In a “Win” for PALTC, Court Allows Medicare Beneficiaries to Challenge Hospital Observation Stays

In what is hailed as a big win in court for Medicare beneficiaries, last week the Court of Appeals affirmed the District Court and ruled that Medicare beneficiaries whose status in the hospital is changed from inpatient to outpatient have the right to a hearing to challenge the change. Previously, patients did not have hearing rights to challenge their observation status.  Thanks to Barrows v. Becerra, for the first time Medicare beneficiaries will have that right. This decision means that Medicare beneficiaries can take appropriate actions to ensure that they are not denied their SNF benefits. Historically, Medicare reimburses hospitals for Part A inpatient claims at a higher rate than Part B observation status claims.

Members of the modified class will be permitted to appeal the denial of Part A coverage. Members who have or will stay in the hospital for three or more consecutive days but were classified as inpatients for less than 3 days will be allowed to have an expedited appeal process. Members may argue that their inpatient admission satisfied the criteria for Part A coverage. A timely notice of procedural rights will be provided to members.

CMS has acknowledged that there may be “unexpected” “large number of long outpatient stays.” The court concluded that there is a serious risk that Medicare beneficiaries are erroneously deprived of coverage for Part A, which they are entitled to by URC reclassification.

This is a big step forward in helping to ensure Medicare beneficiaries are not denied their needed SNF benefit.