NEW YORK (MainStreet) — The requirement by Medicare that beneficiaries must be hospitalized as inpatients for at least three days before it will pay for rehabilitation at a skilled nursing facility (SNF) has cost many frail seniors both in terms of their health and personal finances. But for 23 accountable care organizations (ACOs) across the nation, the three-day rule has been waived.

These organizations are participating in a Medicare program to test whether patients will have better clinical outcomes and if the government will save money waiving the three-day rule. The Pioneer ACO Model makes it possible for patients to go directly from the emergency room, under observation (which is considered outpatient) status, home, or even their doctor's office to rehabilitative care at an SNF.

According to Medicare, the Pioneer model is being used to test different payment arrangements in order to provide better care to beneficiaries and reduce Medicare costs. In the first two years, a shared savings and shared losses payment arrangement was tested in which savings were compared to a benchmark for the patients studied. Pioneer programs that demonstrated a savings were (and continue to be eligible for a population-based payment model, which allots a monthly payment per patient in lieu of some or all fee-for-service payments. (There are two alternative payment arrangements, proposed by the ACOs, being tested, as well. Public comments on the federal government program opened last week.)

Earlier this year, the Pioneer program at Mass General in Boston was expanded from 2,000 to more than 20,000 high-risk patients, according to Ryan Thompson, a general internist and physician lead for the three-day waiver program within Mass General Hospital Population Health Management.

Most of the patients who were sent to an SNF for rehab under this program came from observation status (where they were confirmed stable and received appropriate treatment), Thompson says, which is where many Medicare beneficiaries outside of the program get stuck with the tab if they opt to go for rehabilitation at an SNF. Under the program, besides a need for rehabilitation that could not take place inside the home, patients must have a clear and confirmed diagnosis, must not need hospital care or treatment, and their rehabilitation goal must be to return home, he says.

If Medicare patients who need rehabilitation at an SNF can avoid an unnecessary three-day stay, everyone's a winner, says Thompson.

--Written by S.Z. Berg for MainStreet