BREAKING: Groundbreaking decision on ‘observation stays’: Federal court permits right to appeal, opens access to long-term care

April 17, 2020

courtesy of NAELAeBulletin:

A federal appeals court has granted certain hospital patients the right to appeal “observation stay” designations in a ruling that many hope will lead to even greater access to Medicare-covered long-term care services.

The law currently restricts eligibility for Medicare-covered skilled nursing stays to patients who have held inpatient status at a hospital for three nights. On Monday, Judge Michael P. Shea of the U.S. District Court of Hartford, CT, ruled that as a matter of constitutional due process, patients who are initially admitted as inpatients by a physician but whose status is later changed to observation by their hospital have the right to appeal to Medicare to be certified fully as hospital inpatients.

The reference case, Alexander v. Azar, is a nationwide class action lawsuit filed by the Center for Medicare Advocacy that went to trial in August 2019.

The rules previously have “forced many Medicare beneficiaries to either pay thousands of dollars out of pocket for that care or to forgo the needed care altogether,” the Centers for Medicare Advocacy said in a release announcing the court’s decision. “While people with Medicare can appeal virtually any issue affecting their coverage, the Centers for Medicare &  Medicaid Services has blocked attempts by beneficiaries to appeal their hospital status.”

LeadingAge President and CEO Katie Smith Sloan was unequivocal in her praise for the decision.

“We are very pleased with this ruling,” she said in a statement to McKnight’s Long-Term Care News. “We believe that, ultimately, the law needs to change so that the restrictions on Medicare eligibility because of observation status should be repealed, however, and will continue advocating for passage of legislation that counts all nights in the hospital toward the required three-day stay.

“Ironically, CMS has lifted the three-day requirement underlying this issue during the current crisis,” she added. “[We] hope this means that the agency will support eliminating these restrictions once the pandemic is lifted.”