Medicare Program: Appeal Rights for Certain Changes in Patient Status

<RULE> DEPARTMENT OF HEALTH AND HUMAN SERVICES <SUBAGY>Centers for Medicare & Medicaid Services</SUBAGY> <CFR>42 CFR Parts 405, 476, and 489</CFR> <DEPDOC>[CMS-4204-F]</DEPDOC> <RIN>RIN 0938-AV16</RIN> <SUBJECT>Medicare Program: Appeal Rights for Certain Changes in Patient Status</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule implements an order from the Federal district court for the District of Connecticut in <E T="03">Alexander</E> v. <E T="03">Azar</E> that requires HHS to establish appeals processes for certain Medicare beneficiaries who are initially admitted as hospital inpatients but are subsequently reclassified as outpatients receiving observation services during their hospital stay and meet other eligibility criteria. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> These regulations are effective on October 11, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> David Danek, <E T="03">david.danek@cms.hhs.gov,</E> for issues related to the retrospective process. Janet Miller, <E T="03">janet.miller@cms.hhs.gov,</E> for issues related to the prospective process. Shaheen Halim, <E T="03">shaheen.halim@cms.hhs.gov</E> for issues related to Quality Improvement Organization review. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Executive Summary</HD> The purpose of this final rule is to establish appeals processes to comply with a court order issued in the case <E T="03">Alexander</E> v. <E T="03">Azar,</E> 613 F. Supp. 3d 559 (D. Conn. 2020), <E T="03">aff'd sub nom., Barrows</E> v. <E T="03">Becerra,</E> 24 F.4th 116 (2d Cir. 2022). The processes will apply to certain Medicare beneficiaries who are initially admitted as hospital inpatients but are subsequently reclassified as outpatients receiving observation services during their hospital stay and meet other eligibility criteria. The processes consist of the following: <E T="03">• Expedited appeals:</E> We are establishing an expedited appeals process for certain beneficiaries who disagree with the 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). Eligible beneficiaries will be entitled to request an expedited appeal regarding that decision prior to release from the hospital. Appeals will be conducted by a Beneficiary & Family Centered Care—Quality Improvement Organization (BFCC-QIO). <E T="03">• Standard appeals:</E> Beneficiaries who do not file an expedited appeal will have the opportunity to file a standard appeal (that is, an appeal requested by a beneficiary eligible for an expedited appeal, but filed outside of the expedited timeframes) regarding the 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). These standard appeals will follow similar procedures to the expedited appeals process but without the expedited timeframes to file and for the QIO to make decisions. <E T="03">• Retrospective appeals:</E> We are establishing a retrospective review process for certain beneficiaries to appeal denials of Part A coverage of hospital services (and certain SNF services, as applicable), for specified inpatient admissions involving status changes that occurred prior to the implementation of the prospective appeals process, dating back to January 1, 2009. Consistent with existing claims appeals processes, 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. Eligible beneficiaries will have 365 calendar days from the implementation date of this rule to file a request for a retrospective appeal. We will announce the implementation date on <E T="03">CMS.gov</E> and/or <E T="03">Medicare.gov.</E> In general, as explained in this final rule, we are finalizing the procedures for these appeals as proposed. However, we are making some editorial/technical corrections to the regulations text, as well as several revisions and clarifications to the retrospective appeal procedures based on the public comments we received. These revisions include: • Extending the timeframe for providers to submit a claim following a favorable decision from 180 calendar days to 365 calendar days. • Extending the timeframe for providers to submit records as requested by a contractor from 60 calendar days to 120 calendar days. • Clarifying the effect of a favorable appeal decision to explain that if a hospital chooses to submit a Part A inpatient claim, the hospital must refund any payments received for the Part B outpatient claim before submitting the Part A inpatient claim to Medicare. If a Part A claim is submitted, the previous Part B outpatient claim will be reopened and canceled, and any Medicare payments will be recouped to prevent duplicate payment. • Clarifying the effect of a favorable decision for a beneficiary who was not enrolled in Medicare Part B at the time of hospitalization to explain that the hospital must refund any payments collected for the outpatient services even if the hospital chooses not to submit a Part A claim for payment to the program. • Clarifying the effect of favorable appeals involving beneficiaries who were enrolled in Medicare Part B at the time of hospitalization to explain that hospitals must refund any payments collected for the outpatient hospital services only if the hospital chooses to submit a Part A inpatient claim for such services. • Clarifying that out-of-pocket payments made by a family member on behalf of a beneficiary for SNF services (for the purpose of determining whether those SNF services are eligible for inclusion in an appeal under these procedures), may include out-of-pocket payments made by individuals who are not biologically related to the beneficiary (for example, a close family friend, roommate, or a former spouse). <HD SOURCE="HD1">II. Background</HD> This rule finalizes a proposal issued in December 2023  <SU>1</SU> <FTREF/> and sets forth new appeals procedures to implement the court order in <E T="03">Alexander</E> v. <E T="03">Azar,</E> 613 F. Supp. 3d 559 (D. Conn. 2020), <E T="03">aff'd sub nom., Barrows</E> v. <E T="03">Becerra,</E> 24 F.4th 116 (2d Cir. 2022). In this order, the court directed the Department of Health and Human Services (HHS) to “permit all members of the . . . class to appeal the denial of their Part A coverage” and to establish appeal procedures for certain beneficiaries in Medicare Part A and B (“Original Medicare”) who are initially admitted to a hospital as an inpatient by a physician or otherwise qualified practitioner  <SU>2</SU> <FTREF/> but whose status during their stay is changed to outpatient by the hospital, thereby effectively denying Part A coverage for their hospital stay. <SU>3</SU> <FTREF/> In some cases, the status change also affects the availability of Part A coverage for a beneficiary's post-hospital extended care services furnished in a skilled nursing facility (SNF). The court imposed additional conditions on the right to appeal as described in detail in this final rule. <FTNT> <SU>1</SU>  88 FR 89506. </FTNT> <FTNT> <SU>2</SU>  As discussed in section III.A.1. of this final rule in response to a public comment, we acknowledge that under existing policies, for purposes of payment under Medicare Part A, an individual is considered an inpatient of a hospital if formally admitted as an inpatient pursuant to an order for hospital inpatient admission by a physician or certain qualified practitioners as defined in 42 CFR 412.3. We inadvertently omitted other qualified practitioners when describing the inpatient admission process and have revised our language in this final rule accordingly, when referencing persons ordering hospital inpatient admissions. </FTNT> <FTNT> <SU>3</SU>  The terms of the court order refer to denials of Part A coverage. Consistent with the court order, the appeals processes in this rule do not extend to enrollees in MA plans. MA plan enrollees have existing rights that afford enrollees the right to appeal a plan organization determination where the plan refuses to provide or pay for services, in whole or in part, including the type or level of services, that the enrollee believes should be furnished or arranged for by the MA organization (42 CFR 422.560 through 422.634). For example, if an MA plan has refused to authorize an inpatient admission, the enrollee may request a standard or expedited plan reconsideration of that organization determination (42 CFR 422.566(b), 422.580 through 422.596, and 422.633). </FTNT> The court's order requires new appeal procedures be afforded to the following class: Medicare beneficiaries who, on or after January 1, 2009— • Have been or will have been formally admitted as a hospital inpatient; • Have been or will have been subsequently reclassified by the hospital as an outpatient receiving “observation services”;  <SU>4</SU> <FTREF/> <FTNT> <SU>4</SU>  For the purposes of these procedures, a beneficiary is considered an outpatient receiving observation services when the hospital changes a beneficiary's status from inpatient to outpatient while the beneficiary is in the hospital and the beneficiary subsequently receives observation services following a valid order for such services (see 42 CFR 405.931(h)). </FTNT> • Have rece ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 400k characters. 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