Legal, Scales of Justice

A years-long court battle over one of the biggest thorns in skilled nursing’s side may finally be going to trial, and the outcome could have big implications for providers and patients.

The dispute relates to a group of individuals who were forced to pay out of pocket for their SNF stays because Medicare would not cover it. That’s because their hospital stays were classified under observation status, with individuals required to spend three consecutive days as a hospital inpatient before they’re covered.

Health and Human Services did not adequately prove that patients had no right to a hearing before they were discharged to determine their hospitalization status,  Connecticut District Court Judge Michael P. Shea ruled Wednesday. He is denying the agency’s request for summary judgment and decertifying the complaint’s class action status, Bloomberg Law reported Thursday.

The Center for Medicare Advocacy, which represents the patients, applauded the court’s decision this week.

“People who have paid into Medicare their whole lives, and who risk having to pay thousands of dollars for necessary medical care, deserve a fair process to determine whether they will receive Medicare coverage,” said Alice Bers, lead attorney for the CMA, which is joined in the fight by Justice in Aging, and the firm of Wilson Sonsini Goodrich & Rosati.

They noted that, while observation status is often indistinguishable from inpatient care, it does not count toward the three-day requirement. This often leaves beneficiaries with the burden of either paying for or forgoing costly care. One plaintiff, a 93-year-old veteran, had to pay $10,000 for SNF care after being hospitalized for five days with a shoulder fracture.

Shea concluded that the lawsuit, now approaching its eighth year, must proceed to trial without delay. Bloomberg noted that the eventual outcome could have a big impact on the field down the line.

In the meantime, bipartisan lawmakers introduced legislation earlier this month that would allow patients under observation to satisfy the three-day requirement. A February government watchdog report estimated that CMS improperly paid $84 million for SNF care after providers frequently violated the three-day rule.