Medicare patients win right to appeal gap in nursing home coverage

A three-judge federal appeals court panel in Connecticut has likely ended an 11-year fight over a frustrating and confusing rule that has left hundreds of thousands of Medicare beneficiaries without coverage for nursing home care. retirement and no way to challenge a refusal.

The Jan. 25 ruling, which came in response to a 2011 class action lawsuit eventually joined by 14 beneficiaries against the Department of Health and Human Services, will guarantee patients the right to appeal to Medicare for nursing home coverage. nurses if they were admitted to a hospital as an inpatient, but were transferred to observation care, an outpatient service.

The court ruling only applies to people with traditional health insurance whose status has changed from hospitalization to observation. A hospital service review team can make this change during or after a patient’s stay.

Observation care is a classification designed for patients who are not well enough to go home but still need the kind of care they can only get in hospital. But it can have serious repercussions.

Without a three-day inpatient stay, beneficiaries are not eligible for Medicare nursing benefits. So if they need follow-up nursing home care after leaving the hospital, they may face charges of around $290 a day, the national average cost of nursing home care, according to a 2021 survey. Also, because observational care is categorized as outpatient treatment — even if the patient is on a hospital ward — it can end up with significant copays under Medicare rules.

“You can appeal almost any issue affecting your Medicare coverage except this one, and it’s unfair,” said Alice Bers, director of litigation at the Center for Medicare Advocacy, who represented patients in their lawsuit with Justice. in Aging, another advocacy group. , and the California law firm Wilson Sonsini Goodrich and Rosati.

Until Congress passed a law that took effect in 2017, hospitals were not required to tell patients if they were receiving observational care and were not admitted. Under this law, hospitals must provide written notice, but this does not trigger any right of appeal.

The Justice Department, representing HHS and the Medicare program, has repeatedly tried to have the case dismissed, arguing that the decision to admit patients or classify them as “patients under observation” was based on the medical expertise from a doctor or hospital. Patients had nothing to appeal because the government can’t change a decision it didn’t make, so no Medicare rules were violated.

Doctors have dismissed that notion and have long complained that the Medicare rule undermines their clinical judgment and produces “absurd results” that can hurt patients. The American Medical Association and state medical societies have filed legal documents in support of patients challenging the rule, as have several other organizations, including AARP, the National Disability Rights Network and the American Health Care Association. , which represents nursing homes across the country.

But U.S. District Judge Michael Shea ruled against HHS in 2020 and estimated that hundreds of thousands of Medicare patients could seek reimbursement for nursing home care and other costs that admitted patients don’t pay. not. The trial took place in 2019.

The government, however, continued to back the rule and asked a federal appeals court panel to overturn Shea’s decision – despite comments from then-Medicare chief Seema Verma, who challenged these policies in a tweet 2019, saying that “government doesn’t always make sense”.

On Jan. 25, appeals court judges upheld Shea’s ruling, agreeing that when hospitals change a patient’s status, they were following Medicare’s 2013 “two-midnight rule.” to admit patients who would have to stay until two midnight. The decision applies to people with traditional health insurance.

“The decision to reclassify a hospitalized patient from an inpatient to a patient receiving observation services may have significant and detrimental impacts on the financial, psychological and physical well-being of plaintiffs,” the judges wrote. “The fact that there is currently no remedy available to challenge this decision also weighs heavily in favor of a conclusion that the plaintiffs did not receive the process required by the Constitution.”

A DOJ spokesperson declined to say whether government lawyers would appeal the new ruling.

Three groups of Medicare patients who transitioned from hospitalized to observed status after Jan. 1, 2009, will be able to file appeals for nursing home coverage and out-of-pocket reimbursement. Those currently hospitalized will be able to request an expedited appeal, and others who have recently incurred charges can file a standard appeal by following the instructions in their Medicare Summary Notice. A plan to appeal older claims has yet to be arranged, Bers said. The latest details are available on the Center for Medicare Advocacy website. (The three-day hospitalization requirement is temporarily suspended due to the covid-19 pandemic.)

Observation status is also causing problems for people like Andrew Roney, 70, of Teaneck, New Jersey, who was caught off guard when he went from hospitalized status to observation status. He had Medicare Part A hospitalization coverage, which is free for most people age 65 and older. But he did not sign up for Part B, which carries a monthly premium and covers outpatient services, including observational care, doctor visits, lab tests and x-rays. He spent three days in a nearby hospital for an intestinal infection in 2016.

Roney, a freelance editor and substitute teacher, didn’t think he needed Part B and assumed Part A would cover his hospital stay. Instead, he was surprised to receive a bill for $5,000 because he was classified as an observation patient and was not admitted. No matter how hard he tried, he couldn’t do anything except pay.

“It was a shock to the system,” said Roney, who testified at the 2019 trial. “I don’t want anyone else to go through this.” Although he has given up hope of getting his money back, he intends to appeal now that he can. “It’s a good chunk of change.”

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