Inpatient Status
Doctors designate patients as inpatients based on written hospital admission orders. The physician makes such determinations based on the requirement for hospital-level care that should span at least two continuous midnights. Inpatient status starts when the doctor authorizes admission and nurses place the patient in the hospital bed. Inpatient hospital services qualify for Medicare Part A coverage which includes accommodations, nursing care, and medications enabled by the program.
Patients qualifying for Skilled Nursing Facility (SNF) care must start their stay under inpatient status for hospital admission. The Medicare program requires patients to meet a three-day requirement of hospital inpatient admission that leads to SNF coverage. Patients who fail to meet the admission requirement will need to pay expenses on their own due to the high costs of SNF services.
Outpatient Status
Healthcare facilities consider patients staying without proper admission orders to be under outpatient status whenever they access emergency rooms, undergo tests, or need overnight hospital stays. Healthcare providers need to observe patients in "observation" status for medical assessment before deciding whether hospital admission is necessary.
The Medicare Part B coverage includes outpatient services through doctor appointments, outpatient laboratory tests, X-rays, and acceptable medications. Hospital stays as an outpatient patient or in observation never turn into qualifying days for SNF coverage even though they happen after a three-day hospital stay. Patients often find this rule unexpected as they spent time in hospital beds overnight but the hospital did not officially admit them.
Medical treatments offered as outpatient services receive coverage under Medicare Part B while doctor exams and outpatient tests along with X-rays and selected medicines are included under this provision. Medicare fails to recognize outpatient or observation hospital visits toward the three-day requirement which qualifies patients for SNF coverage. Hospital patients frequently face unexpected challenges due to this rule, especially when they sleep overnight and the facility has not formally admitted them to treatment.
Inpatient vs. Outpatient SNF Eligibility
The main difference between inpatient and outpatient status is how Medicare views and pays for the care. Medicare provides coverage for follow-up SNF care to inpatients but not to patients under observation or outpatient statuses. The medical expenses incurred in hospitals for inpatients will qualify for Medicare SNF coverage even if the patient remains hospitalized past three days. However, Medicare denies coverage for SNF care when a person was not officially admitted as an inpatient.
Getting admission clarification from hospital staff represents an essential step that patients must perform with their families. Understanding their status between inpatient and outpatient helps Medicare beneficiaries prepare their future medical needs while gaining clarity regarding Medicare coverage. The coverage information allows patients to prevent receiving unexpected medical bills from SNF services.
3-Day Qualifying Hospital Stay Rule
Getting admission clarification from hospital staff represents an essential step that patients must perform with their families. Understanding their status between inpatient and outpatient helps Medicare beneficiaries prepare their future medical needs while gaining clarity regarding Medicare coverage. The coverage information allows patients to prevent receiving unexpected medical bills from SNF services.
The Medicare system requires patients to receive hospital care as an inpatient for three successive days which qualifies them for skilled nursing facility (SNF) benefits. The rule exists under the label of the '3-day qualifying stay'. The purpose of this rule is to confirm that skilled nursing facilities should deliver their services after hospital patients experience large medical events requiring continued skilled therapy.
Many patients and their families misunderstand hospital stays which require a clear definition between inpatient and outpatient service periods. A failure to meet the required 3-day inpatient stay results in patients needing to pay large expenses when they need SNF services.
Exceptions and Waivers to the Rule
Under specific public need requirements and alternative care programs, the Medicare 3-day hospital stay rule may receive exceptions. During public health emergencies including COVID-19 the Centers for Medicare & Medicaid Services through waivers enabled patients to access Medicare-covered SNF care without satisfying the typical 3-day inpatient requirement.
Participating patients must adhere to different 3-day stay requirements based on their enrollment in specific Medicare programs such as Accountable Care Organizations (ACOs) or Medicare Advantage plans. Specific Medicare programs and models offer flexible care coordination which leads to hospital stay authorization through medical necessity assessments instead of hospital admission duration requirements.
These waivers do not grant access to Medicare-covered SNF care without approval. Patients need to speak with hospital case managers, discharge planners, and healthcare providers to understand any existing rules or waiver applications for their medical cases. Checking eligibility before admission helps prevent unplanned SNF costs and validates proper coverage through insurance.
CMS Updates to the 3-Day Rule
During 2025, the Centers for Medicare & Medicaid Services (CMS) will update procedures regarding the 3-day hospital stay requirement. Telehealth visits from specific locations now qualify as a part of inpatient stays under particular guidelines. The CMS continues its mission to increase healthcare availability by implementing regulations that would benefit patients residing in rural areas and those facing mobility challenges or medical conditions affecting their ability to reach hospitals.
The new proposal allows healthcare providers to consider specific telehealth services as meeting requirements for the 3-day rule. The Medicare policy suggests that time spent under continuous observation through virtual assessments equivalent to inpatient care can qualify towards the required stay.
The modification indicates CMS's interest in reinventing Medicare rules through technological advancements and improved patient convenience programs in post-pandemic healthcare environments.
Implications for Healthcare Providers
Healthcare providers need to intensify their attention on documentation tasks, enhancing accuracy performance and maintaining compliance standards. During skilled nursing Facility billing providers need to prove that patients fulfilled inpatient status conditions via traditional hospital admissions or qualifying telehealth contacts.
To prevent claim denials, hospitals and SNFs must ensure that:
- Proper documentation exists for all inpatient admissions which includes physician-directed orders and medical necessity evidence.
- Correct SNF billing codes are used, especially if telehealth interactions are involved.
- Timely submission of claims is maintained, as delays can affect healthcare reimbursement and patient access to SNF care.
It is also essential that hospitals and billing teams stay updated on CMS guidelines and ensure all staff are trained on how these updates affect Medicare eligibility. Due to the complexity of the new rules and the risk of SNF billing errors, you can also opt for outsourcing SNF billing to 24/7 Medical Billing Services.
FAQs
Q1. What is the purpose of CMS updating the 3-day rule in 2025?
CMS aims to increase care accessibility and adapt Medicare rules to modern healthcare delivery methods.
Q2. Will telehealth visits completely replace inpatient hospital stays?
Telehealth may supplement but not entirely replace traditional inpatient care under current CMS proposals.
Q3.Can SNFs automatically count telehealth toward Medicare eligibility?
Only specific telehealth services under defined conditions may qualify, and providers must meet CMS criteria.
Q4. Are all hospitals eligible to include telehealth in inpatient stay calculations?
Only hospitals meeting CMS-defined conditions and documentation requirements may include qualifying telehealth time.
Q5. Do patients need to request telehealth consideration themselves?
No, healthcare providers determine eligibility and must document appropriately for CMS to consider it.
Q6. How will SNFs verify if a telehealth interaction counts toward coverage?
SNFs must review hospital discharge summaries and confirm CMS-approved documentation from referring hospitals.
Q7. What happens if a facility misclassifies outpatient care as inpatient?
Misclassification may lead to claim denials and compliance violations under Medicare regulations.