New Class of Hospital Patients May Gain Access to Appeal “Observation Status”

New Class of Hospital Patients May Gain Access to Appeal “Observation Status”

Eighty-four-year-old Nancy Niemi of North Carolina was hospitalized for 39 days earlier this year after her doctor sent her to the emergency room. It took weeks to stabilize her blood pressure and she experienced serious complications. But unbelievably, Ms. Niemi was categorized as an outpatient on “observation status” for her entire hospitalization, and she therefore lacked the three-day inpatient stay Medicare requires for coverage of her subsequent, very expensive care at a nursing home. Ms. Niemi’s son tried to help her challenge her lengthy placement on observation status, but Medicare does not allow beneficiaries to appeal this issue. She still owes thousands of dollars to the nursing facility. However, due to the federal court decision issued July 31, 2017, she is now a member of a nationwide class of hospital patients who may gain the right to appeal their placement on observation status.

Above is a quote from the Center for Medicare Advocacy’s (CMA) press release regarding a new ruling yesterday in Alexander v. Price, 3:11-CV-1703 (MPS). In this ruling, Judge Michael P. Shea of U.S. District Court in Connecticut certified a class composed of all Medicare beneficiaries who, since January 1, 2009, have received or will have received “observation services” as an outpatient during a hospitalization. This ruling is a first crucial step in creating a legal right where Medicare beneficiaries placed in “observation status” can appeal that status. This appeal ability could have a significant positive affect on on hundreds of thousands of beneciaries’ monetary and physical wellbeing. As demonstrated in the example above, being in observation status can have severe financial and health consequences. The right to appeal this status gives beneficiaries a chance to have their case heard, get their status changed to inpatient and thus have their skilled nursing care covered and paid for by Medicare. This can potentially save beneficiaries thousands of dollars and help ensure they receive the care they require to fully recover.

We view yesterday’s court ruling as a significant first step in securing Medicare beneficiaries’ right to appeal observation status, and thus further securing their financial and physical wellbeing.

For more information, read CMA’s press release: Court Certifies Nationwide Class in “Observation Status” Case. For full details, read the court order (PDF).

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.