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Observation Status Lawsuit Update

Dana Halvorson

The Center for Medicare Advocacy released a March 28, 2019, press statement titled, “Court Denies All Government Motions in Class Action Seeking Appeal Right for Medicare Beneficiaries on ‘Observation Status.’” The statement included that “in a decision issued on March 27, 2019, a federal judge denied multiple attempts by the federal government to halt a lawsuit by Medicare patients seeking a right to appeal their placement on ‘outpatient observation status’ in hospitals.  Alexander v. Azar is a nationwide class action brought by individuals who were forced to pay up to $30,000 for post-hospital skilled nursing facility care because they had been classified as outpatients in observation status, rather than as inpatients.”

The statement goes on to include that, “Although care provided to patients on observation status is often indistinguishable from inpatient care, it does not count toward the three-day inpatient hospital stay requirement for Medicare coverage of nursing home care. This leaves beneficiaries with the burden of paying for – or forgoing – extremely costly nursing and rehabilitative care.  The opportunity to appeal is critical because of the severe ramifications that can result from the observation status categorization.”  McKnight’s also published an article around the court decision titled, “Lawsuit over observation status, SNF payment finally going to trial.” 

33 national organizations, including AHCA/NCAL, supports the Improving Access to Medicare Coverage Act of 2019 (H.R. 1682/S. 753).  Introduced by Congressmen Joe Courtney (D-CT) and Glenn 'GT' Thompson (R-PA) and Senators Sherrod Brown (D-OH), Susan Collins (R-ME), Sheldon Whitehouse (D-RI) and Shelley Moore Capito (R-WV), the legislation ensures that time spent under “observation status” in a hospital counts toward satisfying the three-day inpatient hospital requirement for coverage of skilled nursing care services under Medicare.  For more information about the observation stays issue, please visit the AHCA/NCAL website.         

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