U.S. Court of Appeals Rules Medicare Beneficiaries Have Right to Appeal Observation Stay Reclassifications

In Barrows v. Becerra, the U.S. Court of Appeals for the Second Circuit held that Medicare beneficiaries have a due process right to appeal decisions by hospital utilization review committees that reclassify their hospital stays from inpatient to observation stays. Notably, if a patient is placed on “observation” status rather than being admitted as an inpatient, they do not satisfy the "three-day inpatient stay" rule and do not qualify for the Medicare skilled nursing facility benefit.

The decision is good news for Medicare beneficiaries and for nursing homes that admit beneficiaries with the understanding that they have Medicare coverage, but later learn that their hospital stay was reclassified as an observation stay. LeadingAge NY will continue to follow the case if it is appealed to the U.S. Supreme Court. We will also apprise members of any guidance that may arise concerning the process for appealing an observation classification.

Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8838