Nursing Home Update

March 25, 2004

Dear Administrator:

As you may know, CMS conducted audits relating to the 3-day hospital stay used to establish Medicare eligibility for SNF care.  As a result of the audits, certain payments made when an observation day was incorrectly counted as an inpatient day to meet the 3-day hospital requirement were deemed  improper and recoupment of the "overpayment" was sought.  After examining the issue, CMS has concluded that it would not be appropriate to recover payments that were previously made for these claims because there was no deliberate pattern of misrepresentation.  Accordingly, Fiscal Intermediaries have been directed by CMS not to seek recovery for payments identified in these audits and to refund any funds already recovered.

While the CMS is working with OIG to analyze the existing policies and to make recommendations for future action, the existing policy requiring an inpatient hospital stay of at least 3 consecutive days for SNF care is still in effect.

If you would like additional information or have any questions, please feel free to contact Patrick Formato, Barbara Phair, or any of the other attorneys in our Health Care Law Department at (516) 328-2300.