Understanding and Contesting Outpatient Status in Hospitals for Medicare Coverage
The classification of a patient as an inpatient or outpatient in a hospital has significant implications for Medicare coverage and the associated costs for medical services, including care in a skilled nursing facility.
Medicare Part A primarily covers inpatient hospital stays and post-hospital extended care, including skilled nursing facility care, following a hospital admission. Conversely, outpatient care, which encompasses services like emergency department visits, observation services, outpatient surgeries, and diagnostic tests, falls under Medicare Part B.
To qualify for skilled nursing facility care coverage under Part A, a patient must have a minimum three-day inpatient hospital stay.
Inpatient vs. Outpatient Status
Inpatient: You're considered an inpatient after a formal admission to the hospital based on a doctor’s order. The day of discharge is counted as the last inpatient day.
Outpatient: If you're receiving hospital care without being formally admitted, you are an outpatient. This includes emergency services, observation services, and various tests, regardless of overnight stays.
Impact of Reclassification and Appeal Rights
If a hospital reclassifies your status from inpatient to outpatient while receiving observation services, you may lose coverage under Part A. This reclassification can affect your eligibility for Medicare-covered post-hospital extended care.
However, patients have the right to appeal such status changes. A significant legal development in this area was a class action lawsuit settled in January 2022, which the Center for Medicare Advocacy spearheaded. This ruling affirmed the right of Medicare beneficiaries to contest the change from inpatient to outpatient status.
Criteria for Appealing
Medicare.gov explains the process for appealing a reclassification and who qualifies for an appeal.
To be eligible for an appeal, you must:
Have been admitted as an inpatient and then reclassified as an outpatient receiving observation services on or after January 1, 2009.
Have received a Medicare Outpatient Observation Notice (MOON) or a Medicare Summary Notice (MSN) indicating that Part A does not cover your observation services.
Additionally, you must meet one of the following criteria:
You were not enrolled in Medicare Part B at the time of your hospital stay, or
You were enrolled in Part B, stayed in the hospital for three or more days but were not an inpatient for at least three days, and entered a skilled nursing facility within 30 days of your hospital discharge.
The Appeals Process
While Medicare.gov outlines a general five-step appeals process, specific procedures for appealing a reclassification from inpatient to outpatient status are pending implementation.
If successful, an appeal would lead Medicare to recognize you as an inpatient for the purpose of Part A benefits, including hospital stay and skilled nursing facility coverage.
For guidance on navigating these appeals, contact Leitner Law for expert advice and assistance in contesting your hospital status change.