Medicare’s 3-Day Rule Could Be Costing You More Than You Think

Is Medicare keeping you in the hospital longer than necessary? There’s a little-known rule that many people don’t even know exists that could result in longer hospital stays and higher expenses if you don’t understand what’s happening.

So today, we’re going to break down why this matters to you, what you can do about it, and what you need to know.

This is a transcript of our video. You can watch the full video on our YouTube channel: Low Income Relief.

Why This Matters

Obviously, longer hospital stays mean bigger bills. And when you’re on a fixed income, a bigger bill can be extremely difficult to deal with.

It also means that you and your doctor have less control over what’s going on with your care because, in some cases, Medicare may be dictating how long you stay in the hospital.

And of course, the more you know about these rules, the better able you are to advocate for your own rights and your own needs, which is why I think it’s so important that we talk about these things here on our channel.

Background On The 3-Day Rule

Let’s talk about the background of what’s going on here.

We know that Medicare covers Americans aged 65 and older, as well as some people with disabilities, but it doesn’t cover everything. Some of those rules date all the way back to 1965, when hospital stays averaged about two weeks.

Since then, medicine has changed dramatically, but a lot of Medicare’s rules have not kept up. That’s kind of where we get this 3-day rule from.

This rule was created in 1965 to prevent premature discharges from the hospital. The idea was that if you were going to need skilled care after the hospital, they would only cover that if you were in the hospital for at least three consecutive inpatient days.

Why The Rule Is Causing Problems Today

Today, this rule is not having the intended effect of making sure you’re in the hospital long enough.

In fact, in some cases, it’s keeping people stuck in the hospital a lot longer than medically necessary, which increases expenses, takes up hospital beds, and creates a lot of negative consequences.

A lot of that is because today’s medicine is very different than what we had in 1965. Most surgeries are outpatient, and patients recover faster. But despite that, the 3-day rule still applies, and that’s a big problem.

Congressman Joe Courtney called observation status for Medicare beneficiaries “surprise medical bills on steroids” in an article on MedicareAdvocacy.org.

That’s because, in order to get your skilled nursing care covered, you have to stay in the hospital for three full days—and those are very expensive days. This creates large, unexpected bills for services that are not medically necessary.

So you end up with low-income seniors facing fixed-income pressure. In order to get the nursing care they need, they have to wait—but they can’t afford to wait—and everything becomes more expensive than it should be.

Real-Life Example

Let’s look at how this works in practice.

Dorothy, age 72, has hip surgery. Her doctor says she’s ready for a nursing rehab facility after two days, but Medicare will not cover her skilled nursing facility because she hasn’t hit three inpatient days yet.

So she either has to stay in the hospital for another day and pay for that, or figure out how to pay for the skilled nursing facility herself.

Either way, Dorothy is stuck with extra costs because of an outdated Medicare rule.

What The Research Shows

The research on this has been really clear because they actually suspended this rule for a three-year period during COVID.

Between March 2020 and May 2023, the 3-day rule did not apply. What they found is that it didn’t reduce nursing care use—it just made hospital stays longer.

After that COVID pause ended, there was an increase in the number of 3-day stays, especially among Medicare patients who needed skilled nursing facility care.

The cumulative effect was over 2,000 extra hospital stays billed to seniors in just the first month after the rule was reinstated. That’s an extra 2,000 days of hospital stays billed to Medicare and to seniors, potentially for no other reason than this outdated rule.

Medicare Advantage vs. Traditional Medicare

Not all Medicare plans have the same rules.

According to the research, it appears that Medicare Advantage plans can and do sometimes waive that 3-day rule.

If you want to get into the details of what plans are doing, that’s when you need to call our partner, Chapter, because they are trusted Medicare advisors. They have databases and tools to help you look at your options, and they know a lot more about what individual plans can do than I do.

So if you’re interested in how this works with your plan, or if you have other Medicare questions, go ahead and give them a call. Just know that, for the most part, when we’re talking about this 3-day rule, it mostly applies to traditional Medicare.

We also know that about 54% of all Medicare beneficiaries are now enrolled in Medicare Advantage plans. That research shows that most of those plans do waive the 3-day rule, which makes a lot of sense.

MedicareAdvocacy.org says that about 70% of all Medicare beneficiaries are in programs that don’t require that rule. That’s a relief, but it also shows how significant the issue is.

If the rule doesn’t apply to 70% of people and they still billed 2,000 extra hospital days in a single month, that’s a pretty serious problem.

The TEAM Model Waiver

They are working on changing this through what they’re calling the TEAM model waiver.

This was announced in September and began on January 1. Certain hospitals that participate in the TEAM model can discharge patients directly to a skilled nursing facility without waiting for that 3-day stay.

However, this only applies to certain hospitals and five specific surgical procedures, so it depends on what you’re having done and where.

This waiver is currently expected to be valid through 2030.

You may be eligible if you are having:

• A hip or knee replacement
• A hip fracture
• A spinal fusion
• Bypass surgery
• A major bowel procedure

To use this waiver, you must be treated at a participating hospital, and you’ll need to be admitted to the skilled nursing facility within 30 days of your hospital or outpatient discharge.

What You Can Do

When you find yourself in a situation where a hospital stay may be necessary, it helps to know what your plan covers and whether it waives the 3-day rule.

Again, Chapter is a great resource for getting those answers, or you can call your plan directly.

It also helps to know if the hospital is a TEAM participant, because that may determine whether you’re eligible for the waiver.

And, of course, understanding whether you’re being admitted because you truly need to be—or because they’re trying to meet that 3-day requirement—is an important question to ask.

Final Thoughts

You can see some of our sources if you’re interested in diving deeper into this.

I hope this information has been helpful. I know how miserable it can be to be hospitalized, especially longer than you need to be.

Please check out our other videos to see the other changes coming to Medicare right now. There’s a lot happening, and I don’t want you to miss any of those updates.

I’ll see you there.