Rep. Courtney seeks support on Medicare nursing-home bill

Under current law, nursing-home stays are entirely covered by Medicare for the first 20 days — but only if the patients are first admitted to the hospital for three days under "inpatient" status. But more and more patients are being admitted for observation only, which doesn't qualify as a hospital stay for the purposes of Medicare nursing-home coverage.

Courtney's bill would amend the law so that a beneficiary's time spent in the hospital under "observation" status would count toward the three-day-stay requirement. The bill would also let beneficiaries with pending appeals at the time of passage benefit from the Medicare coverage.

The American Health Care Association (AHCA), which advocates for nursing homes, says the number of patients admitted under observation has been growing "exponentially" because hospitals don't want to run afoul of Medicare. The law requires that patients meet certain criteria to be admitted under inpatient status, which is generously covered by Medicare.

Under pressure to cut costs, Medicare this year is expanding nationwide a six-state audit program that collected $1 billion in improper payments over three years from hospitals and other providers. And the new healthcare law could make things worse, argues AHCA, because it penalizes hospitals for patients who have to be readmitted within 30 days; patients under observation aren't considered to have been admitted in the first place.

Elise Smith, vice president of finance policy for AHCA, tells The Hill that the distinction between observation and inpatient status has become blurry — guidance from the Centers for Medicare and Medicaid Services (CMS) says hospitals should only keep patients under observation for one or two days, she said, but some are staying much longer than that, leading them and their families to believe they've qualified for Medicare nursing home care. Without Medicare, families are responsible for the entire bill, which usually runs between $300 and $500 a day.

"From a policy perspective, H.R. 5950 restores observation to an appropriate place and use as required by CMS," she said. "More importantly, from the patient’s perspective, this bill removes the problems created by an increasing number of increasingly lengthy observation stays that have resulted in Medicare’s refusal to appropriately cover post-acute care due to a lack of qualifying three-day stay."