Alice Bers
Alice Bers

Debate over Medicare beneficiaries’ hospital stays being classified as inpatient — a designation crucial to receive skilled nursing coverage — will continue, thanks to a court’s order last week.

The U.S. District Court for the District of Connecticut’s Feb. 8 order allows Alexander v. Cochran to proceed, citing ongoing disputes over whether the Centers for Medicare & Medicaid Services criteria or a physician’s judgment is the best way to designate a stay as inpatient or outpatient.

The proposed class action lawsuit was brought by Medicare beneficiaries who were required to pay out of pocket for their skilled nursing care after they were classified as outpatients in observation status, which does not count toward the three-day stay required for skilled nursing coverage.

Alice Bers, an attorney with the Center for Medicare Advocacy who represented the plaintiffs in the case, said in a statement that the court’s decision allowing the case to proceed “is an important step in the establishment of a fair process for patients who risk having to pay thousands of dollars for necessary medical care or forgo that care altogether.”

The court now has two issues to mull: whether CMS’ criteria — which some argue push hospitals to put more patients on observation status — influences how patients’ stays are designated, and whether beneficiaries have a protected interest in how their stays are classified.

Should the court rule in the plaintiffs’ favor beneficiaries could appeal their observation status classification through Medicare’s administrative review process, which they aren’t currently allowed to do, the Center for Medicare Advocacy said.

Joseph D. Glazer, an attorney that represents healthcare providers in Medicare cases, told Bloomberg BNA on Feb. 9 that “providers and beneficiaries may find a more sympathetic ear to complaints that program rules usurp the authority of the treating physician and improperly undermine the doctor-patient relationship” under recently-approved HHS Secretary Tom Price, M.D.

The court order requires the parties in the case to confer and submit a schedule for further proceedings by Feb. 22.