Rehab stays and the Medicare loophole

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Do you expect Medicare to pay for your rehabilitation in a nursing home after a stay in the hospital? Then you better know about this rule!

A problem often occurs when someone goes into the hospital for surgery and then goes immediately to a skilled nursing facility (SNF) for rehabilitation (rehab).

Most people assume that the rehab stay in the SNF will be covered by Medicare. Unfortunately, that is not necessarily the case.

Medicare mandates that a patient must spend at least three consecutive days, meaning three midnight stays, in a hospital as an inpatient on admitted status in order to qualify for Medicare coverage for the subsequent rehab stay in a SNF.

Unfortunately, patients may be classified as outpatient on observation status in the hospital and fail to achieve the three-day inpatient stay to qualify for subsequent SNF Medicare coverage, even though they are in a hospital bed for multiple days and the care they receive is indistinguishable from admitted patient care. Observation status does not equal admitted status.

Talk to your admitting physician. Determine whether or not your procedure will qualify as an admitted patient procedure. We have been told that sometimes your doctor may have some discretion to put you on admitted status (and not observation status) depending on the rules that he or she must abide by to comply with Medicare.

If your doctor has any discretion in this are,a then he must give you the proper coding and admitted status before you leave the hospital, because after you leave, the record becomes permanent and cannot be changed.

And a recent October 1, 2013 CMS rule unfortunately does not help Medicare beneficiaries. The new rule indicates that a two-midnight standard set out in the new regulations is simply a tool for physicians to apply in making an inpatient admission decisions.

Thus, if your doctor believes that you will require at least two midnights in the hospital, your doctor should admit you to admission status. But, you as the patient will continue to need three midnights on admission status to qualify for Medicare coverage in the subsequent SNF rehab stay.

For more, call 847-292-1220, e-mail or visit

About Anthony B. Ferraro

Anthony B. Ferraro is the founder and managing member at the Law Offices of Anthony B. Ferraro. He received his Bachelor of Science degree in accountancy from DePaul University and his Master of Science in taxation. After receiving his CPA designation in 1978, he enrolled in law school, earning his Juris Doctor in 1983 from De Paul University. An elder law practitioner, his practice areas include Medicaid planning and applications, guardianship, probate & trust administration, long-term care planning, nursing home contracts and admission, senior estate planning, special needs planning, estate planning, and estate taxation.

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