Medicare Payment to Skilled Nursing Facilities: The Consequences of the Three-Day Rule

66 Pages Posted: 17 Sep 2018 Last revised: 10 May 2021

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

AJin Lee

Michigan State University

Susan F. Lu

Purdue University - Krannert School of Management

Date Written: September 2018

Abstract

Medicare does not pay for a skilled nursing facility (SNF) unless a fee-for-service patient has stayed in the hospital for at least three days. Discharges after the three-day cutoff consistently result in more transfers to SNFs. Using the three-day rule as an instrument, we find that SNF discharges decrease hospital readmission for patients with comorbidities. However, for knee and hip replacement patients, we find significant increases in readmission. This perverse effect is more severe when local SNFs have lower quality. Back-of-the-envelope calculations suggest that the three-day rule may have generated extra Medicare payments to SNFs by $100-447 million per year.

Suggested Citation

Jin, Ginger Zhe and Lee, AJin and Lu, Susan Feng, Medicare Payment to Skilled Nursing Facilities: The Consequences of the Three-Day Rule (September 2018). NBER Working Paper No. w25017, Available at SSRN: https://ssrn.com/abstract=3246840

Ginger Zhe Jin (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

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AJin Lee

Michigan State University

Susan Feng Lu

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

HOME PAGE: http://https://sites.google.com/site/susanluhome/home

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