make sense to end the waiver before the end of the PHE,” the AHCA/NCAL said.

Three-day hospital stay as a barrier to care

Jodi Eyigor, LeadingAge director of nursing home quality and policy, believes the benefits of removing the three-day stay requirement fit in with everything else the Biden administration is doing right now to improve quality of care — including its reform initiatives and the Build Back Better Act.

“It does seem like CMS is at least evaluating that option of making it permanent or making some kind of change to the three-day stay requirement,” Eyigor told Skilled Nursing News. “We would certainly support it because we see that the three-day stay can sometimes be a barrier to care.”

Steve LaForte, director of corporate affairs & general counsel for Eagle, Idaho-based Cascadia Healthcare, said the waiver has helped not only the skilled nursing operator, but the communities they serve.

“It’s really created for us more nimbleness in how we provide necessary care,” he said. “I think it’s made care more efficient, it’s made care more value-based … I think it saved money.”

Bentley calls the waiver a “natural experiment” on the part of CMS, to see how much the waiver was used and the outcomes of utilization, while trying to separate Covid cases from non-Covid cases as the government entity looks to possibly end the waiver.

“They are obviously looking at what happened with admissions, when the three-day stay waiver was put into place,” said Bentley of possible government scrutiny into waiver utilization. “In Medicare fee-for-service, CMS has virtually no real utilization management tools. They look at something like the three-day requirement as at least one way to try and manage SNF utilization.”

Legislation and three-day stay

While the industry has yet to see any movement on a bill introduced last June to make the waiver permanent, aging services organizations are hoping to get aspects of the legislation to pass.

Namely, counting observation days toward the requirement.

Efforts by industry lobbyists to change the three-day stay requirement in this way has been a “torch” for many years, according to Finck-Boyle, LeadingAge’s vice president of health policy.

LeadingAge, along with AHCA/NCAL and other industry trade groups are part of the Observation Stays Coalition working to pass the observation day change as a crucial piece of the legislation.

“This will require Congressional action,” AHCA/NCAL said in an email of the waiver. “For years we have advocated to eliminate this confusing policy barrier by recognizing observation stays as qualifying stays for the purposes of the three-day stay requirement, or eliminating the three-day requirement altogether.”

Encouragingly, a court decision in January concerning observation days found failure to count observation days toward the Medicare requirement violates beneficiaries’ due process rights.

The three-day stay doesn’t provide patients with an administrative review process for reclassification from observation to inpatient, according to the decision.

Eyigor said it’s not like the “barn doors were thrown open,” and every operator in skilled nursing made use of the waiver – there are still plenty of operators that admitted new Medicare residents using the requirement.

“There will be some increased scrutiny, there’s going to be audits. What we’ve heard from CMS is that [they aren’t] going to be auditing whether or not this waiver was utilized in a surge,” Eyigor said. “They’re going to be auditing to make sure that those individuals who utilize the waiver still meet the requirements for skilled care.”

Three-day stay admits increased in 2020 from 2% to about 15% as a result of the waiver, LaForte said, referencing Health Affairs data.

This is an important finding, the article said, as CMS and Congress have “long debated” potential effects on utilization. Still, further research is needed to understand the wider impact of the three-day stay waiver across the care continuum, authors noted, specifically if residents bacem SNF-eligible after no hospital stay, one or two days, or after observation days.

“These different patient site-of-service origins each have a unique impact on the budgetary implications of waiving the three-day stay,” according to the Health Affairs article.

Three-day stay beyond the pandemic

There are a lot of other conditions beyond Covid that can be gained from a continuation of the three-day stay waiver, according to Bentley – residents who could benefit from a direct-to-SNF admission.

Even a monitoring period during a SNF stay could be viable, he said, to stabilize a patient before the decision is made to bring them home or keep them as a long-term care resident.

Rare cases with Medicare Advantage plans have done something similar, in that they have the flexibility to get a patient into a SNF without the prerequisite hospital stay, but Bentley said such cases are “few and far between.”

“Depending on lessons learned and analysis of the three-day stay waiver use during the PHE, a permanent version of the waiver could be as simple as an outright elimination of the requirement, to a more nuanced version of the requirement,” said AHCA/NCAL.

AHCA/NCAL representatives believe it is “inevitable” that all Medicare beneficiaries will be eligible for SNF benefits without an inpatient three-day stay. The organization also pointed to MA’s ability to eliminate the requirement, along with Medicare fee-for-service (FFS) beneficiaries who are enrolled in accountable care organizations.

“In other words, about two-thirds of Medicare beneficiaries today already are in payment models that will continue to be able to waive the three-day inpatient stay requirement once the PHE ends,” AHCA/NCAL said in its email. “The question is – why don’t all Medicare beneficiaries have the same opportunities to access needed SNF care once the COVID-19 PHE ends?”

Any time a resident can avoid additional services, additional facilities of care, that’s better for the consumer, Eyigor added. Feedback from LeadingAge’s members have indicated residents have a less sedentary day in the nursing home versus the hospital, they’re getting up and moving around more in a less acute setting.

There’s infection control to think about too, she said.

“I might have one or two staff members coming in and providing services to me, one or two family members, but then when you go into the hospital, you are exposed to all of the staff who are working in the hospital, any roommates in the hospital,” Eyigor said.

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