Hospitals Prepare for Medicare Appeals Changes Effective 2025

Hospitals are urged to prepare for new regulations regarding status-appeal rights for Medicare beneficiaries that will take effect in early 2025. These regulations, stemming from 15 years of litigation, introduce expedited appeals for patients whose status changes while in the hospital, allowing them to challenge reclassification from inpatient to outpatient observation. Hospitals must provide a Medicare Change of Status Notice (MCSN) before patient discharge, particularly if the patient has been in the hospital for at least three days without Part B coverage.

The new appeals process not only affects in-hospital patients but also allows for retrospective appeals for stays dating back to 2009, available until January 2026. Hospitals must navigate the complexities of this process, including holding claims until decisions are made by Quality Improvement Organizations (QIOs) within set timeframes. This development could significantly impact hospital cash flow and requires close collaboration between finance and administrative staff to ensure smooth operations.

With the introduction of retrospective appeals, hospitals face logistical challenges in producing medical records and managing claims that may date back years. Payment adjustments after successful appeals could lead to refunds for patients, adding another layer of complexity to hospital finance management. Hospital leadership is encouraged to support their finance teams in adapting to these changes and to manage the potential delays in claims processing stemming from the new regulations.