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On March 13, 2020, President Trump proclaimed the COVID-19 pandemic a national emergency. As a result, the U.S. Department of Health and Human Services (HHS) now has the authority under Section 1135 of the Social Security Act to waive or modify certain requirements of public health programs, including Medicare. The Centers for Medicare & Medicaid Services (CMS) – the agency within HHS responsible for administering the Medicare program – is using this emergency power to waive the 3-day inpatient hospital stay requirement for skilled nursing facility (SNF) care and to allow certain Medicare beneficiaries to renew their SNF benefit periods without starting a new spell of illness first.

  1. Prior 3-Day Inpatient Hospital Stay Requirement

In order to qualify for Medicare-covered SNF care, beneficiaries must be an inpatient of a hospital for at least three consecutive days.[1] Unfortunately, too often beneficiaries are admitted to hospitals as outpatients on observation status. Although beneficiaries on observation status receive the same services as inpatients and may be in the hospital for far more days, their classification precludes them from qualifying for Medicare-covered SNF care regardless of their medical need for such services.

Under the 1135 Waiver, CMS is temporarily removing this arbitrary access barrier for SNF care for beneficiaries affected by the COVID-19 pandemic. The Waiver is being applied broadly to all Medicare beneficiaries during this emergency. In a memorandum, CMS Administrator Seema Verma provides the following examples:

  1. Beneficiaries who are evacuated from a nursing home in the emergency area;
  2. Beneficiaries who are discharged from a hospital in order to provide care to more seriously ill patients; and
  3. Beneficiaries who need SNF care as a result of the emergency, “regardless of whether that individual was in a hospital or nursing home prior to the emergency.”

While questions about this Waiver remain, CMS appears to be granting Medicare beneficiaries the ability to receive Medicare-covered SNF care without a qualifying 3-day inpatient hospital stay in a wide range of cases, whether or not they are directly affected by COVID-19. The Center for Medicare Advocacy (the Center) encourages CMS to exercise its pre-existing authority to permanently remove this access barrier even after the COVID-19 pandemic ends by counting time spent in observation status for purposes of the 3-day inpatient hospital stay requirement. Alternatively, Congress can also remove this access barrier by passing the Improving Access to Medicare Coverage Act (H.R. 1682, S. 753), which would likewise count all time spent in the hospital for purposes of satisfying the 3-day inpatient hospital stay requirement.

Update:  On March 24, 2020, a U.S. District Court issued a decision in a nationwide class-action lawsuit seeking the right for Medicare beneficiaries to appeal placement on observation status. The case, Alexander v. Azar, was filed by the Center for Medicare Advocacy in 2011. Co-counsel in the case are Justice in Aging and Wilson Sonsini Goodrich & Rosati  In its decision, the court held that, as a matter of Constitutional due process, patients who are initially admitted as inpatients by a physician, but whose status is later changed to observation by their hospital, have the right to appeal to Medicare and argue for Part A coverage as hospital inpatients. To learn more about Alexander v. Azar, please visit the Center’s Outpatient Observation Status webpage.

  1. Benefit Periods

Medicare beneficiaries are entitled up to a maximum of 100 days of SNF care per benefit period.[2] A benefit period ends when a beneficiary has not received skilled care for at least 60 consecutive days.[3] Beneficiaries who have exhausted their benefit periods must once again meet all of the Medicare coverage criteria in order to start a new benefit after the 60-day break.

In order to remove this access barrier, CMS is recognizing “special circumstances for certain beneficiaries” who have exhausted their benefit periods. Specifically, CMS is allowing beneficiaries to renew their benefit periods for “an additional 100 days of SNF Part A coverage for care needed as a result of the . . . emergency.” However, as Administrator Verma states in the memorandum, the policy will apply only to beneficiaries “who have been delayed or prevented by the emergency itself from commencing or completing the process of ending their current benefit period and renewing their SNF benefits that would have occurred under normal circumstances.”

Thus, taken together, beneficiaries who have exhausted or will exhaust their benefit periods may start a new benefit period without a 60-day break in skilled care and without needing a 3-day inpatient hospital stay. Nevertheless, beneficiaries still must meet all other Medicare coverage criteria for SNF care. Beneficiaries who fall in this group should be prepared to demonstrate that “daily” skilled care is still medically necessary.[4]

Additional Information. For more information about COVID-19 and Medicare, including the latest resources, please visit the Center’s COVID-19 (Coronavirus) and Medicare webpage.

March 26, 2020 – D. Valanejad

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[1] 42 C.F.R. § 409.30(a)(1).
[2] Id. at § 409.61(b).
[3] Id. at § 409.60(b).
[4] Daily skilled care is defined as 5 days of skilled therapy, 7 days of skilled nursing, or a combination of both. Id. at § 409.34. Please note that improvement is not a coverage criteria. Id. Medicare beneficiaries in SNFs can receive Medicare-covered skilled nursing or therapy services to maintain their conditions or to prevent or slow further deterioration of their conditions. For more information, please visit: https://www.medicareadvocacy.org/medicare-info/improvement-standard/.

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