Long-term care stakeholders and Medicare beneficiaries are applauding a new federal rule that makes it easier for patients to appeal hospital recoding that leaves them ineligible for Medicare skilled nursing care coverage.
The Centers for Medicare & Medicaid Services quietly issued a final rule Oct. 11 granting patients greater power to appeal hospitals’ re-tagging of significant stays as outpatient, or under “observation” status, after initially being labeled inpatient.
The difference between the observation/outpatient and inpatient labels is critical for those needing subsequent skilled nursing care. For traditional Medicare to cover SNF care, there first must be a three-day Medicare-approved inpatient hospital stay.
The new final rule includes an expedited appeals process that can take as little as one day for coverage decisions to be made. There is also a retrospective appeal process built in, valid for patients with affected stays back to Jan. 1, 2009. That’s a byproduct of a court order stemming from the nationwide class-action lawsuit Alexander v. Azar, which challenged the lack of patient options when hospitals switch their admission status, often without their knowledge.
That lawsuit was filed in 2011. The plaintiffs registered wins in federal District Court in 2022 and again in the US Court of Appeals for the Second Circuit later that year. This month’s final rule is a tweaked version of a proposed rule that CMS issued Dec. 27, 2023. A fact sheet on it is available here.
“It crystalizes the fact that when you get a denial, you still have appeal rights and, if you’re articulate and have good clinical data, you shouldn’t have any trouble getting those determinations reversed,” Leah Klusch, executive director of The Alliance Training Center, noted on Friday.
Hospitals have been accused of reclassifying patients for their own gain by various consumer and post-acute stakeholders. But Klusch explained that hospital employees handling discharge procedures also are “frequently clerical people, not clinical” who may be dealing only with partial records and don’t necessarily understand all of the issues so inadvertent mistakes may ensue.
One of the plaintiffs in Alexander v. Azar, the Center for Medicare Advocacy, reported Thursday that CMS had said in status reports to the court that the agency expected the retrospective appeals to become operational in January 2025 and the prospective appeals to become operational in mid-February 2025.
