Starting in 2025, certain people with Medicare have a new right to appeal their placement on “observation status” in hospitals. This right will help ensure access to follow-up care in nursing facilities and relief from significant out-of-pocket costs. Medicare enrollees who are classified as observation status during a hospital stay, rather than inpatient, cannot access Medicare coverage of nursing facility services. Instead, they must either pay out-of-pocket or forgo these medically necessary services altogether. In addition, people who are not enrolled in Medicare Part B are responsible for the entire cost of their observation status hospital stay since Part A only covers those classified as inpatients. The new appeal processes were finalized in an October 2024 final rule implementing a federal court order in Alexander v. Azar, a nationwide class action lawsuit brought by the Center for Medicare Advocacy, Justice in Aging, and pro bono law firm Wilson Sonsini Goodrich & Rosati, seeking appeal rights for people classified as observation status. With the new appeals, certain Medicare enrollees who are or were admitted to hospitals as inpatients and then reclassified as “observation status” can challenge their observation status designation and seek coverage as inpatients. There are two types of appeals: (1) retrospective appeals for certain people who did not have an appeal process available at the time they were in the hospital or nursing facility, dating back to January 1, 2009, and (2) prospective appeals for people who are in the hospital and wish to appeal their reclassification from inpatient to observation, starting February 14, 2025. Information about these appeals is now available on the Center for Medicare Advocacy’s website:
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Register for the Observations Status Appeals Webinar Justice in Aging’s Associate Litigation Director Carol Wong will join the Center for Medicare Advocacy’s upcoming webinar discussing the new appeal right, retrospective and prospective processes, and any updates or insights learned since the retrospective appeals became operational on January 1, 2025. Register for the webinar on January 22, 2025, at 2:00 PM ET/11:00 AM PT. |
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