Regulatory Update

Lower Federal Court Takes on the Qualifying Hospital Stay for Medicare Part A

Polaris Group Profile
Polaris Group
February 11, 2022
March 14, 2023
Polaris Group Profile
Polaris Group
March 14, 2023

Learn more about the recently upheld 2019 decision allowing Medicare beneficiaries to appeal a hospital's reclassification of inpatients.

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A hospital stay can be a confusing and overwhelming time, particularly when patients and their families are unsure of whether the patient is actually admitted to the hospital or whether the medical team is holding them for observation. In 2019, a judge ruled that Medicare beneficiaries had the right to appeal a hospital’s re-classification of inpatients to observation status. This ruling was recently upheld in January 2022 by the U.S. Court of Appeals for the 2nd Circuit.

This ruling opens the door for thousands of Medicare beneficiaries to appeal their observation days which prevent them from accessing their Medicare Part A Post-Acute benefits.

The current 1812F waiver is still in place due to the pandemic and public health emergency. In a bill filed to Congress last spring, a proposal was made to include some of the observation status days at the hospital as part of the three-midnight hospital stay requirement. Several aging service organizations support making the three-midnight hospital stay waiver permanent, but the Medicare Payment Advisory Commission to date, has only allowed up to two observation days as part of the three-midnight hospital stay criteria.  

In a class action lawsuit, the U.S. Department of Health and Human Services was ordered to set up an appeals process and devise an expedited process for patients to challenge hospitals’ utilization review  decisions to include observation stay days as part of the three-midnight hospital stay requirement. Each hospital should give the patient, at discharge, the appeal process in their discharge paperwork.

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