Hospital Appeals -Change of Inpatient Status (Alexander v Azar)

Medicare Appeal Rights for Certain Changes in Patient Status 

A federal district court issued a judgment in the class action lawsuit, Alexander v. Azar (613 F. Supp. 3d 559 (D. Conn. 2020), aff’d sub nom., Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022), requiring  the Centers for Medicare & Medicaid Services (CMS) to establish appeals processes for people enrolled in Original Medicare who are initially admitted to a hospital as an inpatient and subsequently reclassified by the hospital as an outpatient receiving observation services during their hospital stay and who meet other eligibility criteria. 

On October 15, 2024, CMS issued a final rule implementing the court order. The final rule can be viewed at: https://www.federalregister.gov/documents/2024/10/15/2024-23195/medicare-program-appeal-rights-for-certain-changes-in-patient-status                              

New Patient Status Appeal

CMS has established two new appeals processes.

Beginning February 14, 2025,  certain beneficiaries in Original Medicare who disagree with a hospital's decision to reclassify their status from inpatient to outpatient receiving observation services (resulting in a denial of coverage for the hospital stay under Part A) will be able to file for an expedited appeal prior to release from the hospital. More information on this process can be found at: https://www.cms.gov/medicare/forms-notices/beneficiary-notices-initiative-bni/ffs-mcsn

Beginning January 1, 2025, certain beneficiaries in Original Medicare will be able to file an appeal for denials of Part A coverage of hospital services (and certain skilled nursing facility services) resulting from a change in status from inpatient to outpatient receiving observation services made by the hospital. Eligible beneficiaries will be entitled to ask for appeals for hospital stays that began on or after January 1, 2009 through the implementation date of the prospective appeals process (February 14, 2025). This retrospective appeal process is detailed below.

Appealing a denial of Part A coverage for past hospital stay

Who’s eligible for a retrospective appeal?

The appeal process is available to certain Medicare beneficiaries who were enrolled in Original Medicare and who were initially admitted as hospital inpatients but were subsequently reclassified as outpatients receiving observation services during their hospital stay and meet other eligibility criteria established in the new rule. 

If you were enrolled in Original Medicare you may be eligible for this new appeal if you meet all these requirements:

• You were admitted to the hospital as an inpatient on or after January 1, 2009, and the hospital changed your status to outpatient during your stay.
• You got observation services in the hospital after the hospital changed your status to outpatient.
• You got a Medicare Summary Notice (MSN) for outpatient services for your hospital stay OR a Medicare Outpatient Observation Notice (MOON) for observation services during your hospital stay. For more information on the MOON, go to: https://www.cms.gov/medicare/forms-notices/beneficiary-notices-initiative/ffs-ma-moon
• This is the first time you’re appealing for Medicare to cover services related to this hospital stay OR if you did appeal, you got a final decision AFTER September 4, 2011.

             AND one of these statements also applies to you: 

•  You didn’t have Medicare Part B (Medical Insurance) while you were in the hospital.

             OR 

• You stayed in the hospital for 3 or more consecutive days, but were an inpatient for less than 3 days, and you were admitted to a skilled nursing facility within 30 days after you left the hospital.

If you or a family member paid out-of-pocket for skilled nursing facility services because you didn’t have a qualifying inpatient hospital stay, you may be able to include those services in your appeal. However, if the services you got in a skilled nursing facility were covered by Medicare or another insurance company or third-party payer, you can’t include those services in your appeal under this new process.

How do I file a retrospective appeal?

If you think you meet the eligibility requirements, you may choose between the following 2 options to file a retrospective appeal: 

1. Fill out a “Request Form for Retrospective Appeal of Medicare Part A Coverage” (available in “Downloads” below) and mail or fax it to the address on the form with any additional information you have. Examples of additional information that may help with your appeal are included on the form and are listed below.
2. If you don’t use the form, you may submit a written request with the following information:

• Your name and address
• Your Medicare number 
• The name and location of the hospital where you were admitted
• Dates you were in the hospital

If you’re also appealing SNF services, include:

• The name and location of the SNF
• The dates you stayed at the SNF
• A signed statement that you or a family member paid out-of-pocket for the services you got in the SNF, and the amount of the payment
• Documentation showing the payments made to the SNF, like a copy of a credit card statement or an invoice from the SNF that shows how much you paid for their services

Where to send your request:

                Mail:

                Q2 Administrators

                CMS 4204-F Appeals

                300 Arbor Lake Drive, Suite 1350 

                Columbia, SC 29223-4582

               Secure Fax number: 803-278-9541

What else should I send with my retrospective appeal request?

With either your form or your written appeal, it’s also helpful to include:

• Why you believe you qualified for Part A inpatient coverage for your hospital stay. You can also include a statement explaining why you should have remained a hospital inpatient and not had your status changed to outpatient.
• All medical records from your hospital stay. You can ask the hospital for these records. If you can’t send the records with your form or written request, we’ll try to get them from the hospital. If we have to ask the hospital for the records, they have 120 days to respond (which will delay your decision).
• The Medicare Summary Notice (MSN) from your hospital stay. You can log into (or create) your secure Medicare account to view and download your MSNs.
• The Medicare Outpatient Observation Notice (MOON) from your hospital stay (if you got one). You get this notice from the hospital if you get observation services as an outpatient for more than 24 hours. 
• Any bills or itemized statements from the hospital. 
• If you’re also appealing skilled nursing facility (SNF) services, include:
• Your medical records from the SNF.
• The MSN from your SNF stay (if you got one).
• Any itemized bills or statements from the SNF.

Keep a copy of all the records that you send with your request.

When is the deadline for a retrospective appeal? 

We must receive your request by January 2, 2026. 

If we don’t get your request for a retrospective appeal before the deadline, you can ask for more time if you have “good cause.” Good cause includes things like:

• A serious illness prevented you from contacting the appeals reviewer
  • You had a death or serious illness in your immediate family
  • Important records were destroyed or damaged by fire or other event, like a hurricane, earthquake or flood
  • You didn’t understand how to file an appeal or you were given the wrong information on how to appeal

If we get your request for a retrospective appeal after January 2, 2026 and it doesn’t include a reason for being late, it won’t be accepted. More information on establishing good cause is available at: https://www.cms.gov/medicare/appeals-grievances/original-medicare-appeals/medicare-appeals-good-cause-late-filing

Can I get help with my appeal?

If you have a trusted family member or friend who can help you with your appeal, you can appoint them as a representative.  However, under these new rules, the hospital or skilled nursing facility that provided the services you’re appealing can’t be your representative.  Information about appointing a representative is available here: Can someone help me file an appeal?

If the beneficiary who would have been eligible for an appeal is deceased, then a person who is authorized to act on behalf of the deceased beneficiary may be able to file an appeal. You should submit proof of your authority to act on behalf of the deceased person (for example, proof that you’re the executor of their estate, or if there is no estate, information about the state law that authorizes you to handle this person’s affairs).

You can also call 1-800-MEDICARE (1-800-633-4227) if you have questions about the process, but the only way to find out if you’re eligible is to file an appeal.

Who decides if I’m eligible for a retrospective appeal?

• CMS has contracted with Q2Administrators to make eligibility decisions.
• They’ll review the documents you submit and any information we can get from your provider(s) to determine if you’re eligible to appeal. They may contact you by mail if they need more information from you. 
• They’ll notify you of the decision about your eligibility for an appeal by mail, usually no later than 60 days after they gather all the records.
• If they determine that you’re eligible for an appeal, your information will automatically be sent to the Medicare Administrative Contractor to decide your appeal. Q2Administrators will mail you a letter letting you know their decision.
• If they determine you aren’t eligible for an appeal, you’ll get a letter telling you why. You can ask for a review of the denial within 60 days of getting the letter. Your letter will tell you how to ask for a review of the denial. 

Who performs retrospective appeals?

Once you’re determined to be eligible for an appeal, Medicare Administrative Contractors (MACs) will perform the first level of appeal, followed by Qualified Independent Contractor (QIC) reconsiderations, Administrative Law Judge (ALJ) hearings, review by the Medicare Appeals Council, and judicial review. These are the same entities that perform existing Medicare claim appeals. 

What happens if the appeal is decided in my favor? 

You’ll be notified if the MAC determines that your hospital stay met the coverage requirements for a Part A (Hospital Insurance) inpatient hospital stay. The hospital will also be notified of the decision. The hospital may choose to submit a new Part A claim to Medicare for payment, but they are not required to submit a new claim. 

• If the hospital submits a Part A claim: The hospital is responsible for sending you (or the company that paid them) a refund of any payments received for the outpatient services (including any coinsurance and deductibles they collected). You'll still have to pay your Part A hospital inpatient coinsurance and/or deductible (if you have one).
• If the hospital doesn’t submit a Part A claim: 
  • If you had Medicare Part B (Medical Insurance) when you were hospitalized for the services in the appeal, the hospital may decide not to submit a Part A claim. In that case, the hospital may keep the payment it received for the outpatient services, and won’t refund any payments, including your coinsurance and/or deductible (if you had one). You won’t need to pay anything else to the hospital.
• If you didn’t have Medicare Part B when you were hospitalized for the services in the appeal, the hospital must refund any payments received from you (or the company that paid them). In this situation, the hospital must refund your payments even if they don’t submit a Part A claim. If you're entitled to a refund from the hospital, you should receive it within 60 days of the hospital getting the decision.
• If you included SNF services in your appeal: If we decide some or all of the services you appealed are covered, we’ll notify the SNF that they must refund payments they received from you or your family member for the covered services. You should get a refund from the SNF within 60 days of the skilled nursing facility getting the decision. If the SNF submits a Part A claim for payment, you'll have to pay the applicable coinsurance and/or deductible (if you have any).

What happens if the appeal isn’t decided in my favor?

You’ll be notified if we determine that your hospital services didn’t meet the coverage requirements for a Part A inpatient hospital stay, or if applicable, the coverage requirements for skilled nursing facility services. You’ll be able to file a second level appeal with the Qualified Independent Contractor. Your decision letter will provide detailed information about how to file a second level appeal.

Information for providers

Additional information for providers regarding the submission of new claims following a favorable appeal decision will be available soon.