October 18, 2024
Recently, the Centers for Medicare & Medicaid Services (CMS) finalized the Medicare Program: Appeal Rights for Certain Changes in Patient Status rule. This final rule establishes an appeal process for Medicare beneficiaries admitted as hospital inpatients but later reclassified as outpatients receiving observation services during their hospital stay. This rule is a significant step in ensuring that Medicare beneficiaries have the right to appeal and do not face denial of necessary skilled nursing facility (SNF) benefits.
Although this final rule is a positive development, PALTmed urges Congress to address this issue more permanently by eliminating the three-day stay requirement or recognizing observation days when determining eligibility for SNF benefits. PALTmed has long supported efforts to count observation stays toward the three-day requirement for SNF benefits or to waive it altogether, as was done during the COVID-19 Public Health Emergency.
Additionally, PALTmed endorses the bipartisan Improving Access to Medicare Coverage Act (S. 4137/H.R. 5138), which seeks to ensure that time spent in observation counts toward the three-day prior inpatient stay requirement for SNF care.
Summary of Final Rule on Medicare Appeal Processes
This final rule implements an order from the federal district court for the District of Connecticut in Alexander v. Azar that requires HHS to establish appeals processes for certain Medicare beneficiaries who are initially admitted as hospital inpatients but are subsequently reclassified as outpatients receiving observation services during their hospital stay and meet other eligibility criteria. Key components include:
- Expedited Appeals: Eligible beneficiaries can request an expedited appeal before leaving the hospital if they disagree with their reclassification, which affects coverage under Part A. These appeals will be managed by a Beneficiary & Family Centered Care Quality Improvement Organization (BFCC-QIO).
- Standard Appeals: Beneficiaries who do not opt for expedited appeals can still file standard appeals, following similar procedures but without expedited timeframes.
- Retrospective Appeals: This process applies to status changes dating back to January 1, 2009, allowing beneficiaries 365 days from the rule's implementation date to file a request. The appeals will follow existing processes involving Medicare Administrative Contractors (MACs) and Qualified Independent Contractors (QICs), with the possibility of administrative law judge hearings and judicial review.
The finalized rule also includes several important revisions based on public feedback:
- Extended Timeframes: The time for providers to submit claims following a favorable decision has been extended from 180 to 365 days, and the timeframe for submitting requested records has increased from 60 to 120 days.
- Refund Clarifications: This section clarifies hospitals' financial responsibilities regarding Part A and Part B claims and refunds.
- Payments from Non-Relatives: The rule clarifies that out-of-pocket payments for SNF services may include contributions from individuals who are not biologically related to the beneficiary, such as close friends or roommates.
This rule was effective as of October 11, 2024.