What is the 3 Midnight Rule?

Author

Robert Oubre, MD
October 19, 2024 • Estimated Reading Time: 11 minutes

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No, no. Not the TWO midnight rule, the THREE midnight rule - a whole different ball game.

In May 2023, I posted this on Twitter and I was surprised at the interest it got:

Although the 3-midnight rule had been in place since 1965, it was put on hold during the COVID-19 pandemic starting in March 2020. When it was put back into place after the official end of the COVID-19 public health emergency on May 11, 2023, many social workers, case managers, doctors, APP’s, etc. had come into practice in the previous 3 years and never had to deal with it, or even knew it existed.

But let’s take a step back.

What is the 3 Midnight Rule?

No, it’s not listening to Taylor Swift’s “Midnights” album 3 times in a row.

It all goes back to Medicare parts.

This midnight rule? It’s part of Medicare Part A so that Medicare will pay for days in a SNF (skilled nursing facility).

It requires that a patient stay in an acute care hospital as an INPATIENT for three consecutive medically necessary midnights. Yes, inpatient. Not observation. Observation days don’t count. That’s where the TWO midnight rule comes into play in its importance to the THREE midnight rule. And don’t sleep on the “medically necessary” aspect. You can’t keep a patient in the hospital for the sole reason of meeting the 3-midnight rule. However, if a patient requires further monitoring and passes that third midnight, well that counts.

And, yes, I know.
Put down the pitchforks.

It’s actually the “3-day rule” but it’s often referred to as the 3-midnight rule as that’s the better way to conceptualize it. As CMS says: “Use the midnight-to-midnight method when a day begins at midnight and ends 24 hours later.” So, the day of discharge doesn’t count and (generally speaking ignoring some nuances) when an inpatient order is placed prior to midnight, that day does count. This doesn’t matter your location. Even if the patient is still in the ER or the PACU, once the inpatient order is placed, that patient is magically an inpatient. People often get this confused because CMS states, “time spent in the ED or outpatient observation before admission doesn’t count toward the 3-day rule.” For these purposes, "before admission” is before the inpatient order.

Once this requirement is met, Medicare will then pay up to 20 days in a SNF, and up to 100 days with a copayment. This approval extends to 30 days after a patient is discharged, including after being discharged home (something many don’t realize).

A History Problem

This rule has remained largely unchanged since 1965. Yes, 1965. Before we ever went to the dang moon. Why is that a problem?

Medicine has changed just a little bit since then. In 1972, the average length of stay in a hospital was 12 days. So, requiring 3 midnights didn’t seem that unreasonable.

But now? In 2016, the average length of stay for Medicare patients was 5.5 days and a more recent analysis of general acute care patients is closer to 4.5 days. In this context, 3 midnights seems like an eternity.

There have been attempts to get observation days to count towards this but it’s just too expensive for Medicare. The rule was eliminated in 1988 and cost Medicare an extra $1.8 billion (with a b). So, uh, yeah, they put it back the next year.

A Hospitalist’s Experience

In my experience, I encounter this rule in mostly one of two ways:

  1. We determine that the patient needs SNF, and they’ve already been an inpatient for more than 3 midnights. We realize they have traditional Medicare and breathe a sigh of relief as we now only need to find a facility to accept the patient and do not have to wait for authorization from an insurance company. In these cases, I THANK Medicare for its simplicity.

  2. An elderly frail patient comes into the hospital with a fall due to an acute condition that doesn’t necessarily require inpatient stay, let alone THREE days as an inpatient. The patient wants SNF. The family wants SNF. PT/OT recommend SNF. And I, their doctor, think they need SNF. But they don’t meet the 3-midnight requirement, so there’s little we can do. Family often directs their anger at us, and we ultimately have to discharge the patient with alternatives such as home health PT/OT. These brief admissions are also often the moment family realizes they can no longer care for their elderly loved one at home and need to place them into a custodial care facility. Placement in custodial care can take weeks, so “SNF to custodial” is often the solution. But, again, that’s not available in this situation. For the sake of the patient, all involved are typically left unsatisfied with the solution.

What about Medicare Advantage?

Medicare Advantage plans have the option to waive the 3-midnight rule.

Aww. So kind of them.
Right?
Not so fast.

Any UM physician advisor or hospitalist who has had to deal with peer-to-peer calls with MA plans refusing authorization of SNF services knows clearly why they waive the 3-midnight rule.

They will often argue that SNF care is not medically necessary. Medicare defines medically necessary in 42 CFR 409.31. As summarized by Dr. Ben Kartchner:

1. The patient requires skilled nursing or rehabilitation services:

- For a condition for which the patient received inpatient hospital services

- For a condition that arose while receiving SNF care for a condition for which the patient received hospital services; and

2. The patient requires skilled services on a daily basis

3. Daily skilled services can be provided only on an inpatient basis in a SNF:

- Need to consider practicality, economy, and efficiency in this decision; and

4. Services are reasonable and necessary for the treatment of a patient’s illness or injury:

- Consistent with the nature and severity of the individual’s illness or injury.

Dr. Kartchner did a great job in that linked article of describing custodial versus skilled care, and how to approach peer to peer calls. I won’t repeat it all here. Check it out.

This becomes a concern (just like the 2-midnight rule) that Medicare Advantage patients are not truly receiving coverage “that is equal to or better than Traditional Medicare” as they would have been covered by Traditional Medicare and the 3-day rule, but are refused coverage by MA plans using the argument of lack of medical necessity.

What about Inpatient Rehab?

The 3-day rule does not apply to inpatient rehab. Those requirements can be found at 42 CFR 412.622 (3). As I’m not a UM nor IPR expert and don’t deal with these specific requirements often, I won’t provide my interpretation of their legalese.

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That’s all for now. Don’t hesitate to ask questions as they help inspire future issues!

Cheers,

Robert

Thanks to Dr. Benjamin Kartchner, MD for his contributions, and Laura Samson, RN BSN CCDS and my wife Kara (for grammar) for editing this newsletter!

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