On August 27, 2025, the Centers for Medicare & Medicaid Services (CMS) released guidance implementing a 3-day Skilled Nursing Facility (SNF) rule waiver as part of the new Transforming Episode Accountability Model (TEAM). The waiver will apply to qualifying episodes of care beginning on or after January 1, 2026, and will remain in effect through December 31, 2030.
Under this waiver, CMS will allow acute care hospitals participating in TEAM to discharge eligible patients to a qualified SNF or swing bed provider without requiring a 3-day inpatient hospital stay. This change is intended to support care coordination and improve transitions across acute and post-acute settings.
Key details of the waiver include:
- The patient must be part of a TEAM episode of care initiated by a qualifying inpatient hospitalization or outpatient procedure for one of five surgical procedures: lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, or major bowel procedure.
- The SNF admission must occur no later than 30 days after discharge from the hospital or outpatient department.
- The patient must meet TEAM eligibility requirements at the time of SNF admission, including having Medicare Part A and B, not being enrolled in a Medicare Advantage plan, and not having ESRD or coverage under a United Mine Workers of America health plan.
- SNFs must be identified as qualified to participate in TEAM. Qualified SNFs must have had an overall star rating of 3 or higher for at least 7 of the last 12 months. This rating requirement does not apply to swing bed providers.
- SNF claims must include demonstration code A9 in the treatment authorization code field and meet all applicable billing criteria outlined in the Change Request (CR).
- If a SNF claim does not meet TEAM requirements but otherwise meets Medicare coverage rules, the MAC will remove the demonstration code and reprocess the claim under standard fee-for-service (FFS) billing.
TEAM is a mandatory episode-based payment model that will hold participating acute care hospitals accountable for the cost and quality of care during the episode, which includes the 30 days following the anchor procedure or hospitalization. CMS finalized TEAM policies through rulemaking in the FY 2025 and FY 2026 IPPS final rules. Implementation details, including billing and eligibility requirements for SNFs, are outlined in CR 14098.
Access the guidance from CMS here.
Compliance Perspective
Issue
On August 27, 2025, CMS released guidance implementing a waiver of the 3-day SNF rule, which will take effect on October 1, 2025. This waiver modifies certain admission requirements, allowing more flexibility for providers in admitting patients without the prior 3-day inpatient hospital stay. Facilities should review the guidance carefully to update policies, staff training, and internal procedures to ensure compliance with the new requirements.
Discussion Points
- Review and update policies and procedures to reflect the implementation of the 3-day SNF rule waiver effective October 1, 2025. Remove or modify any prior requirements tied to the 3-day hospital stay, and ensure admission criteria and documentation practices reflect the updated guidance. Consider working with a consultant to confirm that policy changes meet regulatory expectations.
- Educate admissions, clinical, and care planning staff on the waiver’s implications, emphasizing changes in patient eligibility and documentation needs. Training should highlight the revised criteria and support smooth transitions under the new admission processes. Med-Net Academy offers the course CMS Admission Process Requirements, which covers admissions process development, Medicaid-related charges, waiver of rights prohibitions, and strategies to reduce transfer-related trauma and stress.
- Conduct audits or focused reviews of admissions and related documentation ahead of October 1 to identify and address compliance gaps. Utilizing mock surveys or external audits can provide an objective assessment and help facilities proactively manage risks related to the waiver.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*