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Court Rejects Medicare Observation Status Suit:
A U.S. district court has ruled that a group of Medicare beneficiaries who were denied coverage of nursing home care because they were not admitted to a hospital for three days prior to moving a nursing home, but rather were place on “observation status” for the duration of their stay, cannot compel the government to change the rules governing how hospitals admit patients. Bagnall, et al v. Sebelius (D. Conn., No. 3:11cv1703 (MPS), Sept. 23, 2013).
Under current Medicare rules, a patient must be admitted to a hospital for at least three days in order for Medicare to pay for the first 20 days of follow-up care in a nursing home. Many hospitals do not actually admit elderly patients who arrive at their doors; they keep them, sometimes for days at a time, in “observation,” a state of limbo that does not qualify as an admission. When these seniors are then moved to nursing homes for rehabilitation, Medicare refuses to cover their care because they fail to meet the three-day hospital admission requirement. The patients are also responsible for any co-pays required under Medicare’s Part B coverage.
Hospitals’ use of observation status has been growing in response to financial incentives created by Medicare. In 2011, a group of Medicare patients who were denied care due to this restriction filed a class action against the Secretary of Health and Human Services, asking for an order eliminating the use of observation status altogether or the crafting of a uniform policy for allowing patients who have been placed in observation to appeal their status. They argued that the Secretary’s use of observation status violates the Medicare statute, the Administrative Procedures Act, the Freedom of Information Act and the Due Process Clause. The Secretary moved to dismiss, arguing that the court should not hear the case because the plaintiffs had not exhausted their administrative remedies.
Although finding that it may hear the case, the U.S. District Court for the District of Connecticut nevertheless grants the motion to dismiss. Leaning heavily on the Second Circuit’s 2008 decision in Estate of Landers v. Leavitt, the court rules that hospitals have the right to determine whether or not to admit patients. In addition, the court holds that federal Medicare law clearly sets out the rules for coverage of nursing home care and that the plaintiffs may not change it.
The decision underlines the need for changing the law. All time in the hospital should count toward the three-day stay requirement. Observation status can affect anyone on Medicare who needs to go a hospital and then needs rehabilitation and skilled nursing.
In a related matter . . .
Bill Would End Hospital Inpatient Requirement for SNF Medicare Coverage:
Medicare beneficiaries would be eligible for Part A coverage of skilled nursing care without a preceding hospital stay under a new bill introduced by Rep. Jim McDermott (D-WA).
Currently, Medicare Part A only reimburses for skilled nursing facility care after a person has spent at least three days as a hospital inpatient. However, SNFs now can provide services that used to be available only in hospitals, McDermott stated when introducing his legislation Thursday. Eliminating the three-day inpatient rule would also resolve the urgent problem of hospitals keeping people for extended stays under “observation” status, which does not qualify a person for SNF coverage.
Under McDermott’s proposal, a physician or other qualified healthcare professional would have to certify the need for skilled care. The Department of Health and Human Services would be responsible for drafting “a set of uniform requirements” that Medicare administrative contractors could use to determine whether a person had a medical need for skilled services.
Many have called for this change, including the American Health Care Association/National Center for Assisted Living and the Congressional Commission on Long-Term Care. The commission released its full report to Congress last week, and McDermott said he noted its recommendation to kill the three-day inpatient requirement.
AHCA President and CEO Mark Parkinson praised McDermott for addressing a “long-standing problem.”
Another recently introduced House bill, the HEAR Act, would also change Medicare. Rep. Matt Cartwright (D-PA) and 12 co-sponsors put forward the legislation, which would provide Medicare coverage for hearing aids and hearing rehabilitation services.