Abstract
The traditional Medicare program requires an enrollee to have a hospital stay of at least three consecutive calendar days to qualify for coverage of subsequent postacute care in a skilled nursing facility. This long-standing policy, implemented to discourage premature discharges from hospitals, might now be inappropriately lengthening hospital stays for patients who could be transferred sooner. To assess the implications of eliminating the three-day qualifying stay requirement, we compared hospital and postacute skilled nursing facility utilization among Medicare Advantage enrollees in matched plans that did or did not eliminate that requirement in 2006–10. Among hospitalized enrollees with a skilled nursing facility admission, the mean hospital length-of-stay declined from 6.9 days to 6.7 days for those no longer subject to the qualifying stay but increased from 6.1 to 6.6 days among those still subject to it, for a net decline of 0.7 day when the three-day stay requirement was eliminated. The elimination was not associated with more hospital or skilled nursing facility admissions or with longer lengths-of-stay in a skilled nursing facility. These findings suggest that eliminating the three-day stay requirement conferred savings on Medicare Advantage plans and that study of the requirement in traditional Medicare plans is warranted.
For nearly fifty years the federal Medicare program has required beneficiaries to be hospital inpatients for three days before Medicare will cover their postacute skilled nursing care.1 When Congress enacted this policy, the average hospital length-of-stay was two weeks, and three days represented the minimum time necessary for appropriate evaluation and postdischarge planning.1–5 Medicare does not require a qualifying three-day stay for other forms of postacute care, including home health visits or a stay in an inpatient rehabilitation facility.
Over the past several decades, acute and post-acute care in the Medicare program have been characterized by substantial declines in hospital lengths-of-stay, the enhanced capacity of skilled nursing facilities to care for patients with complex conditions, and the increased use of post-acute care providers after hospital discharge.6,7 Nearly one in five Medicare-financed acute hospitalizations concludes with a discharge to a skilled nursing facility.6,7 These trends raise the possibility that the three-day stay policy may both inappropriately lengthen acute hospital stays for patients who could be transferred to skilled nursing facilities earlier and, as a result, increase spending on avoidable hospital care and increase patients' exposure to iatrogenic complications.8
Two empirical studies have evaluated the consequences of eliminating the three-day stay requirement. A demonstration project in Oregon and Massachusetts in 1978–80 found that waiving the requirement had negligible effects on Medicare Part A spending for hospital and skilled nursing facility care.9 In contrast, under the ill-fated Medicare Catastrophic Coverage Act of 1988, which eliminated the three-day hospital stay requirement for one year until the act was repealed, relatively small reductions in the use of hospital care were accompanied by substantial increases in skilled nursing facility days.10–12 More recent studies are lacking.
Medicare Advantage plans have the flexibility to eliminate the three-day stay requirement for skilled nursing facility care coverage; thus, they offer a unique opportunity to study the impact of changing that policy. In this quasi-experimental study, we compared the use of hospital and skilled nursing facility services in Medicare Advantage plans that eliminated the three-day stay requirement and the use of those services in matched Medicare Advantage plans that retained the requirement.
Study Data and Methods
Sources of Data
We merged data from the following four sources. Information on the benefit structure of Medicare Advantage plans, including requirements for the use of skilled nursing facility care, were obtained from the Centers for Medicare and Medicaid Services (CMS) Plan Finder. From the Medicare Healthcare Effectiveness Data and Information Set (HEDIS) we obtained information on each enrollee's health plan and the number of his or her acute hospital care admissions and days each year. We obtained information on the use of skilled nursing facility services from the Residential History File from the Minimum Data Set.13,14 Our demographic data came from the Master Beneficiary Summary File.
Brown University's Human Research Protections Office and CMS approved the study.
Identification of Case and Control Medicare Advantage Plans
Among the 528 Medicare Advantage plans that reported HEDIS data to CMS between 2006 and 2010, we identified seventeen plans that had eliminated the requirement for a three-day qualifying hospital stay and that met the following additional inclusion criteria: They had reported at least two consecutive years of enrollment, utilization, and benefit data; had instituted no concurrent change in patient cost-sharing requirements (copayments or deductibles) for receiving hospital or skilled nursing facility care; were located in a census region; and had more than 100 hospitalized enrollees annually.
We excluded one plan with more than a threefold increase in enrollment during one year and two plans that could not be matched to a suitable control (for information about the exclusion criteria, see the online Appendix).15 After these exclusions, there was a final cohort of fourteen Medicare Advantage case plans.
We matched these fourteen case plans to fourteen control plans that maintained a three-day qualifying hospital stay requirement during the same years in which the case plan eliminated the requirement and that met the same inclusion and exclusion criteria as the case plans (for additional information about the matching strategy, see the Appendix).15 The observation period was from January 1, 2006, to March 31, 2011, to account for skilled nursing facility admissions in 2010 that continued into 2011.
Analyses
We used a difference-in-differences study design to assess changes in the use of acute hospital and skilled nursing facility care among enrollees in Medicare Advantage plans that did or did not eliminate the three-day qualifying stay requirement. That is, we compared changes in utilization patterns during the study period for the two plan types.
Our study population consisted of patients who were enrolled in the same case plan during the year before and the year after the elimination of the three-day stay requirement or in the matched control plan during the same period. Because Medicare Advantage benefits change on a calendar year basis, we defined the elimination of the requirement as occurring on January 1. The baseline year was defined as the twelve months before the requirement was eliminated, and the follow-up year was defined as the calendar year of the change.
The primary outcome variable was an enrollee's annual mean hospital length-of-stay, which we calculated by dividing the person's number of annual hospital days by his or her number of annual hospital admissions. We used HEDIS data in this calculation.
Secondary outcome variables included annual numbers of hospital and skilled nursing facility admissions. We also examined the proportion of skilled nursing facility admissions discharged within twenty days and the skilled nursing facility length-of-stay among people discharged within 100 days (the Medicare skilled nursing facility benefit period).16 Skilled nursing facility stays that began in one calendar year and ended in another were attributed to the year in which the admission occurred.
Patient-level characteristics included age, sex, race (white, black, or other), census region, and participation in Medicaid or a Part D low-income subsidy program during the first month of plan enrollment each year.
The primary analysis involved patients who were enrolled in the same case or control plan for any length of time in both the year before and the year after the three-day stay requirement was eliminated. By definition, therefore, patients in the primary analysis could not have died in the baseline year, but they could have died in the follow-up year. Hospital and postacute care utilization is greater among decedents than among those who remain alive.17,18 Thus, we expected that utilization would increase from the baseline to the follow-up year and the length-of-stay in skilled nursing facilities would decrease.
We conducted two sensitivity analyses. In the first, we included all who were enrolled in either the year before or the year after the three-day stay requirement was eliminated. In the second, we included all who were enrolled for all twelve months of the year before and at least one month of the year after the three-day stay requirement was eliminated. The results of these analyses were consistent with those reported using the primary study population (see Appendix Exhibit A2).15 Additional details about our modeling approach are provided in the Appendix.15
Limitations
This study had several limitations. The primary one was that we could not exclude the possibility that unobserved differences between enrollees in case and control plans influenced our results and that case plans might have instituted other concurrent processes to decrease hospital length-of-stay. However, by observing the entire benefit structure of each Medicare Advantage plan, we were able to limit case plans to those that eliminated the three-day stay policy without changing other hospital or skilled nursing facility benefits. Therefore, we are confident that our findings are not due to other changes in the plans' benefit structure.
We observed a substantial difference between case and control plans in the proportion of enrollees receiving Medicaid or low-income subsidies. However, we observed reductions in length-of-stay after we adjusted for this characteristic and in stratified analyses of enrollees receiving Medicaid or other low-income subsidies.
HEDIS data were not available for some plans with fewer than 1,000 enrollees or for private fee-for-service plans for most of our study period. In addition, some employer-sponsored Medicare Advantage plans for retirees do not report Plan Finder data. Therefore, our results might not be generalizable to this group of Medicare Advantage plans.
We did not have information on each patient's reason for hospitalization and could not ascertain whether differences in our outcomes varied by diagnosis.
Finally, the Minimum Data Set does not include information on payer source. This prevented us from examining whether Medicare Advantage plans covered skilled nursing facility care for long-stay nursing home residents without a previous hospitalization. It was unclear whether the Medicare Advantage plans in our study allowed these conversions of Medicaid-financed nursing home days to Medicare-financed skilled nursing facility days among long-stay nursing home residents and, if so, under what circumstances. Such conversions were allowed during the year that the Medicare Catastrophic Coverage Act was in effect but are prohibited under traditional Medicare's three-day qualifying stay policy.10
Study Results
The proportion of Medicare Advantage plans that did not require a three-day hospital stay prior to a skilled nursing facility admission increased from 80 percent in 2006 to 86 percent in 2010 (for information about the characteristics of case and control plans, see Appendix Exhibit A1).15 Our study population consisted of 257,415 enrollees, with 116,676 in the fourteen case plans and 140,739 in the fourteen control plans (Exhibit 1). Compared with enrollees in control plans, enrollees in case plans were younger (71.3 years versus 74.2 years), less likely to be white (86 percent versus 93 percent), and more than twice as likely to receive Medicaid or a low-income subsidy (52 percent versus 19 percent).
In case plans, the proportion of enrollees who were hospitalized increased from 17.2 percent before the policy change to 20.9 percent after the policy change (Appendix Exhibit A3).15 In control plans, that proportion increased from 15.5 percent to 18.2 percent (adjusted difference-in-differences: 1.3 percentage points; p < 0:001). Among patients with at least one hospitalization, the mean number of admissions remained unchanged for both case and control plans.
Among hospitalized patients in case plans, 23.5 percent were admitted to a skilled nursing facility in the year before the policy change, and 25.7 percent were admitted to such a facility in the year after (Appendix Exhibit A3).15 A similar trend was observed among hospitalized patients in control plans (22.8 percent before and 26.3 percent after the policy change). This led to a marginally significant −1.2-percentage-point difference-in-differences (p¼ 0:0404).
The difference-in-differences estimate for the number of skilled nursing facility admissions was not significant. The majority of such admissions for both case and control plans occurred directly from a hospital. In case plans, the proportion of the admissions in which the patient was admitted directly from a hospital was 89.2 percent before and 88.0 percent after the policy change. In control plans, the shares were 90.2 percent and 89.8 percent, respectively. The proportion of the admissions occurring directly from home was 3 percent or less in each year for both case and control plans.
Among hospitalized enrollees who received skilled nursing facility care, we observed no significant differences between case and control plans in mean number of hospital admissions per enrollee. However, hospital length-of-stay in this population declined from 6.9 days to 6.7 days for case plans and increased from 6.1 days to 6.6 days for control plans (difference-in-differences: −0.7 day; p< 0:0001).
The decline in hospital length-of-stay among people admitted to skilled nursing facilities was greater in magnitude for those who had Medicaid or a low-income subsidy (Exhibit 2). We observed reductions in length-of-stay across age categories, by sex, by race, and according to whether or not enrollees died in the year after the policy change.
For ten of the fourteen case-control pairs, hospital length-of-stay for people admitted to skilled nursing facilities declined after the policy change, relative to the concurrent trend observed in the matched control plans (Exhibit 3).
Among hospitalized enrollees in case plans, the proportion of skilled nursing facility admissions with a length-of-stay of less than twenty days increased from 24.9 percent in the year before the policy change to 29.2 percent after the change. The concurrent trend in control plans was from 34.8 percent to 36.5 percent (difference-in-differences: 2.4 percentage points; p¼ 0:0116) (Appendix Exhibit A3).15 These estimates were not significant in sensitivity analyses that included all enrollees or those with twelve months of enrollment before the policy change (Appendix Exhibit A2).15
Among hospitalized enrollees with a skilled nursing facility admission of a hundred days or less, the mean length-of-stay in the facility changed from 29.9 days to 29.8 days in case plans and from 26.9 days to 27.7 days in control plans. These changes did not differ significantly (difference-in-differences: −1.0 day; p¼ 0:1261).
Discussion
Medicare provides coverage of postacute care for beneficiaries in skilled nursing facilities. However, that coverage requires a patient to have a stay of at least three days in an acute care hospital before transferring to the skilled nursing facility. With a brief exception following the enactment of the Medicare Catastrophic Coverage Act in 1988, this policy has been in effect for nearly five decades. During that time, patterns of hospital and postacute care utilization have changed markedly, but there are no recent empirical data evaluating the consequences of eliminating the three-day stay requirement.
In our quasi-experimental study of Medicare Advantage plans that did or did not exercise their option to eliminate the three-day stay requirement, we found no evidence that doing so increased the probability of skilled nursing facility admission, the number of skilled nursing facility admissions, or the length-of-stay in a skilled nursing facility. Elimination of the three-day stay policy was associated with a decline of 0.7 day in mean hospital length-of-stay among people discharged to a skilled nursing facility. In ten of the fourteen pairs of matched case-control plans in the study, enrollees in the case plan experienced a decline in length-of-stay relative to the concurrent trend for enrollees in the matched control plan. Our findings were robust to sensitivity analyses that included people who were continuously enrolled for twelve months before the policy change or that included all people irrespective of their length of enrollment.
If patients in case plans were discharged too early, the decline in acute care length-of-stay might have been accompanied by an increased probability of readmission and other subsequent hospital stays among those beneficiaries with a skilled nursing facility admission. However, we did not find increases in the average number of hospital admissions among this population. Mark Unruh and coauthors also found no association between reductions in length-of-stay and readmission among Medicare beneficiaries discharged to a skilled nursing facility.19
In the year following the elimination of the three-day stay requirement in the Medicare Catastrophic Coverage Act, Medicare spending on skilled nursing facility services more than doubled.12 Much of this increase occurred through direct admissions to skilled nursing facilities from home and conversions of Medicaid-financed nursing home days to Medicare-financed skilled nursing facility days among long-stay nursing home residents.
These findings raise the possibility that eliminating the three-day stay requirement would open the floodgates for patients to use skilled nursing facility services. However, we did not observe an influx of skilled nursing facility admissions directly from home in case plans after they eliminated the requirement.
Our results differ from studies of the effects of the Medicare Catastrophic Coverage Act,10 and there are two potential reasons for the difference. First, in contrast to the traditional Medicare program, Medicare Advantage plans may deploy active care management and utilization review strategies to decrease enrollees' cycling between a skilled nursing facility and the hospital and to reduce the duration of hospital and skilled nursing facility stays.7,20–22 Second, the act also lowered hospital and skilled nursing facility copayments, which might have increased the use of these services. In our study we selected plans that did not change cost sharing for hospital and skilled nursing facility care.
Our results suggest that eliminating the three-day stay requirement would not necessarily increase spending on hospital and skilled nursing facility care among Medicare Advantage enrollees. A lack of increase in spending would be consistent with the results of a study of two state demonstration projects that waived the three-day stay requirement in 1977.9
The 0.7 day reduction in hospital length-of-stay among hospitalized patients who received skilled nursing facility care could lower patients' exposure to iatrogenic complications. Furthermore, given the estimated costs associated with a day in the hospital, a 0.7 day reduction would translate into approximately $1,500 in savings for every inpatient admission that concluded with a discharge to a skilled nursing facility.23 Thus, the Medicare Advantage case plans in our study probably realized cost savings after eliminating the three-day stay policy.
These cost savings are unlikely to be generalizable to the traditional Medicare program. In contrast with the Medicare Advantage program, in which plans receive capitated payments per member in exchange for bearing the risk of providing Medicare-covered services, traditional Medicare reimburses providers separately for the delivery of each covered service.24 Because Medicare pays hospitals prospectively for each admission, savings from reductions in hospital length-of-stay would accrue to hospitals instead of to the Medicare program. Traditional Medicare would realize savings only if eliminating the three-day stay policy led to some acute hospitalizations being avoided entirely, without generating offsetting increases in spending on skilled nursing facility care.
It is unclear whether our findings related to Medicare Advantage plans could be extended to accountable care organizations (ACOs). ACOs are groups of providers that elect to be accountable for the spending on and quality of care of the Medicare fee-for-service beneficiaries attributed to them, even if those beneficiaries receive care from non-ACO providers.
Similar to Medicare Advantage plans, ACOs can use care management strategies to influence the use of inpatient and postacute care and operate under financial incentives to reduce health care spending.24 However, in contrast to Medicare Advantage plans, ACOs cannot control costs through coverage restrictions and the use of prior authorization, increased cost sharing, or limitations on the network of available providers. Notably, CMS allows Pioneer ACOs to waive the qualifying stay requirement, and the Medicare Payment Advisory Commission has recommended that CMS extend this flexibility to other ACOs.25,26 Thus, it will be important to evaluate whether the elimination of the three-day stay policy in ACOs produces results similar to those observed among Medicare Advantage plans. Future studies should also characterize the impacts of eliminating the three-day stay policy on long-term nursing home residents' use of hospital and postacute care.
Conclusion
Elimination of the three-day hospital stay requirement to qualify for Medicare coverage of postacute skilled nursing facility care in Medicare Advantage plans was associated with declines in average hospital length-of-stay among enrollees transferred for such care but not with an increase in the average number of hospital admissions, the average length of skilled nursing facility stay, or the likelihood of using skilled nursing facility services. These results suggest that Medicare Advantage plans may have realized cost savings by eliminating this precondition for Medicare payment. Investigation of the effects of waiving this requirement on the use of acute and postacute care in ACOs and traditional Medicare is warranted.
Acknowledgments
Results from this study were presented at the AcademyHealth Annual Research Meeting in Minneapolis, Minnesota, June 15, 2015. This study was supported by grants from the Alliance for Quality Nursing Home Care and the National Institute on Aging (Grant Nos. R01 AG044374 and P01 AG027296). The funders played no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication. The views expressed in this article are those of the authors and do not necessarily represent the position or policy of the Department of Veterans Affairs or the US government.
Exhibit 1.
Baseline Characteristics Of Medicare Advantage Patients Enrolled In Plans With Or Without The Three-Day Stay Requirement, 2006–10.
| Patient characteristic | Case plans | Control plans | All plans |
|---|---|---|---|
| Number | 116.676 | 140,739 | 257,415 |
| Mean age, years (SD) | 71.3 (13.8) | 74.2 (9.2) | 72.9 (11.6) |
| Female | 62% | 60% | 61% |
|
| |||
| RACE | |||
|
| |||
| White | 86% | 93% | 90% |
| Black | 8 | 4 | 6 |
| Other | 6 | 3 | 4 |
|
| |||
| CENSUS REGION | |||
|
| |||
| Midwest | 42% | 34% | 37% |
| Northeast | 49 | 49 | 49 |
| South | 8 | 15 | 12 |
| West | 2 | 2 | 2 |
|
| |||
| MEDICAID OR LOW-INCOME SUBSIDY | |||
|
| |||
| Full Medicaid | 46% | 12% | 27% |
| Partial Medicaid | 4 | 3 | 4 |
| Part D low-income subsidy only | 2 | 4 | 3 |
| Other or none | 47 | 81 | 66 |
SOURCE Authors' analysis of data from Medicare Advantage and Medicare enrollment records, NOTES The study included fourteen case plans, which had eliminated the three-day qualifying hospital stay requirement, and fourteen matched control plans, which still had the requirement. For each case plan and its matched control, the baseline year was the year before the case plan eliminated the three-day stay requirement. All comparisons of case plans to control plans were significant ( p < 0:001). Percentages may not sum to 100 because of rounding. SD is standard deviation.
Exhibit 2.
Adjusted Difference-ln-Differences Estimates In Mean Hospital Length-Of-Stay Among Skilled Nursing Facility Users In Case Plans Versus Those In Control Plans, By Selected Characteristics.
SOURCE Authors' analysis of data from Medicare Advantage and Medicare enrollment records, the Healthcare Effectiveness Data and Information Set, and the Residential History File from the Minimum Data Set. NOTES The point estimates and 95 percent confidence intervals (represented by the whiskers) refer to the adjusted difference-in-differences for mean hospital length-of-stay among enrollees in case plans versus those in control plans. Estimates were adjusted for age, sex, race, and receipt of Medicaid or low-income subsidy (LIS), with the exception of the stratification variable. **p < 0:05 ***p < 0:01 ****p < 0:001
Exhibit 3.
Adjusted Difference-ln-Difference Estimates In Mean Hospital Length-Of-Stay For Skilled Nursing Facility Users For Each Matched Case-Control Pair.
SOURCE Authors' analysis of data on hospital utilization from the Healthcare Effectiveness Data and Information Set and data on skilled nursing facility utilization from the Residential History File from the Minimum Data Set. NOTES The point estimates and 95 percent confidence intervals (represented by the whiskers) refer to the adjusted difference-in-differences for hospital length-of-stay among enrollees in each case-control pair in the study. Estimates were adjusted for age, sex, race, and receipt of Medicaid or low-income subsidy. *p < 0:05 ***p < 0:001
Contributor Information
Regina C. Grebla, Center for Gerontology and Health Care Research at Brown University, in Providence, Rhode Island, Global Health Economics, Outcomes Research, and Epidemiology Division at Shire, in Lexington, Massachusetts.
Laura Keohane, Department of Health Services, Policy, and Practice at the Brown University School of Public Health.
Yoojin Lee, Center for Gerontology and Health Care Research at Brown University.
Lewis A. Lipsitz, Harvard Medical School and director of the Institute for Aging Research at Hebrew SeniorLife, both in Boston, Massachusetts.
Momotazur Rahman, Department of Health Services, Policy, and Practice at the Brown University School of Public Health.
Amal N. Trivedl, Email: amal_trivedi@brown.edu, Department Df Health Services, Policy, and Practice at Brown University, Center of Innovation in Long Term Services and Supports at the Providence Veterans Affairs Medical Center, in Rhode Island.
Notes
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