As many hospital patients have discovered, there are huge financial implications when a hospital designates one of its patients as an outpatient on “observation status.” In order to receive Medicare coverage for a subsequent nursing home stay, Medicare requires that the patient first have a three-day inpatient stay. The “observation status” designation is an outpatient designation, and results in non-coverage of the patient’s subsequent care in a nursing home. One study cited by a recent press release from the Center for Medicare Advocacy estimated that, in 2009 alone, more than 900,000 Medicare beneficiaries had hospital stays that were considered “observation status.” In some cases, the patient may have been hospitalized for several days (or even weeks), and treated as an inpatient, but was still classified as “observation status.” The hospital placement designation can mean financial devastation to a patient who later needs nursing home care. Nevertheless, until now, patients have lacked the right to appeal that designation.

As reported by the Center for Medicare Advocacy, a July 31, 2017 decision may change that. In Alexander v. Price, the Federal District Court of Connecticut certified a class action. The class is composed of Medicare beneficiaries who received the “observation status” designation during a hospital stay. As the Litigation Director of the Center for Medicare Advocacy explains, the class certification is a first step that may result in an opportunity for these patients to appeal those designations:

The decision recognizes that Medicare patients across the country face dire situations, including having to choose between spending thousands of dollars on nursing home care or simply forgoing that necessary care. We look forward to establishing that the right to review is required as a matter of constitutional due process.

A copy of the August 1, 2017 Press Release issued by the Center for Medicare Advocacy can be found here – Center for Medicare Advocacy Press Release

For additional information concerning New Jersey elder law, visit: