Medicare Proposes Outpatient Appeals Process After Court Ruling

Medicare patients changed to outpatient “observation status” after they were initially hospitalized would have a chance to appeal this reclassification under a process proposed by the Biden administration Thursday.

The proposed rule (RIN: 0938-AV16) intends to implement a 2020 ruling by the US District Court for the District of Connecticut in a class action. The case involved a dispute over Medicare’s obligation to pay for hospitalizations and long-term care for elderly patients.

Medicare Part A pays for hospitalizations for admitted patients, but not for beneficiaries classified as outpatients receiving observation services. Doctors make the initial decision on whether to categorize a patient as admitted or on observation status. A hospital’s utilization review staff looks at that decision using nationwide standards set by the Centers for Medicare & Medicaid Services, but patients don’t typically have a say in the matter.

Under the CMS proposal, Part A beneficiaries could go through an expedited appeals process to challenge the reclassification prior to their discharge from the hospital. The agency also plans to establish a standard appeals process to challenge a hospital’s reclassification decision without expedited timeframes.

The third option for appeals would be through a retrospective process, allowing certain beneficiaries to file appeals for reclassifications that occurred prior to the implementation of the prospective appeals process and dating back to Jan. 1, 2009.

Reviews of appeals would be conducted by Beneficiary and Family Centered Care-Quality Improvement Organizations, which currently perform expedited discharge reviews, inquiries related to the quality of care received by beneficiaries, and other reviews related to Medicare coverage.