The federal judge who found that Medicare is violating beneficiaries’ constitutional rights by disallowing appeals of their placement on “observation status” in hospitals has imposed deadlines and urged Medicare to “take all possible steps, as a matter of urgent agency policy” to expedite implementation of the court-ordered appeals.
In March 2020, the judge determined that Medicare beneficiaries whose hospital classification is changed from inpatient to “outpatient receiving observation services” have the right to appeal that decision to Medicare. While the services received are typically indistinguishable to patients under either classification, the distinction between designation as an inpatient (with Part A coverage) versus observation (with Part B coverage) can and has resulted in devastating financial and health consequences for Medicare beneficiaries. For instance, many Medicare beneficiaries who were reclassified have had to either pay thousands of dollars out of pocket for required skilled nursing facility care or forgo that care altogether. The court’s decision was temporarily stayed and then affirmed by the U.S. Court of Appeals for the Second Circuit in January 2022.
Earlier this year, class counsel from the Center for Medicare Advocacy, Justice in Aging, and Wilson Sonsini Goodrich & Rosati raised concerns to the court about the government’s continuing, drawn out implementation timeline as class members continue to be harmed. Judge Michael P. Shea of the U.S. District Court in Connecticut agreed with counsel in a May 31, 2024 order, commenting that “elderly Medicare beneficiaries continue to enter hospitals without the ingredients of due process specified in the Court’s injunction….” He also stated that he expected the Centers for Medicare and Medicaid Services (CMS) to treat the injunction “with real urgency.” In a notice dated July 16, 2024, Judge Shea asserted that CMS’s actions outlined in a recent status report do not constitute “reasonable compliance with the Court’s order of injunction.” After a conference held with the parties on July 19, 2024, the judge ordered CMS to publish the final rule implementing the appeals by October 15, 2024; to finalize educational and other instructional materials by November 8, 2024; and to address in its next status report to the court whether outside contractors can be given tight timeframes so that appeals can be made operational by the end of 2024. Class counsel is pleased that the court understands the urgency of the observation status issue and agrees with the court’s approach of imposing deadlines to ensure that class members’ rights are protected as swiftly as possible.
- Additional information about Alexander v. Becerra can be found here: https://medicareadvocacy.org/litigation/active-cases/
- Frequently Asked Questions about the case can be found here: https://medicareadvocacy.org/frequently-asked-questions-about-the-observation-status-court-decision/
July 25 – A. Bers