Judge: Medicare patients can appeal bills from observation status switch

Patients can now appeal to Medicare for reimbursement for nursing home stays that were initially not covered because their "inpatient" status had been changed to "observation," according to Kaiser Health News.

Five things to know about the ruling:

1. A federal judge in Hartford, Conn., ruled March 24 that Medicare beneficiaries have the ability to appeal negative coverage decisions if they were switched to observation care by their hospital after being admitted as inpatients. Usually patients have to be admitted to the hospital as an inpatient for three straight days to receive coverage for nursing home care.

2. The ruling could result in Medicare paying back millions of dollars in nursing home bills if the federal government doesn't challenge the decision. One man told KHN he paid $9,145 for a monthlong stay in a nursing home after his status was changed from inpatient to observation. 

3. The decision applies to all beneficiaries with traditional Medicare coverage who were switched from inpatient to observation status since January 2009, spent at least three days in the hospital and had Medicare Part A coverage. If beneficiaries win their appeal, they will be reimbursed under Part A.

4. U.S. District Judge Michael Shea said patients won't be able to appeal if their physician first placed them in observation care under Medicare's two-midnight rule. The rule states that inpatient admission and payment are appropriate when a physician admits their patient with the expectation that they will stay longer than two midnights. 

5. The ruling stems from a 2011 lawsuit against HHS that became a class-action lawsuit. 

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