NATIONWIDE — Were you, or a loved one, ever denied Medicare benefits for skilled nursing because a hospital stay was classed as being on “observation status” rather than “inpatient”?

Then you’re among hundreds of thousands of people. Many have claims dating as far back as 2009. And now you can appeal to the Centers for Medicare and Medicaid Services (CMS).

Observation-status classifications can lead to financially devastating bills when a patient later needs skilled nursing facility care but can’t pay for it without Medicare, said a spokesperson for nonprofit Justice in Aging, which uses the legal system to support the rights of the disabled and older adults.  

In a decision issued in late January, a federal appeals court ruled that patients are entitled to an appeal process at CMS when their hospital-stay classifications are changed from “inpatient” to “observation status.” The change can create catastrophic medical bills, because Medicare will not cover such post-hospital care unless a person was first admitted as an inpatient for at least three days.  

Prior to this decision, beneficiaries whose status was changed from inpatient to observation had no opportunity to appeal to CMS. The Court of Appeals for the Second Circuit upheld the trial court decision that had found that this lack of appeals procedure violates the due process clause of the Constitution. The plaintiffs were represented by the Center for Medicare Advocacy (CMA), Justice in Aging, and pro bono firm Wilson Sonsini Goodrich and Rosati.  

“The court recognized that this case is about fundamental fairness,” said Alice Bers, litigation director for the CMA. “Many older adults and people with disabilities will now have the opportunity to appeal… for inpatient coverage—coverage that can make the difference between getting critical health care and going without.”  

“In addition to the substantial financial costs borne by patients, the appellate court recognized the emotional and psychological costs that an outright denial of inpatient coverage without recourse has,” said Carol Wong, senior staff attorney with Justice in Aging. “Now, patients will no longer be forced to forgo medically necessary care simply because of a classification error.”  

For more information, visit the Justice in Aging website at https://justiceinaging.org/.