By Andrew L. Bardetti
Supervising Attorney, Elder Law Unit,
South Coastal Counties Legal Services, Inc.
Exciting news—Medicare may now refund you for money you paid out of pocket because of being placed on observation status.
As a result of a class action lawsuit, Medicare beneficiaries may now file appeals to have Medicare pay for nursing home coverage that was denied in the past.
Historically, Medicare did not allow appeals of a patient’s status in the hospital. Your status—whether admitted to the hospital or placed on observation—matters because Medicare requires a three-day inpatient (Part A) hospital stay for Medicare to then cover a nursing home or short-term rehab stay.
For example, if you spent one day inpatient, and then two days observation, Medicare would not cover the nursing home coverage. In addition, people without Part B could owe full costs for hospital services.
Therefore, beneficiaries had to decide to pay thousands out of pocket or go without care.
In November 2011, the Center for Medicare Advocacy, Justice in Aging, and Wilson Sonsini Goodrich & Rosati filed a class action lawsuit: Alexander v. Azar, 613 F.Supp. 3d 559 (D. Conn. 2020) aff’d sub nom. Barrows v. Becerra, 24 F. 4th 116 (2d Cir. 2022).
As a result, the court ordered Medicare to create an appeals process for class members who did not have the process available at the time (retrospective) and expedited appeals for class members going forward (prospective).
The retrospective period covers anyone who was hospitalized from Jan. 1, 2009 to Feb. 14, 2025. If you win, you could be refunded for out-of-pocket costs you paid to the nursing home or hospital.
In order to be eligible, you must meet three criteria.
First, you had to be a Medicare beneficiary who was reclassified from hospital inpatient to “outpatient receiving observation services” on or after Jan. 1, 2009. Second, you must have received a notice showing the hospital stay was not covered by Part A. This is typically a Medicare Summary Notice (the ones you may get every quarter) or a Medicare Outpatient Observation (MOON) notice.
Last, you either had to stay in the hospital for at least three days—but inpatient fewer than three days—and were admitted to a nursing home within 30 days after leaving the hospital.
You could also qualify if you were not enrolled in Part B at the time of the hospitalization.
You have until Jan. 2, 2026 to file a request with Medicare. If this happened to you, then you should gather as many of your medical records as possible.
For more information on how to file a request, and what forms to use, please visit: https://medicareadvocacy.org/new-resources-on-observation-status-appeals/.
This information is provided by South Coastal Counties Legal Services (SCCLS) which provides free legal services to eligible clients. If you are an older adult look for legal help with this issue, or another civil legal matter, you are welcome to contact our New Bedford office at 774-488-5979 or submit an inquiry online at sccls.org.
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