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 Medicare Beneficiaries Sue U.S. Over ‘Observation Stays’

 

 

 
Medicare beneficiaries and their families have filed a class-action lawsuit against the federal government to stop the “observation stay” process that the group says deprives beneficiaries of Medicare Part A coverage for their hospital stay and after care in post-acute care facilities.

The suit (Bagnall vs. Sebelius) was filed in a U.S. district court in Hartford, Conn., and asks the court to stop Health and Human Services Secretary Kathleen Sebelius from authorizing doctors to place Medicare hospital patients on “observation” status rather than admitting them for inpatient care.

“The plaintiffs are Medicare beneficiaries who received inpatient hospital services but were improperly classified as outpatients, often referred to as ‘observation status,’ and therefore deprived of Medicare Part A coverage for their hospital stay and after care,” according to the Center for Medicare Advocacy and co-counsel, the National Senior Citizen Law Center.

“The misapplication of ‘observation status’ deprives Medicare beneficiaries of their coverage rights and may cause them to absorb significant hospital costs that otherwise would be paid for under Medicare Part A.”

The two groups filed suit on behalf of seven individual plaintiffs who represent a nationwide class of people harmed by the allegedly illegal “observation status” policy and practice.

Currently, it is required for patients to be admitted into a hospital as an inpatient for three days in order to be eligible for skilled nursing facility (SNF) care through Medicare after they are discharged. However, classifying a hospital patient as on observation stay status is a common, clinically appropriate practice to treat and assess whether a patient requires further treatment or whether they are able to be discharged.

Plaintiff Lee Barrows of Connecticut said her husband experienced the negative impact of the observation policy after his five-day stay in a Connecticut hospital as an observation patient and denial of Medicare payment for his subsequent nursing care.

“After five days of treatment in the hospital, my husband’s neurologist, physician, and social worker ushered me into the hallway to tell me that my husband was never admitted. I was stunned with disbelief and tearfully blurted out that I would fight this,” said Barrows. “His doctors then indicated that this happens once or twice a week.”

The lawsuit follows a late October congressional briefing on “observation status,” which sought support for bipartisan legislation, the Improving Access to Medicare Coverage Act of 2011, which has been filed in both houses.

There was also a call for an administrative resolution.
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