SNF 3-Day Rule Billing

To be eligible for Skilled Nursing Facility (SNF) extended care services coverage, Medicare beneficiaries must meet the 3-day rule prior to SNF admission. SNF extended care coverage is considered an extension of care necessary within 30 days of hospital discharge (unless admitting within 30 days would be medically inappropriate). The 3-day rule requires Medicare beneficiaries to have three consecutive days of inpatient hospitalization. The 3-day hospital admission count excludes any pre-admission time spent in the emergency room or any outpatient observation. Medicare covers SNF extended care services only after the beneficiary satisfies the requirements of the 3-day rule, which begins on the calendar day of hospital admission but excludes the day of discharge.

Hospitals should first communicate to the SNF and the beneficiary the number of inpatient hospital days when the patient is being discharged to a SNF for extended care services. The SNF should also verify the beneficiary’s hospital stay during SNF admission to ensure that the patient met the 3-day rule. Although Medicare does not require the SNF to issue a SNF Advance Beneficiary Notice of Non-coverage (SNF ABN), it is strongly encouraged to make the patient aware of their liability for the cost of the stay. Patients accepting SNF admission while not meeting the requirements of the 3-day rule must pay the extended care services claim out-of-pocket unless other coverage is available.

Members should understand that when the SNF bills Medicare for extended care services that do not meet the requirements of the 3-day rule, the SNF becomes liable to return the overpayment to the Centers for Medicare and Medicaid Services (CMS) within 60 days of identifying the overpayment error. If a SNF provider is without fault for an extended care services billing error, Medicare waives the provider of any overpayment responsibility. To verify eligibility when processing 3-day rule Medicare claims, SNFs are required to report occurrence span code “70” when providing the dates of a qualifying hospital stay.

While the 3-day rule applies to most Medicare residents, members should be aware whether the resident’s payment arrangement may provide a waiver of the 3-day rule. These could include Medicare Advantage plans, Accountable Care Organizations, and Bundled Payment arrangements.

To view a CMS fact sheet with further details on SNF 3-day rule billing, click here.

Contact: Ken Allison, kallison@leadingageny.org, 518-867-8820