A Recent Federal Court Decision Permits a Patient the Right to Appeal a Change in Their Hospital Status

HNWElder Care Law

  • patient's right to appealA federal appeals court granted certain hospital patients the right to appeal “observation stay designations in a ruling.
  • It means many hospital patients will have greater access to Medicare-covered long-term care services, (i.e., nursing home rehab) upon hospital discharge.
  • The law currently restricts eligibility for Medicare-covered skilled nursing stays to patients who have held inpatient status at a hospital for three nights.

Why is This Blog Topic Important?

Generally, upon arriving at the hospital, an elderly patient will be examined by a physician who, in addition to determining the patient’s course of treatment, will decide whether to admit the patient formally as a hospital inpatient or instead, to place the patient on “observation status.”  Although the patient might not know it, this is a critical decision, because formal admission to a hospital is a pre-condition to payment both for hospital services and for post-hospital skilled nursing services under Part A of Medicare, a portion of the Medicare program that is free to most Medicare beneficiaries.  If the patient is placed on “observation status” instead of being admitted as an inpatient, the patient will have to pay for both the hospital services and the post-hospital skilled nursing services out of pocket, unless he or she has other insurance coverage, such as Medicare Part B (for which premiums must be paid and which covers outpatient hospital services but not post-hospital skilled nursing services) or private insurance. Under current Medicare regulations, the patient has no right to a say in the doctor’s decision about whether to admit him or her as an inpatient, and no means to challenge it.

The physician’s decision whether to admit the patient as an inpatient is not, however, the final word on the matter. That decision will be reviewed by the hospital’s “utilization review staff,” a team each hospital participating in the Medicare program must have in place to review whether the physician’s decision is correct under mandatory, nationwide standards set by the Centers for Medicare and Medicaid Services (“CMS”), which is part of the U.S. Department of Health and Human Services. Sometimes, the utilization review staff will disagree with the physician’s decision and ask him or her to change it, and often the physician will do so. But the patient has no right to participate in the hospital’s review process and has no means to challenge a decision by the review staff, for example, a decision that the physician’s order admitting the patient as an inpatient should be changed to one placing the patient on “observation” status.

A Recent Federal Case Changed the Medicare Law

In a recent federal case, plaintiffs sought a procedure to challenge the coverage-altering decision to classify them as “observation,” and argued that Medicare was depriving them of their interest in Medicare benefits without due process by failing to afford them such a procedure.

They won!  The court ordered that”:

All Medicare beneficiaries who, on or after January 1, 2009 (yes, 2009): (1) have been or will have been formally admitted as a hospital inpatient, (2) have been or will be subsequently reclassified as an outpatient receiving “observation services”; (3) has received or will receive a Medicare Outpatient Observation Notice (MOON) indicating that his/her observation services are not covered under Medicare Part A; and (4) either (a) were not enrolled in Part B coverage at the time of their hospitalization; or (b) stayed at the hospital for three or more consecutive days (but were designated as inpatient for fewer than three days, unless more than 30 days has passed after the hospital stay without the beneficiary having been admitted to a skilled nursing facility) will be allowed to challenge decisions by hospitals to place them on “observation status.”

If you are looking for additional details on this topic or if you require advice about your situation, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Elder Care Attorney

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