Category: Member News

The Centers for Medicare & Medicaid Services (CMS) and the United States Department of Health and Human Services (HHS) recently released a final rule, effective Oct. 11, 2024, implementing a federal district court order that requires the HHS to establish appeals processes for Medicare beneficiaries initially admitted as hospital inpatients, but who are subsequently reclassified as outpatients receiving observation services during their hospital stay.  The change in status from inpatient to outpatient results in a denial of coverage for the hospital stay under Medicare Part A.

The processes include:

• Expedited appeals – Beneficiaries will be entitled to request an expedited appeal prior to hospital discharge when they disagree with the hospital’s decision to reclassify their status from inpatient to outpatient receiving observation services. Appeals will be conducted by a Beneficiary & Family Centered Care – Quality Improvement Organization.
• Standard appeals – This process will be available to beneficiaries who file an appeal after hospital discharge. These standard appeals will follow procedures similar to expedited appeals, but without the expedited filing and decision timeframes.
• Retrospective appeals – This process is available for beneficiaries to appeal denials of Part A coverage for specific inpatient admissions involving status changes that occurred back to Jan. 1, 2009. Medicare Administrative Contractors will perform the first level of appeal, followed by Qualified Independent Contractor reconsiderations, Administrative Law Judge hearings, review by the Medicare Appeals Council and judicial review. Eligible beneficiaries have 365 calendar days from the implementation date of this rule to request a retrospective appeal.

The CMS updated regulations and appeal procedures based on the final rule to include:

• Increasing the timeframe for providers to submit a claim following a favorable decision from 180 to 365 calendar days.
• Extending the timeframe for submission of provider records as requested by a contractor from 60 to 120 calendar days.

The rule clarifies the effect of a favorable appeal decision in various instances:

• The hospital must refund any payments received for the Part B outpatient claim before submitting the Part A inpatient claim. If a Part A claim is submitted, the previous Part B outpatient claim will be reopened and canceled, with any Medicare payments recouped to prevent duplicate payment.
• The hospital must refund any payments collected for the outpatient services if the hospital chooses not to submit a Part A claim for a beneficiary who was not enrolled in Medicare Part B at the time of hospitalization.
• The hospital must refund any payments collected for the outpatient hospital services only if the hospital chooses to submit a Part A claim for beneficiaries who were enrolled in Medicare Part B at the time of hospitalization.
• Out-of-pocket payments made by a family member on behalf of a beneficiary for skilled nursing facility services may include payments made by individuals who are not biologically related to the beneficiary such as a close friend, roommate or former spouse.

Members with questions regarding the Medicare appeal process should contact Vickie Kunz at the MHA.