Centers for Medicare & Medicaid Services News: Proposed Rule for Medicare Beneficiaries to Access Appeals
On December 21, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would establish appeals processes for certain individuals who are:
- Covered by Original Medicare
- Initially admitted to a hospital as an inpatient
- Subsequently reclassified by the hospital as an outpatient receiving observation services
- Eligible under certain other criteria, as outlined below.
The proposed rule can be downloaded from the Federal Register here.
Medicare Beneficiaries Affected by the Proposed Rule
Medicare beneficiaries included are those who either had, or will have, Part A benefits denied for hospital inpatient services and Skilled Nursing Facility (SNF) care as a result of the hospital’s reclassification. The class also includes beneficiaries who did not have Part B coverage at the time of hospitalization.
The change follows a class action lawsuit filed in 2011 aimed at establishing an appeal process for patients in this scenario. Without this rule, changing a patient’s inpatient status essentially means the patient is denied Medicare Part A coverage, which is the part of Medicare that covers inpatient hospital stays. The patient is then responsible for the 20% cost-sharing requirements of Medicare Part B for the inpatient stay. The patient may also become ineligible for coverage for skilled nursing care, which also falls under Medicare Part A.
The proposed processes would consist of Expedited Appeals and Standard Appeals performed by the BFCC-QIO and Retrospective Appeals dating back to January 1, 2009, with the existing claims appeals processes using the Medicare Administrative Contractors (MACs), Qualified Independent Contractor (QIC) and Administrative Law Judge (ALJ) Hearings, etc.
New Appeal Process for Medicare Beneficiaries
The new appeal process applies to Medicare beneficiaries that on or after January 1, 2009, have been or will be formally admitted as a hospital inpatient and have either subsequently been reclassified as an outpatient for observation services. Also eligible are beneficiaries who have received or will receive an initial determination or Medicare Outpatient Observation Notice (MOON) indicating that the observation services are not covered by Medicare Part A, and either were not enrolled in Part B coverage or stayed at the hospital for 4 or more consecutive days but were designated as inpatient fewer than 3 days.
Understanding the Appeal Process
The goal of the appeal process is to provide an opportunity for patients to demonstrate that their initial inpatient admission met the criteria for coverage under Medicare Part A. This includes demonstrating that the patient’s medical case necessitated an inpatient stay over at least “two midnights” (a metric determined by CMS in 2013), and that the hospital’s Utilization Review Committee was incorrect in its findings in opposition.
Once CMS publishes a final rule regarding the procedures for these new appeals, it will specify the implementation date for filing appeal requests for retrospective and prospective appeals. When the prospective process is fully implemented, eligible Medicare beneficiaries who are hospitalized and receive notice of their appeal rights and wish to pursue an appeal will be expected to utilize the prospective procedures. Eligible beneficiaries who are hospitalized and entitled to an appeal under these procedures prior to the implementation date of the prospective process will be able to utilize the retrospective appeal process, subject to the filing limitation proposed.
For more information on the proposal rule, the Centers for Medicare & Medicaid Services’ fact sheet is available here.
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