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Some seniors win Medicare exemptions for nursing-home coverage in pilot program

Medicare is exempting some patients at dozens of hospitals from the controversial requirement that seniors be admitted to the hospital for at least three days to qualify for follow-up skilled nursing home care.

The exemptions are at hospitals participating in Affordable Care Act pilot projects meant to test ways to improve Medicare service while reducing costs or holding them steady.

The pilot projects are conducted under a provision of the ACA that created the Center for Medicare and Medicaid Innovation to develop ways of improving Medicare.

“We’re testing whether it leads to better care and lower costs,” said Medicare’s deputy administrator Sean Cavanaugh. “And if those are successful, the secretary [of Health and Human Services] has the authority to expand those tests.”

The health law allows the government to extend successful pilot projects nationwide.

If the experiment is successful, “we should be able to make an argument to Medicare that there is a way to do it for all our patients,” said Eric M. Weil, associate chief for clinical affairs in the general internal medicine division at Massachusetts General Hospital in Boston. The hospital is one of five in the Partners HealthCare system that began offering the waiver in April after testing a limited version.

“It gets patients to the care they need much quicker and prevents them from clinically declining at home,” Weil said. If patients can spend less time in the hospital, he said, that frees up resources for sicker patients and saves money for Medicare because nursing-home care or home-health care is cheaper than a hospital stay.

Medicare’s three-day rule has frustrated seniors who don’t qualify for nursing-home coverage because they were in the hospital under observation care rather than being admitted. The number of observation patients ineligible for Medicare-covered nursing-home care has shot up by 88 percent in just six years, to 1.8 million in 2012.

Officials have said that only Congress can change the rule.

Diane Paulson, the senior attorney at Greater Boston Legal Services who is handling observation care appeals for several seniors, said Medicare should get rid of the requirement without waiting for any experiment results.

“Nursing-home care and other benefits are supposed to be covered if medically necessary and are not based on alleged cost savings,” she said.

One of the payment experiments involves about 600,000 seniors at more than 170 hospitals participating in what Medicare calls Pioneer Accountable Care Organizations. Under this pilot, which includes the Partners Health hospitals, patients who spend little or no time in the hospital can still qualify for Medicare’s nursing-home benefit. Medicare makes a set payment for a patient, which is shared by the patient’s health-care providers, including the nursing home.

This waiver of the three-day rule applies even to patients kept for observation, which is considered an outpatient service. No matter how long these patients stay, observation care normally doesn’t count toward Medicare’s requirement for short-term nursing- home coverage.

Medicare assigns patients to a program and does not accept volunteers.

Another experiment involves a “bundled payment care initiative” that also moves hospitals away from Medicare’s traditional fee-for-service model and instead pays a set fee for any of 48 specific procedures chosen by the hospital. The list includes hip or knee replacements. Patients admitted to about 70 participating hospitals may be eligible for the waiver for nursing-home coverage. Hospitals, doctors, nursing homes and other providers share Medicare’s discounted reimbursement for a patient receiving one of the eligible procedures. Medicare patients can check with their hospitals ahead of time to see if they are participating in the initiative.

“Even if patients are here 24 hours, they would still qualify for a skilled-nursing facility and are not penalized for getting well sooner,” said Joe Harrington, president of Lodi Memorial Hospital in Lodi, Calif., which provides the waiver to knee and hip replacement patients.

Hospital officials participating in the pilot programs say the waiver should be used conservatively to ensure that patients don’t leave the hospital prematurely, are not kept longer than necessary and enter a nursing home only if they have the potential for short-term rehabilitation.

“It’s been a long-standing Medicare policy, so if you want to change it, it’s important to make sure it’s safe to change it,” said Mark Froimson, an orthopedic surgeon and president of the Cleveland Clinic system’s Euclid Hospital. The hospital is in the bundled payment pilot project and offers the waiver to seniors who need nursing-home care after undergoing a knee or hip replacement. The Cleveland Clinic has asked Medicare for permission to expand the waiver to more procedures and additional hospitals.

“This is one example where Medicare, to their credit, is saying ‘we are willing to waive our rules and evaluate whether it is better care,’ ” he said.

Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.

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