CHA News

CMS Finalizes Medicare Observation Appeals Processes

What’s happening: The Centers for Medicare & Medicaid Services (CMS) has established appeals processes for Medicare beneficiaries who were admitted as inpatient but whose status changed to outpatient observation during their hospital stay.  

What else to know: The appeals processes only apply to patients enrolled in traditional Medicare, not patients enrolled in Medicare Advantage.  

The final rule establishes both retrospective and prospective appeal rights for beneficiaries and is a result of a court order following a class action case filed in 2011 (Alexander v. Azar).  

In the final rule, CMS establishes three classification appeals processes:  

  • Expedited appeal for beneficiaries who appeal their hospital status during their stay 
  • Standard appeal for beneficiaries who appeal after being discharged from the hospital 
  • Retrospective appeal for beneficiaries involved in the class action suit 

CMS is targeting implementation for retrospective appeals procedures on Jan. 1, 2025, and prospective appeals procedures on Feb. 14, 2025.  

Additional details can be found in a CMS fact sheet.