Q&A: Understanding CMS’ proposed changes to appeal rights

Wednesday, February 21, 2024

CMS is proposing significant changes to certain appeal processes for Medicare beneficiaries. In this Q&A, Kimberly A. Hoy, JD, CPC, director of Medicare and compliance for HCPro LLC, in Chicago, explains how the rule could affect hospitals, including new required notices and potential billing process updates, and strategies for managing patient status changes.

Q: What are the changes CMS is proposing in Medicare Program: Appeal Rights for Certain Changes in Patient Status?

A: CMS is proposing an appeal process for certain patients who have or have had their status changed from inpatient to outpatient with observation. Patients who qualify for an appeal must either not have Medicare Part B to cover the observation services or have stayed three consecutive nights in the hospital with fewer than three inpatients night, which would affect skilled nursing facility (SNF) coverage after discharge.

Part of the proposal is enacting appeal rights for a class of patients affected back to 2009 pursuant to a court order. In addition, CMS is setting up expedited appeal rights, with protections from billing, as well as non-expedited appeal rights for similarly situated patients going forward. Due to the expedited appeal right, CMS is proposing a new form, the Medicare Change of Status Notice (MCSN), to inform patients of their right to an expedited appeal if the hospital changes their status from inpatient to outpatient with observation.

Under the proposal, hospitals will have to provide the form after changing a patient’s status to outpatient with observation if the patient doesn’t have Part B or the patient has stayed three or more consecutive nights with fewer than three inpatient nights. The notice will have to be provided as soon as possible for patients that don’t have Part B, or as soon as possible after the patient meets the three consecutive night criteria, and at least four hours before the patient’s discharge.


Q: Why does this matter to hospitals? What are the most important aspects of the proposed rule from hospitals’ perspective?

A: Currently, a hospital developed notice is required in these situations, commonly called condition code 44 status changes; however, this law will introduce a new mandatory form. Not all patients will require the new form, so hospitals will have to develop policies to ensure those patients that have the expedited appeal right receive the new form in place of, or in addition to, their standard condition code 44 form. It will be important to only provide the form to patients who have the expedited appeal right to avoid inappropriate appeals by patients who don’t meet the requirements for an appeal but are unhappy about their change in status. 

If a patient does appeal their discharge under the proposed expedited appeal process, hospitals will have to respond to the Quality Improvement Organization (QIO) with records and information by noon of the day following notification of the appeal, similar to the current process for expedited discharge appeal. This requires someone be available to receive requests from the QIO seven days a week and the ability to provide records and information quickly to the QIO.

Additionally, this rule provides one more reason to move away from the condition code 44 process and instead implement a post-discharge self-denial process, sometimes referred to as the condition code W2 process or inpatient Part B billing. The post-discharge self-denial process accomplishes compliant billing, the same reimbursement in most cases, and represents significantly less effort for physician advisors and nurses than condition code 44. The new form and appeal right proposed in the new rule increases the work and confusion around condition code 44 even further, offering one more reason to move away from the process. 


Q: The comment period is open until February 26. Is it important to submit comments?

A: Based on comments, in the final rule CMS may change which patients have this right and how the form will be delivered to them, so hospitals shouldn’t assume this will affect only a small portion of patients. If hospitals are concerned about the impact this may have on their operations, they should submit comments to CMS related to their concerns.