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Study: Eliminating Three-Day-Stay Rule Saves Money, Shortens LOS

Hospitals could realize cost savings, authors say

Cost savings and less time in the hospital are the result when Medicare Advantage plans waive the decades-old rule requiring at least a 3-day hospital stay before patients become eligible for coverage of skilled nursing care afterward, according to a report from HealthLeaders Media. The new study by researchers at Brown University was published in Health Affairs.

The 3-day rule for skilled nursing care eligibility was implemented in the 1960s, when the average hospital stay was 2 weeks. Now the average length of stay is about 5 days, so it would be reasonable to expect that it would also take less time for a care team to determine whether a patient should be discharged to a skilled nursing care facility, senior author Amal Trivedi, MD, MPH, told HealthLeaders Media.

“Every day in the hospital comes with some risk,” Trivedi said. Moreover, “a day in the hospital is quite expensive. If we could get patients out quicker, it would be good for the patient, but also good for the Medicare program.”

Medicare Advantage plans have more flexibility than traditional Medicare, and most of them have waived the 3-day rule. Plans that waived the rule set up a natural experiment. Comparing 14 plans that eliminated the rule during the study period with 14 plans that had the rule in place allowed the authors to track changes over time.

They found that between 2006 and 2010, the average time in the hospital per year increased by half a day among 140,739 people in the plans that never waived the 3-day rule, but decreased by 0.2 days among 116,676 people in the otherwise similar plans after they waived the rule.

“The decline in length of stay was 0.7 days (or 10%) among hospitalized patients admitted to a skilled nursing facility [SNF],” Trivedi said. “Given the estimated costs of a hospital admission among a Medicare beneficiary, we estimate a savings of $1,500 for every admission concluding with a discharge to an SNF."

In addition to the estimated cost savings, less time in the hospital also means a smaller chance of patients developing hospital-acquired complications, such as blood clots or infections, according to Trivedi.

Waiving the rule not only resulted in a reduction in hospital days, it also showed no evidence of “adverse effects,” he said. For instance, it didn’t increase the probability of skilled nursing admissions, the number of skilled nursing admissions, or even the length of stay in a skilled nursing facility. Neither did the researchers find increases in the average number of hospital admissions in the study population, which could have resulted if patients were discharged too early.

The wider implications of the study are harder to gauge.

“To what extent do these results generalize to the traditional Medicare program?” Trivedi asked. That’s a question for further study, the researchers concluded. Currently, the traditional Medicare program isn’t free to waive the 3-day rule the way Medicare Advantage plans are. The authors also suggest exploring the effects of eliminating the 3-day hospital stay requirement on acute and post-acute care in accountable care organizations.

According to the study, the cost savings estimated in the new research “are unlikely to be generalizable to the traditional Medicare program” because of payment differences. The study noted, however, that hospitals (rather than the Medicare program) could realize cost savings for decreased lengths of stay.

Sources: HealthLeaders Media; September 1, 2015; and Health Affairs; August 2015.


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