Federal data show that hospitals have been placing a growing proportion of Medicare patients on observation care rather than full-fledged inpatient admissions in recent years, a trend driven at least in part by government auditors' aggressive scrutiny of hospital inpatient stays lasting less than two days. In many cases, the auditors say patients should have been kept under observation, even though it pays less and exposes patients to more cost-sharing under Medicare Part B.
The lawsuit, filed in 2009 in U.S. District Court in Connecticut, said the CMS has never properly published the rules on how hospitals ought to decide when patients are admitted for full hospitalization under Medicare Part A. The lawsuit also said the agency had denied patients' constitutional due process right to challenge such admitting decisions, even in cases where a decision to admit was later reversed by the hospital.
Neither argument holds merit, Judge Michael Shea ruled.
Shea said the CMS has clearly delegated admission decisions to hospitals and doctors, who are best positioned to make complex medical decisions. And due process rights do not apply because Medicare beneficiaries lack a “property interest” in a hospital's or doctor's admission decision.
Shea's ruling also notes that Medicare published rules this year clarifying when patients are presumed to be inpatients or outpatients under observation, which is the so-called two-midnights rule.
Ali Bers, an attorney with the center, said the plaintiffs were still analyzing their potential options for appeal, including Shea's decision that Medicare patients lack due process rights. “We are figuring out possible next steps,” she said. “It is certainly not an end to the legislative fight.”
Last May, two House members and a senator introduced bills to change Medicare policy so that any time spent in a hospital in observation status would count toward the rule that says patients must spend three days in inpatient care before they can qualify for Medicare-paid skilled nursing care. The Improving Access to Medicare Coverage Act would also establish a 90-day appeal period.
Rep. Joe Courtney, D-Conn., one of the sponsors of the bill, said he was disappointed in the judge's ruling on the Center for Medicare Advocacy's lawsuit.
“For Congress, the meaning of this decision is crystal clear—we need to enact H.R. 1179 to protect the rights of Medicare beneficiaries and their families,” Courtney said in an emailed statement.
Follow Joe Carlson on Twitter: @MHJCarlson