Federal Court Upholds Right of Medicare Patients to Appeal Decisions about “Observation Status”

Medicare patients around the country breathed a sigh of relief in late January 2022 when a federal appeals court upheld their right to appeal certain decisions about their medical care. In the past, Medicare patients could be admitted to a hospital as inpatients – meaning their care would be covered by Medicare Part A – and then have their status changed to “outpatient receiving observation services”, which is covered by Medicare Part B, during their stay. Once their status was changed, it could make them responsible for covering their own inpatient rehabilitation services at skilled nursing care facilities. 

While Medicare does cover nursing home stays and other skilled care for the first 20 days under Medicare Part A, that only applies if a patient was admitted as an inpatient to a hospital for at least three midnights prior to that care being received. Because many patients had their status changed during that three-day window without their knowledge or input, hundreds of thousands of Medicare recipients have been affected by this policy. These observation status decisions are usually made by hospital staff without consulting the patient.  While hospitals are now required to advise a patient if they are treated as an outpatient or inpatient, most do not understand the implications of the determination.  Further, unlike other Medicare determinations, there are no appeal rights for this determination under federal law since Medicare is still paying for the hospital stay. 

Prior to 2020, there was no official way for Medicare patients to appeal decisions related to their observation status. That year, patients won the right to appeal in a class-action lawsuit leveled by the Center for Medicare Advocacy, Justice in Aging, and the law firm Willson Sonsini Goodrich and Rosati. The U.S. government fought the decision, asking a federal appeals court to reverse it, but January’s ruling will allow Medicare recipients to keep their right to appeal for the time being. At this time, it is unknown whether government lawyers will appeal the new ruling, but at the time of this article’s writing, Medicare patients have retained the right to appeal these observation status decisions in some circumstances.

Planning for Your Long-Term Care

Long-term care expenses are one of the biggest threats to a senior’s financial security, and if you are relying on Medicare to cover these expenses, you could end up having to pay more than you expected.   While Medicare does pay for some limited rehabilitation services, it does NOT pay for long-term custodial care that is often needed as we age.  The good news is that there are some steps you can take to cover skilled care. You may want to consider insurance or discuss Medicaid and Asset Protection planning with a competent elder law attorney.  

If you are a Pennsylvania resident considering one or both of these options to cover your long-term care expenses, an elder law attorney serving Chester County, PA can help you.

Attorney Robert Slutsky has almost 30 years of experience in the field of elder law, so if you need help applying for Medicaid, he is the lawyer to call. Call (610) 940-0650 or fill out the contact form to schedule your consultation with eldercare lawyer Robert Slutsky today.

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