Court rules Medicare beneficiaries can appeal move to hospital observation status

A federal court has ruled that hospitalized Medicare beneficiaries who transitioned from inpatient status to observation status can appeal the decision, making it easier for them to receive coverage for aftercare in a nursing home. retirement. The decision appears to end more than a decade of litigation on behalf of Medicare beneficiaries.

Medicare fully covers nursing home stays for the first 20 days, but only if the patient was first admitted to the hospital as an inpatient for at least three days. Partly due to pressure from Medicare to reduce costly hospital stays, hospitals often do not admit patients but instead place them under observation to determine whether they should be admitted. Even if a hospital initially admits a patient, a hospital review board may upgrade the patient from inpatient status to observation status, either before or after the patient’s stay. If the patient does not have three full days as an inpatient, Medicare will not cover a subsequent stay in a nursing home, which could cost the Medicare beneficiary thousands of dollars.

There are other consequences of being considered under observation. Instead of billing you under Medicare Part A, which covers inpatient services, the hospital will bill you under Medicare Part B. This means you will owe a co-payment for each service provided. Your total co-pay could be much higher than the single deductible you must pay under Part A.

In 2011, a group of Medicare beneficiaries sued the federal government in a class action lawsuit, arguing that they should have the right to appeal when their status changes from hospitalized status to observation status. After 11 years of litigation, the United States Court of Appeals for the Second Circuit upheld a lower court’s decision in favor of the beneficiaries, noting that Medicare allows appeals from other decisions. According to the court, “the decision to reclassify an inpatient from an inpatient to a patient receiving observation services may have significant and detrimental impacts on the financial, psychological and physical well-being of plaintiffs.” The court ordered Medicare to establish an appeals process for coverage as inpatients and to inform people of their appeal rights. The class was represented by pressure groups Medicare Defense Center and Justice in Aging and the law firm Wilson, Sonsini, Goodrich and Rosati.

The sighting status has been controversial for years. Originally, hospitals did not have to inform patients that they were under observation rather than hospitalization. That changed in 2017, when a federal law required hospitals to notify patients under observation for more than 24 hours of their patient status within 36 hours, or upon discharge if it happens sooner.

What patients can do now

If you are hospitalized and under observation, you can ask the hospital doctor to be hospitalized. You should also contact your GP to ask if they can call the hospital and explain the medical reasons why you need to be admitted.

If you are kept under observation and transferred to a nursing home and Medicare denies you coverage, you can appeal. To appeal, you must wait for your Medicare Summary Notice (MSN) to arrive. Copy the notice and highlight the disputed charges. The notice should provide information on where to send the notice to request an appeal. You can appeal both hospital denials and subsequent nursing home charges. The appeal process can be very complicated and you may need the help of a lawyer to navigate it. For more information on the Medicare appeals process, click here.

For more analysis of the decision by Kaiser Health News, Click here.

Last modification: 02/01/2022


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