CMS establishes new outpatient appeals processes

CMS issued a final rule to establish several new appeals processes for Medicare beneficiaries who want to challenge a hospital’s decision to reclassify their status.

The final rule fulfills a federal court order issued in a class action case for CMS to create new appeals procedures for eligible Medicare inpatients who are reclassified as outpatients receiving observation services. This status change can result in a denial of coverage under Part A.

CMS established processes for expedited, standard, and retrospective appeals for these beneficiaries. The expedited appeals process is intended for inpatients who want to challenge a facility’s decision to reclassify their status prior to discharge. They will be able to file an appeal with a Beneficiary & Family Centered Care-Quality Improvement Organization (BFCC-QIO), who will determine whether the inpatient admission met criteria for Part A coverage and render a determination within one day after receiving the records.

The standard appeals process follows procedures similar to expedited appeals, but it is to be used for patients who file after discharge. This option offers patients more time to file the appeal and BFCC-QIOs more time to render determinations.

Finally, CMS established a retrospective appeals process for beneficiaries with hospital admissions on or after January 1, 2009, involving status changes before the prospective appeals processes were implemented. For these appeals, beneficiaries must meet certain requirements and show that the admission satisfied Part A coverage criteria. They will have 365 calendar days from the implementation date of the final rule to file an appeal.

CMS is generally finalizing the processes it presented in a December 2023 proposed rule. However, the agency did make a few modifications, including the following:

• Extended the timeframe for providers to submit a claim following a favorable decision from 180 calendar days to 365
• Extended the timeframe for providers to submit records as requested by a contractor from 60 calendar days to 120
• Clarified the effect of a favorable appeal decision in various circumstances

CMS intends to make these appeals processes available to beneficiaries after an operational implementation period, which is expected to take place in early 2025. Revenue integrity professionals can view CMS’ fact sheet on the final rule for more information.