Government Seeks to Stop Implementation of Court Order in Hospital Observation Status Case

Over 10 months ago, in March 2020, a federal district court issued an order in Alexander v. Azar stating that the Centers for Medicare & Medicaid Services (CMS) must permit certain Medicare beneficiaries to appeal the denial of their Part A inpatient coverage when they are placed on “observation status” in hospitals. It found that CMS is violating the constitutional due process of those beneficiaries by providing no opportunity for them to appeal to Medicare for inpatient coverage. The court’s order applies to a nationwide class of individuals who, since January 1, 2009, were admitted as hospital inpatients—covered by Part A—and then reclassified as “outpatient” observation—covered by Part B. The court’s order was based in part on the fact beneficiaries may lose access to medically necessary skilled nursing facility care if they cannot appeal for inpatient coverage of their hospitalizations. The government appealed the trial court’s decision to the Second Circuit Court of Appeals in May, but it did not request a “stay” to pause implementation of the court’s order pending appeal.

Now, after inquiries from the Center for Medicare Advocacy and co-counsel regarding the progress of implementation, the government has requested a stay of the district court’s order. In its January 11, 2021 filing, the government states that complying with the judgment while the case is on appeal will cause CMS irreparable harm. The Center and its co-counsel who represent the class will oppose the stay and will continue to press for relief for class members as soon as it can be provided. The Center is also opposing the appeal of the trial court’s decision at the Second Circuit.

For more information on Alexander v. Azar and the trial court’s decision, see the Center for Medicare Advocacy’s FAQ page regarding the case here.