Currently, the law restricts eligibility for nursing stays that are covered by Medicare to patients who have been categorized as inpatients for three nights. On March 23, Judge Michael P. Shea of the U.S. District Court of Hartford, Connecticut ruled in Alexander v. Azar that, as a matter of constitutional due process, a patient who initially is admitted to a hospital by a physician as an inpatient, but who later receives an observation status designation by the hospital, can appeal to Medicare in order to be fully certified as a hospital inpatient.

This distinction between inpatient and observation status is crucial, since Medicare only covers subsequent care in a SNF for patients who held inpatient status at a hospital for three or more consecutive nights. Conversely, patients categorized in observation status are ineligible for coverage of SNF services.

According to the Center for Medicare Advocacy, which filed the case, the court’s decision now opens the door to medically necessary services in SNFs that Medicare beneficiaries might otherwise have to skip because they cannot afford to pay for it out of pocket.

In a statement released by the Center, the law has “…forced many Medicare beneficiaries to either pay thousands of dollars out of pocket for that care or to forgo the needed care altogether. While people with Medicare can appeal virtually any issue affecting their coverage, the Centers for Medicare & Medicaid Services has blocked attempts by beneficiaries to appeal their hospital status.”

In the statement, Alice Bers, Litigation Director for the Center, called the ability to appeal the observation status issue to Medicare one of fundamental fairness. “The ruling acknowledges that Medicare patients are in a very vulnerable position when they are hospitalized and particularly when they require care at a skilled nursing facility after hospitalization. Medicare sets the rules that doctors and hospitals must follow with regard to patient status. It is only just that Medicare patients – older adults and people with disabilities – be able to appeal this issue to Medicare.”

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