Background: Medicare coverage of skilled nursing facility (SNF) care requires that beneficiaries have a 3-night inpatient stay in the prior 30 days to be eligible. Time spent by beneficiaries receiving hospital-based observation services does not count toward this requirement.
Objectives: To examine the frequency of Medicare beneficiary discharge from hospital-based observation services to SNFs and its impact on Medicare coverage.
Study design: Retrospective cohort study.
Results: In 2010, 195,068 community-dwelling beneficiaries received hospital-based observation services. Beneficiaries were overwhelmingly (96.5%) discharged back to the community without home health services. Only 1.2% (2319) were discharged to non-covered SNFs, while 0.6% (1196) were discharged to covered SNFs. Patients discharged to SNFs experienced longer lengths of stay (LOS) than those discharged back to the community (34.9 hours vs 25.5 hours; P<.01). Approximately one-fourth of beneficiaries discharged to SNFs had an observation LOS of 48 hours or more.
Conclusions: While only a small minority of community-dwelling Medicare beneficiaries who received hospital-based observation services in 2010 were discharged to an SNF not covered by Medicare, the implications for these patients and the associated costs deserve attention. These findings have important implications for Medicare's observation service and 2-midnight policies.