83240 Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations 

1 88 FR 89506. 

2As discussed in section III.A.1. of this final rule 

in response to a public comment, we acknowledge 

that under existing policies, for purposes of 

payment under Medicare Part A, an individual is 

considered an inpatient of a hospital if formally 

admitted as an inpatient pursuant to an order for 

hospital inpatient admission by a physician or 

certain qualified practitioners as defined in 42 CFR 

412.3. We inadvertently omitted other qualified 

practitioners when describing the inpatient 

admission process and have revised our language in 

this final rule accordingly, when referencing 

persons ordering hospital inpatient admissions. 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 476, and 489 

[CMS–4204–F] 

RIN 0938–AV16 

Medicare Program: Appeal Rights for 

Certain Changes in Patient Status 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS). 

ACTION: Final rule. 

SUMMARY: This final rule implements an 

order from the Federal district court for 

the District of Connecticut in Alexander 

v. Azar that requires HHS to establish 

appeals processes for certain Medicare 

beneficiaries who are initially admitted 

as hospital inpatients but are 

subsequently reclassified as outpatients 

receiving observation services during 

their hospital stay and meet other 

eligibility criteria. 

DATES: These regulations are effective 

on October 11, 2024. 

FOR FURTHER INFORMATION CONTACT: 

David Danek, david.danek@

cms.hhs.gov, for issues related to the 

retrospective process. 

Janet Miller, janet.miller@

cms.hhs.gov, for issues related to the 

prospective process. 

Shaheen Halim, shaheen.halim@

cms.hhs.gov for issues related to Quality 

Improvement Organization review. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary 

The purpose of this final rule is to 

establish appeals processes to comply 

with a court order issued in the case 

Alexander v. Azar, 613 F. Supp. 3d 559 

(D. Conn. 2020), aff’d sub nom., Barrows 

v. Becerra, 24 F.4th 116 (2d Cir. 2022). 

The processes will apply to certain 

Medicare beneficiaries who are initially 

admitted as hospital inpatients but are 

subsequently reclassified as outpatients 

receiving observation services during 

their hospital stay and meet other 

eligibility criteria. 

The processes consist of the 

following: 

• Expedited appeals: We are 

establishing an expedited appeals 

process for certain beneficiaries who 

disagree with the hospital’s decision to 

reclassify their status from inpatient to 

outpatient receiving observation 

services (resulting in a denial of 

coverage for the hospital stay under Part 

A). Eligible beneficiaries will be entitled 

to request an expedited appeal regarding 

that decision prior to release from the 

hospital. Appeals will be conducted by 

a Beneficiary & Family Centered Care— 

Quality Improvement Organization 

(BFCC–QIO). 

• Standard appeals: Beneficiaries 

who do not file an expedited appeal will 

have the opportunity to file a standard 

appeal (that is, an appeal requested by 

a beneficiary eligible for an expedited 

appeal, but filed outside of the 

expedited timeframes) regarding the 

hospital’s decision to reclassify their 

status from inpatient to outpatient 

receiving observation services (resulting 

in a denial of coverage for the hospital 

stay under Part A). These standard 

appeals will follow similar procedures 

to the expedited appeals process but 

without the expedited timeframes to file 

and for the QIO to make decisions. 

• Retrospective appeals: We are 

establishing a retrospective review 

process for certain beneficiaries to 

appeal denials of Part A coverage of 

hospital services (and certain SNF 

services, as applicable), for specified 

inpatient admissions involving status 

changes that occurred prior to the 

implementation of the prospective 

appeals process, dating back to January 

1, 2009. Consistent with existing claims 

appeals processes, Medicare 

Administrative Contractors (MACs) will 

perform the first level of appeal, 

followed by Qualified Independent 

Contractor (QIC) reconsiderations, 

Administrative Law Judge (ALJ) 

hearings, review by the Medicare 

Appeals Council, and judicial review. 

Eligible beneficiaries will have 365 

calendar days from the implementation 

date of this rule to file a request for a 

retrospective appeal. We will announce 

the implementation date on CMS.gov 

and/or Medicare.gov. 

In general, as explained in this final 

rule, we are finalizing the procedures 

for these appeals as proposed. However, 

we are making some editorial/technical 

corrections to the regulations text, as 

well as several revisions and 

clarifications to the retrospective appeal 

procedures based on the public 

comments we received. These revisions 

include: 

• Extending the timeframe for 

providers to submit a claim following a 

favorable decision from 180 calendar 

days to 365 calendar days. 

• Extending the timeframe for 

providers to submit records as requested 

by a contractor from 60 calendar days to 

120 calendar days. 

• Clarifying the effect of a favorable 

appeal decision to explain that if a 

hospital chooses to submit a Part A 

inpatient claim, the hospital must 

refund any payments received for the 

Part B outpatient claim before 

submitting the Part A inpatient claim to 

Medicare. If a Part A claim is submitted, 

the previous Part B outpatient claim 

will be reopened and canceled, and any 

Medicare payments will be recouped to 

prevent duplicate payment. 

• Clarifying the effect of a favorable 

decision for a beneficiary who was not 

enrolled in Medicare Part B at the time 

of hospitalization to explain that the 

hospital must refund any payments 

collected for the outpatient services 

even if the hospital chooses not to 

submit a Part A claim for payment to the 

program. 

• Clarifying the effect of favorable 

appeals involving beneficiaries who 

were enrolled in Medicare Part B at the 

time of hospitalization to explain that 

hospitals must refund any payments 

collected for the outpatient hospital 

services only if the hospital chooses to 

submit a Part A inpatient claim for such 

services. 

• Clarifying that out-of-pocket 

payments made by a family member on 

behalf of a beneficiary for SNF services 

(for the purpose of determining whether 

those SNF services are eligible for 

inclusion in an appeal under these 

procedures), may include out-of-pocket 

payments made by individuals who are 

not biologically related to the 

beneficiary (for example, a close family 

friend, roommate, or a former spouse). 

II. Background 

This rule finalizes a proposal issued 

in December 2023 1 and sets forth new 

appeals procedures to implement the 

court order in Alexander v. Azar, 613 F. 

Supp. 3d 559 (D. Conn. 2020), aff’d sub 

nom., Barrows v. Becerra, 24 F.4th 116 

(2d Cir. 2022). In this order, the court 

directed the Department of Health and 

Human Services (HHS) to ‘‘permit all 

members of the . . . class to appeal the 

denial of their Part A coverage’’ and to 

establish appeal procedures for certain 

beneficiaries in Medicare Part A and B 

(‘‘Original Medicare’’) who are initially 

admitted to a hospital as an inpatient by 

a physician or otherwise qualified 

practitioner 2 but whose status during 


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3The terms of the court order refer to denials of 

Part A coverage. Consistent with the court order, 

the appeals processes in this rule do not extend to 

enrollees in MA plans. MA plan enrollees have 

existing rights that afford enrollees the right to 

appeal a plan organization determination where the 

plan refuses to provide or pay for services, in whole 

or in part, including the type or level of services, 

that the enrollee believes should be furnished or 

arranged for by the MA organization (42 CFR 

422.560 through 422.634). For example, if an MA 

plan has refused to authorize an inpatient 

admission, the enrollee may request a standard or 

expedited plan reconsideration of that organization 

determination (42 CFR 422.566(b), 422.580 through 

422.596, and 422.633). 4For the purposes of these procedures, a 

beneficiary is considered an outpatient receiving 

observation services when the hospital changes a 

beneficiary’s status from inpatient to outpatient 

while the beneficiary is in the hospital and the 

beneficiary subsequently receives observation 

services following a valid order for such services 

(see 42 CFR 405.931(h)). 

5As explained in 42 CFR 489.21(y), the Medicare 

Outpatient Observation Notice (MOON) is a written 

notice furnished by a hospital to Medicare 

beneficiaries who receive observation services as an 

outpatient for more than 24 hours. The notice 

explains why the beneficiary is not an inpatient and 

also explains the consequences of being an 

outpatient rather than an inpatient. A copy of the 

notice is available to download at https:// 

www.cms.gov//medicare/forms-notices/beneficiarynotices-initiative/ffs-ma-moon. 

their stay is changed to outpatient by 

the hospital, thereby effectively denying 

Part A coverage for their hospital stay.3

In some cases, the status change also 

affects the availability of Part A 

coverage for a beneficiary’s posthospital extended care services 

furnished in a skilled nursing facility 

(SNF). The court imposed additional 

conditions on the right to appeal as 

described in detail in this final rule. 

The court’s order requires new appeal 

procedures be afforded to the following 

class: Medicare beneficiaries who, on or 

after January 1, 2009— 

• Have been or will have been 

formally admitted as a hospital 

inpatient; 

• Have been or will have been 

subsequently reclassified by the hospital 

as an outpatient receiving ‘‘observation 

services’’; 4

• Have received or will have received 

an initial determination or Medicare 

Outpatient Observation Notice 

(MOON) 5 indicating that the 

observation services are not covered 

under Medicare Part A; and 

• Either—(1) were not enrolled in 

Part B coverage at the time of their 

hospitalization; or (2) stayed at the 

hospital for 3 or more consecutive days 

but were designated as inpatients for 

fewer than 3 days, unless more than 30 

days has passed after the hospital stay 

without the beneficiary’s having been 

admitted to a SNF. Medicare 

beneficiaries who meet the requirements 

of the foregoing sentence but who 

pursued an administrative appeal and 

received a final decision of the Secretary 

before September 4, 2011, are excluded 

from the class. 

The court determined that 

beneficiaries who are members of the 

class described previously have been 

deprived of due process and ordered the 

following: 

• Class members shall have an 

opportunity to appeal the denial of their 

Part A coverage. 

• Class members who have stayed, or 

will have stayed, at a hospital for 3 or 

more consecutive days, but who were 

designated as inpatients for fewer than 

3 days, shall have the right to an appeal 

through an expedited appeals process 

substantially similar to the existing 

expedited process for challenging 

hospital discharges. 

• Class members shall be permitted to 

argue that their inpatient admission 

satisfied the relevant criteria for Part A 

coverage—for example, that the medical 

record supported a reasonable 

expectation of a medically necessary 

two-midnight stay at the time of the 

physician’s or otherwise qualified 

practitioner’s initial inpatient order, in 

the case of a post–Two Midnight Rule 

hospital stay—and that the hospital 

utilization review committee’s (URC) 

determination to the contrary was 

therefore erroneous. If a class member 

prevails, then for the purposes of 

determining Part A benefits, including 

both Part A hospital coverage and Part 

A SNF coverage, the beneficiary’s 

reclassification as an outpatient that 

resulted from the URC’s erroneous 

determination shall be disregarded. 

• For class members whose due 

process rights were violated, or will 

have been violated, prior to the 

availability of the procedural 

protections as previously set forth, such 

beneficiaries shall be afforded a 

meaningful opportunity to appeal the 

denial of their Part A coverage, as well 

as effective notice of this right. 

In addition, on December 9, 2022, the 

district court issued an ‘‘Order 

Clarifying Judgment’’ with respect to the 

claims for outpatient hospital services 

received by beneficiaries who were 

enrolled in Part B of the program at the 

time such services were furnished. In 

this clarifying order, the court stated 

that it intended to provide a meaningful 

opportunity for class members whose 

due process rights were violated to 

appeal the denial of Part A coverage, but 

it also stressed the need to provide a 

remedy for class members who endured 

undercompensated stays at skilled 

nursing facilities. It further stated that, 

since class members with Part B 

coverage had much of their past hospital 

stays paid for by such coverage, it did 

not intend to require the unwinding of 

previously approved Part B outpatient 

hospital claims so they could be 

reprocessed as Part A claims. The 

clarification states that if a class member 

enrolled in Part B coverage at the time 

of their hospitalization prevails in an 

appeal of a claim, then an adjustment of 

payment for the underlying hospital 

services (including any applicable 

deductible and coinsurance amounts) is 

not required, and Part A payment for 

covered SNF services may be made 

without any adjustment to the payment 

for the underlying hospital services. 

In section III.A. of this final rule, we 

describe the procedures that will be 

available to members of the class 

described previously (hereinafter, 

eligible beneficiaries) to appeal denials 

of Part A coverage of hospital services 

(and certain SNF services, as 

applicable), for specified inpatient 

admissions involving status changes 

that occurred prior to the 

implementation of the prospective 

appeals process, dating back to January 

1, 2009. We refer to this as the 

retrospective appeals process. In section 

III.B. of this final rule, we describe the 

expedited and standard appeals 

procedures that will be available 

prospectively (meaning to beneficiaries 

whose status is changed after the 

effective date of this rule and after the 

implementation and availability of the 

procedures established by the rule) to 

eligible beneficiaries who, among other 

things, are admitted as hospital 

inpatients and are reclassified by 

hospitals as outpatients receiving 

observation services (the ‘‘prospective 

appeals process’’). 

Eligible beneficiaries who are 

hospitalized and entitled to an appeal 

under these procedures prior to the 

implementation date of the prospective 

appeals process will be able to utilize 

the retrospective appeals process, 

subject to the filing limitation proposed 

in § 405.932(a)(2)(i)(B). 

The flowcharts below depict the 

overall appeals processes being 

finalized in this regulation. With the 

exception of some editorial revisions 

and updating the amount in controversy 

requirements for calendar year 2025 

($190 for an Administrative Law Judge 

hearing and $1,900 for judicial review), 

the flowcharts are the same as what was 

outlined in the proposed rule (88 FR 

59509). 

BILLING CODE 4120–01–P 


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Retrospective Review Process 

365 days to file* 

First Level of Appeal 

180 days to file* 

Second Level of Appeal 

60 days to file* 

Third Level of Appeal 

60 days to file* 

Fourth Level of Appeal 

60 days to file* 

AIC = Amount In Controversy 

AU = Administrative Law Judge Judicial review 

MAC= Medicare Administrative Contractor 

OMHA = Office of Medicare Hearings and Appeals 

QIC = Qualified Independent Contractor 

*Filing deadlines are calendar days from date of receipt of the notice/decision (presumed to be 5 days from the 

date of the notice, unless evidence to the contrary). 

**Eligibility determination timeframes may be longer if additional documentation is required (such as medical 

records or claims information). 

***The AIC requirement for an AU hearing and Federal District Court is adjusted annually in accordance with the 

medical care component of the consumer price index. The chart reflects the amounts for calendar year 2025, and 

is subject to change each calendar year. 
Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations 83243 

BILLING CODE 4120–01–C 

In the sections that follow, we provide 

an overview of the different appeal 

processes and describe the proposed 

provisions, the comments received on 

those provisions, and our response to 

those comments. We then indicate 

whether we are finalizing the provisions 

as proposed or with modifications. 


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Expedited (Prospective) Appeals Process 

AIC = Amount In Controversy 

AU = Administrative Law Judge 

OMHA = Office of Medicare Hearings and Appeals 

Before release from the hospital 

Noon the next calendar day 

60 days to file* 

60 days to file* 

60 days to file* 

QIO = Quality Improvement Organization, a.k.a. Beneficiary Family Centered Care (BFCC-QIO) 

*Filing deadlines a re calendar days from date of receipt of the notice/decision (presumed to be 5 days from the 

date of the notice, unless evidence to the contrary). 

NOTE: The Amount In Controversy for an ALJ Hearing and Judicial Review is not adjusted annually under Section 

1155 of the Social Security Act. 

First Level of Appeal 

Second Level of Appeal 

Third Level of Appeal 

Fourth Level of Appeal 

Judicial review 
83244 Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations 

6 Section 205(a) of the Act, incorporated into 

Title XVIII by section 1872 of the Act, provides that 

the Secretary ‘‘shall have full power and authority 

to make rules and regulations and to establish 

procedures, not inconsistent with the provisions of 

this title, which are necessary or appropriate to 

carry out such provisions[.]’’ Section 1871 of the 

Act states that the Secretary shall prescribe such 

regulations as may be necessary to carry out the 

administration of the insurance programs under this 

title. 

7 The amount in controversy requirement for CY 

2025 is $190 for a hearing before an Administrative 

Law Judge, and $1,900 for judicial review. Notice 

of the updated minimum amounts for each calendar 

year is published in the Federal Register and is 

available on https://www.cms.gov/medicare/ 

appeals-grievances/fee-for-service/third-levelappeal. 

III. Provisions of the Proposed Rule and 

Analysis of and Responses to Public 

Comments 

A. Retrospective Appeals 

1. Overview 

The retrospective appeals required by 

the court order constitute a new process 

under the Medicare program, as the 

appeals would be based on alleged 

entitlement to coverage for services that 

were not actually billed to the program 

on a claim. That is, under existing 

claims appeals processes for the 

Original Medicare program, a 

beneficiary is asking for a determination 

on whether specific items and services 

billed on a claim for payment should 

have been covered and paid, not 

whether items and services should have 

been billed or whether there should 

have been coverage when there is no 

claim. Sections 205(a), 1871, and 1872 

of the Social Security Act (the Act) 

provide the Secretary authority to 

establish regulations to carry out the 

administration of the insurance 

programs under Title XVIII of the Act.6

The new retrospective appeals 

procedures required under the court 

order do not fit into the existing claims 

appeals process for Original Medicare 

claims established under section 1869 of 

the Act. However, in our view, these 

new procedures would have similarities 

to the longstanding claims appeals 

procedures with which Medicare 

beneficiaries are familiar. Accordingly, 

we proposed new procedures to govern 

the retrospective appeals process in 

proposed 42 CFR 405.931 through 

405.938 that would be based, in large 

part and to the extent appropriate, on 

the existing claims appeals procedures 

in the existing provisions in 42 CFR part 

405 Subpart I (as authorized under 

section 1869 of the Act). 

In § 405.931(b), we proposed to define 

the term ‘‘eligibility contractor’’ to mean 

the contractor that would serve as a 

single point of contact for incoming 

retrospective appeal requests. As 

proposed in § 405.932(a) through (e), the 

eligibility contractor would determine if 

the request for appeal is valid, including 

whether the request is timely and 

contains the required elements for an 

appeal. In addition, we proposed that 

the eligibility contractor would 

determine whether the individual 

submitting the request (or the individual 

for whom a request is submitted, in the 

case of a request filed by a 

representative) meets the definition of a 

class member as defined by the court, 

and is, thus, an eligible party entitled to 

an appeal under the terms of the court 

order. The eligibility contractor would 

then either deny or approve each appeal 

request received and notify the 

individual (or their representative) of 

the determination. For those requests 

that are denied (that is, the beneficiary 

has not demonstrated they meet the 

definition of a class member and is not 

eligible for an appeal, or the appeal 

request is not otherwise valid), we 

proposed in § 405.932(e) that the 

individual filing the request (or their 

representative) would have an 

opportunity to correct any errors and/or 

demonstrate why the appeal request 

should be approved. An individual’s 

request to review a denial must be 

received by the eligibility contractor 

within 60 calendar days of the 

individual’s receipt of the denial notice 

under proposed § 405.932(e)(2). For 

appeal requests that are approved (that 

is, the beneficiary satisfies the 

requirements for class membership— 

and thus, is determined to be an eligible 

party—and the request is valid), the 

eligibility contractor would forward 

those requests to the processing 

contractor to conduct the first level 

appeal. 

In § 405.931(b), we proposed that the 

processing contractor would perform 

the first level of appeal. The processing 

contractor would be the MAC that 

currently has jurisdiction over Part A 

claims for the hospital at which the 

beneficiary was initially admitted prior 

to being subject to a status change. As 

proposed in § 405.932(f) through (i), 

processing contractors would generally 

follow existing procedures that govern 

redeterminations (42 CFR 405.940 

through 405.958), as appropriate, except 

as we otherwise proposed in § 405.932. 

In § 405.934, we proposed that 

eligible parties (or their representatives) 

who are dissatisfied with the processing 

contractor’s appeal decision would have 

the opportunity to request a 

reconsideration to be performed by a 

QIC. We proposed that the QICs would 

generally utilize existing procedures 

that govern reconsiderations (42 CFR 

405.960 through 405.978), as 

appropriate, except as we otherwise 

proposed in § 405.934. 

Following a reconsideration, in 

§ 405.936 we proposed that eligible 

parties (or their representatives) who are 

dissatisfied with the reconsideration 

would be able to request a hearing 

before an Administrative Law Judge 

(ALJ) (or review by an attorney 

adjudicator) if the claims under appeal 

meet the amount in controversy 

requirement.7 In § 405.936(c), we 

proposed a new method of calculating 

the amount in controversy that reflects 

the differences between these new 

appeals and typical claims appeals 

under existing procedures. In addition, 

under proposed § 405.938, eligible 

parties (or their representatives), would 

be able to request review by the 

Medicare Appeals Council (hereinafter, 

Council). As with the first two levels of 

appeal, we proposed that these new 

appeals before an ALJ (or attorney 

adjudicator) and the Council would 

generally follow existing procedures in 

42 CFR 405.1000 through 1140, as 

appropriate, except as we have 

otherwise proposed in §§ 405.936 

through 405.938. Eligible parties would 

also be able to request judicial review 

under the existing provisions in 42 CFR 

405.1136. 

In § 405.932(a)(2), we proposed to 

limit the time to file a request for a 

retrospective appeal to 365 calendar 

days following the implementation date 

of the final rule. We have provided 

notice of the pending appeals process 

for class members since July 2022 on 

both Medicare.gov and CMS.gov and we 

will continue to update those websites 

with information as this rulemaking 

proceeds and as we begin to implement 

the final rule. Thus, when this 

rulemaking is concluded and 

procedures are finalized, effective, and 

operational, we believe we would have 

afforded eligible beneficiaries ample 

time to gather necessary documentation 

in anticipation of filing appeal requests. 

We received many comments in 

support of the overall process we 

proposed for retrospective appeals. In 

addition, we received several general 

comments on the scope and proposed 

procedures for the retrospective appeals 

process and several comments on the 

outreach efforts we proposed. 

Comment: A commenter expressed 

concern that due to the length of the 

entire retrospective appeal process, 

eligible parties could experience delays 

in receiving coverage decisions for up to 

a year or more. 

Response: We appreciate the concerns 

raised by the commenter. We 


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understand that beneficiaries and their 

families, in some cases, have waited for 

many years to access an appeals process 

for the issues addressed in these 

procedures. As we explained in the 

proposed rule, the new appeals 

procedures ordered by the court do not 

fit neatly into existing processes, but to 

the extent possible, we are mirroring 

existing appeals processes for these new 

appeals. This relative consistency in the 

processes will benefit individuals filing 

appeals as well as our contractors who 

process appeals. In some cases, 

decisions can be made in less time than 

the deadlines prescribed in the 

regulations. We believe these 

timeframes, which have been in place 

for existing appeals for 15 years, are 

reasonable and balance the need to 

resolve complex issues with the 

interests of appellants in receiving 

timely decisions. 

Comment: A commenter requested 

that CMS clarify whether these new 

appeals procedures apply to persons 

enrolled in Medicare Advantage (MA) 

plans and consider extending these 

rights to the MA program. 

Response: The retrospective appeals 

process (addressed in section III.A. of 

this final rule) and the prospective 

appeals process (addressed in section 

III.B. of this final rule) do not apply to 

the MA program and will not be 

available for MA enrollees. As we 

explained in the proposed rule, the 

terms of the court order refer to denials 

of Part A coverage. Consistent with the 

court order, we are creating a new 

appeals process for beneficiaries 

enrolled in Original Medicare. We 

further explained that the appeals 

processes proposed in this rule do not 

extend to enrollees in MA plans because 

we have determined that the 

considerations underlying the 

protections ordered by the court for 

beneficiaries enrolled in Original 

Medicare do not apply to MA plan 

enrollees. MA enrollees have rights and 

protections as set forth in 42 CFR part 

422 Subpart M. Under the MA 

regulations at 42 CFR 422.566(b)(3), an 

MA plan’s refusal to provide or pay for 

services, in whole or in part, including 

the type or level of services, that the 

enrollee believes should be furnished or 

arranged for by the MA plan is an 

organization determination. If an MA 

plan enrollee disagrees with a plan’s 

organization determination, the enrollee 

has the right to request a 

reconsideration of that decision under 

the rules at § 422.578. In the event an 

MA plan refuses to authorize an 

inpatient admission, this is an adverse 

organization determination and the 

enrollee may request a standard or 

expedited plan reconsideration 

(§§ 422.580 through 422.590, 422.633). 

If an MA plan upholds an adverse 

decision at the reconsideration level, the 

case is automatically sent to the Part C 

IRE for review (§§ 422.592 and 422.594). 

Additional levels of appeal that may be 

available to an MA enrollee include ALJ 

and Council review and judicial review 

(§§ 422.600 through 422.612). Because 

of these existing rights and protections 

afforded to MA enrollees, we did not 

propose any new procedures applicable 

to MA enrollees. To the extent we 

identify additional processes that may 

be necessary for the MA program, any 

such proposals would be subject to full 

public discussion through notice and 

comment rulemaking. 

Comment: A commenter requested 

that we use ‘‘provider-neutral language’’ 

throughout the rule, for example, 

instead of using physician, we should 

consider using physician or otherwise 

qualified practitioner. 

Response: We appreciate the 

suggestion from this commenter. We 

have reviewed the language in the 

proposed rule and found several 

instances where it would be more 

appropriate to use the phrase 

‘‘physician or other qualified 

practitioner’’ consistent with the 

regulatory provisions regarding 

inpatient admissions in 42 CFR 412.3(a). 

We will use this terminology going 

forward. 

Comment: A commenter requested 

that we amend the text of several 

sections of the proposed codified 

regulations text to include the word 

‘‘shall’’ to strengthen and emphasize 

required actions. 

Response: We appreciate the 

suggestion by the commenter. We 

drafted the regulation text for these new 

procedures to be consistent with 

existing regulation text in 42 CFR part 

405 Subpart I. Those provisions also 

include required actions for contractors, 

but generally use ‘‘must’’ rather than 

‘‘shall’’ to indicate a requirement. We 

reviewed the proposed regulation text 

and did not identify language that was 

vague or did not clearly indicate a 

requirement where we intended a 

requirement. Thus, we are not adopting 

the recommendations made by the 

commenter. 

Comment: Many commenters 

expressed their support for the outreach 

and education that we plan to conduct 

following the issuance of the final rule 

as we implement these procedures. 

Commenters suggested additional 

means of educating beneficiaries and 

their representatives on the new appeal 

rights offered in this rule. For example, 

commenters recommended we include 

information in the Medicare & You 

handbook and with Medicare Summary 

Notices (MSNs) while the filing period 

is open and create new materials 

available to beneficiaries and advocates 

such as social workers and State Health 

Insurance Assistance Program (SHIP) 

counselors. Commenters also suggested 

that we provide translations of these 

materials into various languages. 

Response: We appreciate the support 

of these commenters on our general 

approach to conducting education and 

outreach related to these new appeals 

procedures. We are committed to 

providing educational and training 

materials on our website for advocates 

to reference and provide to 

beneficiaries. We are also committed to 

creating new documents and 

publications, as well as updating 

current publications such as Medicare & 

You, that may be downloaded from 

Medicare.gov and/or CMS.gov. This 

includes the translation of materials into 

different languages as needed. We 

intend to train and provide information 

to customer service representatives at 1– 

800–MEDICARE to assist and inform 

beneficiaries with questions about these 

procedures. We also intend to provide 

information to SHIP counselors and 

other advocacy groups in providing 

updates on new and emerging programs 

in Medicare, such as these new appeal 

rights. 

In addition, we will include a 

message regarding this new appeal right 

on beneficiary MSNs. This message will 

refer beneficiaries to the detailed 

information that will be included on 

Medicare.gov and/or CMS.gov. 

Comment: A commenter suggested 

that we extend the date of receipt of 

notices or decisions sent by the 

eligibility contractor, processing 

contractor or other appeals adjudicators, 

to 30 calendar days following receipt of 

the notice. 

Response: We appreciate the 

comment. Our longstanding policy 

presumes receipt of a notice in the 

appeals process is 5 calendar days after 

the date of the notice. We adopted this 

policy for these new retrospective 

appeals as we intended the process for 

these new appeals to mirror existing 

processes as much as possible. This 

presumption is rebuttable if the 

appellant can establish receipt outside 

of the 5-day window. The reason for this 

longstanding presumption is to account 

for the time between the printing and 

mailing of the notice receipt by the 

appellant and because filing timeframes 

at subsequent levels of appeal begin 

upon receipt of the decision at the 

previous level. Our longstanding 

experience is that this 5-day window for 


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8 Appointed representative means an individual 

appointed by a party to represent the party in a 

Medicare claim or claim appeal. Authorized 

representative means an individual authorized 

under State or other applicable law to act on behalf 

of a beneficiary involved in the appeal (for example, 

a beneficiary’s legal guardian, surrogate decisionmaker for an incapacitated beneficiary, or an SSAappointed representative payee). The authorized 

representative will have all of the rights and 

responsibilities of a beneficiary or party, as 

applicable, throughout the appeals process and 

does not need a further appointment. 

9 We acknowledge that payment by Medicare 

would not have been made in appeals brought by 

a beneficiary who was not enrolled in Part B at the 

time of hospitalization. In those situations, the 

beneficiary would have been responsible for 

payment for outpatient services furnished by the 

hospital. 

10 Typically, an authorized representative will be 

a legal guardian, representative payee or someone 

acting under state law on behalf of a beneficiary (for 

example, a family member with a durable power of 

attorney). Often these authorized representatives are 

family members or other individuals who are 

unfamiliar with the technical requirements of the 

existing claim appeals process. We believed it was 

reasonable to treat appeals filed by authorized 

representatives, like other existing claim appeals 

filed by family members (that is, as if the appeal 

was filed by an unrepresented beneficiary). 

receipt is generally consistent with 

postal delivery timeframes. We do not 

believe the time between mailing the 

notice and receipt would be as long as 

30 calendar days. Thus, we are not 

adopting the recommendation made by 

the commenter. 

2. Party Status, Authorized 

Representatives, and Appointed 

Representatives 

The court order instructs HHS to 

establish new appeals procedures for 

certain beneficiaries, specifically, 

beneficiaries who are members of the 

defined class, as previously described in 

the overview and in proposed 

§ 405.931(b). The court’s decision noted 

that some class members suffered 

financial or other consequences as a 

result of the change in their status from 

inpatient to outpatient receiving 

observation services, including having 

to pay for the costs of post-hospital 

extended care services in a SNF out of 

pocket because they did not satisfy the 

statutory requirement for SNF coverage 

of having a 3 consecutive day qualifying 

inpatient stay (see section 1861(i) of the 

Act). In addition, other class members 

had to pay for their hospital services 

themselves because they lacked 

Medicare Part B coverage. The court 

directed HHS to afford class members a 

right to appeal certain denials of Part A 

coverage which are defined later is this 

section. The court ordered an appeal 

process be made available to those class 

members who did not have such a 

process available if their hospital stays, 

dating back to January 1, 2009, met the 

conditions of the order. Accordingly, in 

§ 405.931(b) we proposed to define an 

eligible party as an individual who 

meets the definition of a class member 

in Alexander v. Azar. In that case, the 

court adopted the following class 

definition: a Medicare beneficiary who, 

on or after January 1, 2009— 

• Was formally admitted as a hospital 

inpatient; 

• While in the hospital was 

subsequently reclassified as an 

outpatient receiving observation 

services (as defined in § 405.931(h)); 

• Has received an initial 

determination (as defined in § 405.920) 

or a Medicare Outpatient Observation 

Notice (MOON) (as described in 

§ 489.20(y)) indicating that the 

observation services are not covered 

under Medicare Part A; and 

• Either— 

++ Was not enrolled in the 

Supplementary Medical Insurance 

program (that is, Medicare Part B 

coverage) at the time of beneficiary’s 

hospitalization; or 

++ Stayed at the hospital for 3 or more 

consecutive days but was designated as 

an inpatient for fewer than 3 days, 

unless more than 30 calendar days has 

passed after the hospital stay without 

the beneficiary’s having been admitted 

to a SNF. 

An eligible party would be entitled to 

request an appeal under the proposed 

retrospective process. 

In contrast, the court’s decision did 

not include providers as class members 

entitled to additional appeals 

procedures and did not require HHS to 

afford new appeal rights to providers in 

these new appeals proceedings. 

Accordingly, in § 405.931(b) and (c), we 

proposed to limit party status in these 

new appeals to beneficiaries who meet 

the definition of a class member as 

specified in the court order. 

As we believe some beneficiaries who 

are members of the class may require 

assistance with their appeal requests, 

we proposed to apply existing rules 

regarding appointed representatives and 

authorized representatives (see 

§§ 405.902 and 405.910) to these new 

appeals.8 There may also be some 

situations in which a class member has 

died since their hospitalization and, as 

applicable, admission to a SNF. Our 

existing rules in § 405.906(a)(1) permit 

certain successors in interest to file 

appeals on behalf of a deceased 

beneficiary. Thus, in § 405.931(d)(3) we 

proposed to apply those rules to 

deceased class members who would 

have been eligible to request an appeal 

under the proposed procedures for 

retrospective appeals. 

However, contrary to existing claims 

appeals procedures, in § 405.931(d)(1)(i) 

we proposed to exclude providers from 

representing beneficiaries in these new 

appeals, and we proposed to prohibit 

the assignment of appeal rights to 

providers as well. Since the decision to 

change a patient’s status is made by the 

hospital, we had concerns that the 

interests of a class member could 

conflict with the interests of a hospital 

or SNF, and we were concerned that a 

class member’s challenge to their denial 

of Part A coverage resulting from a 

change in status from inpatient to 

outpatient receiving observation 

services may not be appropriately 

represented by the hospital that 

initiated that change, determined that 

outpatient services were appropriate for 

the beneficiary, and in most cases, 

previously received payment for 

outpatient services. We had similar 

concerns regarding representation by 

SNFs that already received payment for 

the SNF services at issue. Unlike most 

existing claims appeals, where the 

primary issue under review is the 

denied coverage and payment for items 

and/or services billed on a claim, the 

issue on appeal under these procedures 

is whether services meet the relevant 

criteria for coverage and payment under 

the inpatient hospital benefit under Part 

A of the program rather than under the 

Part B outpatient benefit where payment 

was, in most cases,9 previously made to 

the hospital, and the consequences of 

that decision on coverage of SNF 

services. Moreover, as we are 

implementing procedures required 

under the court’s order under the 

Secretary’s rulemaking authority in 

sections 205(a), 1871, and 1872 of the 

Act, we believed the provisions of 

section 1869 of the Act guide, but do not 

explicitly govern, the appeals 

procedures for the new retrospective 

appeals ordered by the court. 

We proposed to include a definition 

of ‘‘unrepresented beneficiary’’ 

applicable to appeals under proposed 

§§ 405.931 through 405.938. In the 

existing claims appeals process in 42 

CFR part 405 subpart I, certain 

procedural requirements do not apply to 

an unrepresented beneficiary. However, 

that term is not defined in existing 

regulations. Therefore, in 

§ 405.931(d)(5), we proposed to define 

an unrepresented beneficiary as a 

beneficiary who is an eligible party and: 

(1) has not appointed a representative 

under § 405.910; or (2) has an 

authorized representative as defined in 

§ 405.902; 10 or (3) has appointed as its 

representative, a member of the 

beneficiary’s family, a legal guardian, or 


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an individual who routinely acts on 

behalf of the beneficiary, such as a 

family member or friend who has a 

power of attorney; or (4) in the case of 

a deceased beneficiary, the appeal 

request is filed by an eligible party who 

meets the conditions set forth in 

§ 405.906(a)(1). 

We also proposed to incorporate 

certain existing policies that would 

apply in the new appeals procedures for 

the convenience of appellants and 

adjudicators. For example, in 

§ 405.931(f), we proposed that the date 

of receipt of a notice or decision sent by 

the eligibility contractor, processing 

contractor or other appeals adjudicator 

is presumed to be 5 calendar days 

following the date on the notice unless 

there is evidence to the contrary. In 

addition, in § 405.931(g) we proposed 

that for the purposes of determining 

whether a beneficiary has a qualifying 

inpatient stay for SNF eligibility and for 

eligibility as a class member, days are 

counted consistent with existing policy 

in § 409.30 (that is, 3 consecutive 

calendar days starting with the 

admission day but not counting the 

discharge day). 

In proposed § 405.931(h), we 

explained that for the purposes of 

determining eligibility for an appeal 

under these procedures, a beneficiary 

would be considered an outpatient 

receiving observation services when the 

hospital changes a beneficiary’s status 

from inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services. 

We received several comments 

regarding eligibility requirements for an 

appeal under these procedures and 

several comments regarding the 

limitation on provider representation of 

eligible parties. 

Comment: A few commenters 

questioned the MOON being a 

determining factor for eligibility for an 

appeal under the new procedures. A 

commenter noted that the MOON was 

established in August 2015, but 

retroactive appeals are available to 

eligible beneficiaries with hospital 

admissions starting on January 1, 2009. 

Another commenter suggested that the 

proposed regulation in § 405.931(b) 

defining an eligible party requires the 

delivery of the MOON as a condition of 

eligibility for a retrospective appeal. 

Response: We appreciate the 

commenter’s observations regarding the 

implementation date of the MOON and 

the eligibility criteria under these 

appeal procedures. The federal district 

court order and our definition of an 

eligible party states that receipt of either 

an initial determination or a MOON 

would serve to meet one condition of 

eligibility for an appeal under these new 

procedures. For hospitalizations that 

predate the effective date of the MOON, 

a beneficiary’s receipt of an initial 

determination for their hospital and/or 

SNF claim (that is, a Medicare Summary 

Notice resulting from processing a claim 

submitted by a provider) would serve to 

meet the requirement. 

Comment: A commenter sought 

clarification on whether a beneficiary 

must receive observation services after 

the change in status from inpatient to 

outpatient in order to be eligible for an 

appeal under these new procedures. 

Response: We appreciate the 

opportunity to provide this clarification. 

A beneficiary must receive observation 

services after the change in status from 

inpatient to outpatient in order to be 

eligible for an appeal under these new 

procedures. As explained in the 

proposed rule, consistent with the court 

order, the class members who are to be 

afforded an opportunity to appeal the 

denial of their Part A coverage include 

Medicare beneficiaries who, on or after 

January 1, 2009, have been or will have 

been subsequently reclassified by the 

hospital as an outpatient receiving 

observation services, and meet the other 

conditions specified in the order (88 FR 

89506 (December 27, 2023)). We further 

stated in the proposed rule that, for the 

purposes of these proposed procedures, 

a beneficiary is considered an outpatient 

receiving observation services when the 

hospital changes a beneficiary’s status 

from inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services (88 FR 89506). 

Comment: Several commenters stated 

that the proposed rule does not address 

how beneficiaries who are eligible for a 

retrospective appeal will be identified 

and receive notice of the new appeal 

procedures that are available. A 

commenter suggested that CMS utilize 

claims data, hospital records, or 

beneficiary reports to identify eligible 

parties. 

Response: We appreciate the 

commenter’s suggestions. We 

considered this issue as we assessed 

how to implement the court order and 

determined that it would not be feasible 

to proactively identify eligible parties. 

Unfortunately, the claims data available 

to us do not align precisely with the 

eligibility criteria for these new appeals 

procedures. For example, the outpatient 

claim submitted by a hospital would not 

provide any indication of when 

observation services were furnished to a 

beneficiary. Thus, we could not discern 

between a beneficiary who received 

observation services prior to the 

inpatient admission (who would not 

meet eligibility criteria) and a 

beneficiary who received observation 

services after the change in status from 

inpatient to outpatient simply based on 

claims information. This aspect of 

eligibility for an appeal would only be 

available after a review of medical 

records, and we believe it would be 

inefficient and ineffective to request and 

review medical records for all 

potentially eligible beneficiaries 

(estimated to be over 32,000) in order to 

identify those beneficiaries who are, in 

fact, eligible for an appeal. Such 

attempts would cause undue burden on 

the program and would delay appeals 

due to the volume of records requests 

and resources needed to review every 

medical record. Instead, we will rely on 

education and outreach to alert 

beneficiaries to the availability of these 

new appeal procedures and the 

eligibility requirements to access these 

appeals established in this final rule. 

Comment: A commenter questioned 

whether beneficiaries who were not 

enrolled in Medicare Part B at the time 

of their hospitalization but had other 

insurance coverage to cover outpatient 

services (such as a group health plan) 

would be eligible for an appeal. 

Response: A beneficiary not enrolled 

in Medicare Part B who meets all stated 

eligibility criteria would be eligible for 

an appeal under these new procedures, 

even if the beneficiary had other 

insurance coverage that covered Part B 

outpatient hospital services. We would 

expect such appeals would be rare and 

would likely focus on noncovered SNF 

services that resulted in out-of-pocket 

expenditures by the beneficiary. 

Comment: A few commenters 

disagreed with our limitation on 

provider representation for these new 

appeals as proposed in § 405.931. 

Generally, these commenters were 

concerned about the lack of support for 

beneficiaries to work through these 

appeals. A commenter stated that 

beneficiaries sometimes rely on 

provider staff to understand benefits 

and available coverage and requested 

clarification regarding whether provider 

staff may provide information and 

assistance to beneficiaries filing appeals. 

A commenter stated that SNFs should 

be able to file appeals on behalf of 

beneficiaries since SNFs have the 

motivation to ensure that they receive 

proper payment for the services they 

provide. A commenter expressed 

support for the definition of an 

unrepresented beneficiary and the rights 

it will extend to beneficiaries under 42 

CFR part 405 subpart I. 


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Response: We appreciate the concerns 

raised by these commenters. While we 

generally agree that providers may 

provide valuable assistance to 

beneficiaries seeking appeals of denied 

services under existing procedures, we 

believe that in these new appeals, the 

circumstances warrant a different 

approach to appointed representatives. 

We note that beneficiaries entitled to an 

appeal under these new rules still have 

many options for obtaining assistance in 

their appeal. For example, friends and 

family members are eligible to be 

appointed as a representative. In each 

state, state health insurance assistance 

programs (SHIPs) are available to 

explain coverage and benefits and to 

represent and assist beneficiaries in 

appeals. Private advocacy groups are 

also available to assist and represent 

beneficiaries in Medicare appeals. Staff 

employed by providers may also assist 

beneficiaries by providing them with 

information and support in their 

appeals. These are just a few illustrative 

examples of persons and groups that 

may be available to assist beneficiaries, 

and we do not believe that precluding 

providers from representing 

beneficiaries for services, in some cases, 

furnished many years ago, will have a 

negative impact on beneficiary access or 

representation in these new appeals. 

As explained in the proposed rule, we 

are concerned about a provider acting as 

the appointed representative of a 

beneficiary in these new appeals. 

Appointed representatives play a 

significant role in a beneficiary’s appeal. 

The representative is responsible for 

submitting forms, receiving and 

submitting information on behalf of the 

beneficiary, and making arguments on 

behalf of the beneficiary. While an 

appointed representative is acting on 

behalf of a beneficiary, the 

representative exercises control over 

most aspects of the appeal. In many of 

the appeals we expect under these new 

procedures, beneficiaries or family 

members reimbursed SNFs for the care 

that was furnished to the beneficiary. In 

some of these cases, we believe a SNF’s 

interests could be at odds with the 

interest of the beneficiary. For example, 

a SNF could be motivated by 

maintaining the status quo with respect 

to payment already received for services 

in light of the burden associated with 

refunding payments and billing the 

Medicare program for payment for 

services furnished as many as 15 years 

earlier. We believe restricting formal 

provider representation in the appeals 

process, given the broad availability of 

other resources, affords beneficiaries the 

best opportunity for independent and 

unbiased assistance, if needed. While a 

provider may not act as an appointed 

representative for a beneficiary under 

these procedures, we believe it would 

be entirely appropriate for providers to 

lend assistance to beneficiaries in 

providing records, information, and 

advice about the appeal and the appeal 

process. Thus, we are not adopting the 

recommendation to allow providers to 

be appointed as a representative for an 

eligible party. 

We would also like to clarify the 

scope of our proposal in adding a 

definition to the term unrepresented 

beneficiary in § 405.931(d)(5) for these 

new appeal procedures. As proposed in 

§ 405.931(d)(5), a beneficiary who is an 

eligible party is considered 

unrepresented if the beneficiary meets 

one of several criteria specified in that 

section. As we explained in the 

introductory paragraph of § 405.931(d), 

the policies established in that section 

are for the limited purposes of these 

new appeal procedures, that is, appeals 

conducted under §§ 405.931 through 

405.938. We did not intend to apply the 

definition of unrepresented beneficiary 

in § 405.931(d)(5) to claim appeals 

conducted under existing 42 CFR part 

405 subpart I. The purpose in adding 

this definition is to help eligible parties 

who are considered unrepresented 

understand how certain existing 

procedural requirements, adopted for 

these new procedures, will apply. For 

example, in § 405.1018, there are 

specific requirements regarding the 

submission of evidence at an ALJ 

hearing that do not apply to an 

unrepresented beneficiary. For the 

purposes of appeals conducted under 

§§ 405.931 through 405.938, those 

requirements will not apply to an 

unrepresented beneficiary as defined in 

§ 405.931(d)(5). 

We appreciate the feedback that we 

received from commenters on eligibility 

requirements and policies regarding 

appointed representatives. Based on 

analysis of the public comments, we 

will be finalizing the proposals related 

to such procedures as proposed. 

3. Appeal Requests and Determinations 

of Eligibility by the Eligibility 

Contractor 

In § 405.932, we proposed to channel 

all retrospective appeal requests from 

eligible parties through a single point of 

contact, the eligibility contractor. We 

proposed, in § 405.932(a)(2) for a 

retrospective appeal, that the appeal 

request filed by an eligible party (or 

their representative) must be received 

by the eligibility contractor within 365 

calendar days from the implementation 

date of these provisions which would be 

specified when this rule is finalized. We 

proposed that details regarding the 

filing of appeal requests would be 

posted to Medicare.gov and/or CMS.gov 

once the retrospective appeals process is 

operational. A single point of contact 

will relieve beneficiaries of the burden 

of determining which contractor is 

currently responsible for claims 

processed many years ago in order to 

file their appeal request. In addition, 

due to the complexity of the 

requirements for determining eligibility 

as a class member for an appeal, we 

believed having a single point of contact 

would promote consistency in such 

determinations and would provide a 

better overall experience for eligible 

beneficiaries pursuing their appeal 

rights. 

We anticipated eligible parties (or 

their representatives) would provide 

relevant information to demonstrate 

their eligibility as a member of the class 

afforded appeal rights in the court order 

as proposed in § 405.932(a) through (c), 

including medical records that may 

serve to document certain conditions of 

eligibility under the court order. 

Medical records would also assist in 

determining whether the beneficiary 

received observation services following 

the reclassification from inpatient to 

outpatient receiving observation 

services. However, we understood the 

challenges beneficiaries and their 

representatives may face in obtaining 

and producing such information in 

situations where significant time may 

have passed since a beneficiary was 

hospitalized. Therefore, we proposed in 

§ 405.932(c)(2) that the eligibility 

contractor would work with MACs, 

eligible parties, and providers, 

whenever necessary, to attempt to 

obtain the information needed to make 

such determinations. In our existing 

claims appeals process, contractors 

routinely seek records from providers to 

assist beneficiaries filing appeals when 

the beneficiary is unable to provide 

records needed to adjudicate the appeal. 

In § 405.932(b), we proposed that 

eligible parties (or their representatives) 

provide, in writing, certain minimum 

basic information in their appeal 

request, so the eligibility and processing 

contractors may identify the prior 

claims filed for the hospital stay and 

SNF services, as applicable, that serve 

as the basis for the retrospective appeal. 

These required elements for an appeal 

request (which are similar to existing 

requirements for requesting a 

redetermination under § 405.944) 

include the beneficiary’s name, 

Medicare number (the number on the 

beneficiary’s Medicare card), name of 

the hospital and the dates of 


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11However, if an eligible party paid out of pocket 

for some or all of the SNF services, including 

situations where a denial by a third-party insurer 

resulted in the beneficiary making out of pocket 

payments for some or all of the SNF services, then 

those SNF services that resulted in out of pocket 

payments would be eligible for an appeal. 

12See https://www.medicare.gov/providersservices/claims-appeals-complaints/appeals/ 

original-medicare and https://www.cms.gov/ 

medicare/appeals-grievances/fee-for-service. 

hospitalization, and the name of the 

SNF and the dates of stay (as 

applicable). If the appeal includes SNF 

services not covered by Medicare, the 

written request must also include an 

attestation to the out-of-pocket 

payment(s) made by the beneficiary for 

such SNF services and must include 

documentation of payments made to the 

SNF for such services. CMS would 

prepare a model form that appellants 

may use to file requests for a 

retrospective appeal under these 

provisions. Once the appeal process is 

operational, this notice would be 

available online at Medicare.gov to 

download and complete and would be 

available to request in printed or 

accessible form by calling 1–800– 

MEDICARE. 

We also proposed in § 405.932(b)(2) 

that eligible parties attest to their out-ofpocket costs (other than customary cost 

sharing paid to a third-party payer or 

insurer) paid for SNF services not 

covered by Medicare because the 

statutory requisite, 3-consecutive 

calendar day inpatient hospital stay, 

was not met. (We note that for the 

purposes of determining coverage of 

SNF services under section 1861 of the 

Act, inpatient hospital days are counted 

in accordance with longstanding, 

existing policy in § 409.30, that is, a 

patient must have a qualifying inpatient 

stay of at least 3 consecutive calendar 

days starting with the admission day but 

not counting the discharge day (see 

§ 405.931(g)). 

In cases where a third-party payer or 

insurer covered all of the cost of SNF 

services of an eligible party, we 

proposed that such services be excluded 

from consideration in the retrospective 

appeals process. (Payments for SNF 

services made by a family member 

would not be considered payment by a 

third-party payer but would be 

considered out-of-pocket payment for 

the eligible party.) In light of the 

clarification to the court order 

indicating that the new appeal processes 

are intended to provide a remedy for 

class members who already endured 

uncompensated or undercompensated 

stays at skilled nursing facilities, we did 

not believe the court order requires the 

readjudication of such paid services 

under a Medicare appeal process if 

payment for that care is provided by 

another insurer.11 Moreover, 

readjudicating these claims potentially 

puts Medicare trust fund dollars at risk 

for making duplicate payments to 

providers for previously compensated 

care, as Medicare does not have 

authority to compel refunds with 

respect to payments made by third-party 

payers to providers. In addition, 

focusing our efforts on situations 

involving payments for denied services 

made by beneficiaries (or their families) 

focuses resources for appeals for 

beneficiaries (or their families) that paid 

out of pocket for the cost of care. 

We proposed in § 405.932(d) that the 

eligibility contractor would be 

responsible for determining the validity 

of requests for appeal under these 

provisions, that is, whether the request 

is filed by an eligible party, is timely 

filed, and contains the required 

elements for a valid request specified in 

§ 405.932(b)(1) and (2). The eligibility 

contractor would issue a decision to 

approve or deny such requests. In 

proposed § 405.932(d)(1)(ii), we would 

require the eligibility contractor to issue 

a written decision within 60 calendar 

days of receipt of a valid appeal request 

from the eligible party (or their 

representative). We proposed in 

§ 405.932(d)(2) that approved requests 

(meaning those meeting both eligibility 

and filing requirements), would be 

forwarded to the processing contractor 

(the MAC with jurisdiction over the 

hospital claim), and the processing 

contractor would perform the appeal. 

Under proposed § 405.932(d)(3), 

requests that are not eligible for an 

appeal or do not meet the requirements 

under proposed in §§ 405.931 and 

405.932 would be denied. However, we 

proposed that individuals receiving a 

notice of denial of an appeal request 

would have an opportunity to request a 

review of the denial by the eligibility 

contractor in order to provide additional 

clarification, or correct any deficiencies 

in the filing, under the provisions 

proposed in § 405.932(e). Our proposed 

approach to handling requests that are 

ineligible for an appeal differed slightly 

from how similar appeal requests are 

handled under existing claims appeals 

procedures in § 405.952. Under existing 

rules, such requests are dismissed, and 

dismissals may be reviewed and vacated 

by the adjudicator who issued the 

dismissal or appealed to the next level 

adjudicator to determine if the dismissal 

was appropriate. However, given the 

complexity of the eligibility 

requirements, the age of the service in 

question and in many cases, the lack of 

a claim to review, in our view the most 

effective and efficient approach to 

resolving eligibility concerns was to 

keep these disputes with the eligibility 

contractor, requiring review by an 

individual not involved with the initial 

denial determination. 

We received several comments 

regarding the proposed filing 

timeframes and procedures for 

retrospective appeals, the procedures for 

eligibility determinations, and the 

submission of medical records in 

support of an eligible party’s appeal. 

Comment: Several commenters 

recommended CMS extend the filing 

timeframes for retrospective appeals 

beyond the period of 1 year following 

the implementation of the final rule 

proposed by CMS, citing that 

beneficiaries may have trouble locating 

such dated medical records and that the 

process to determine eligibility could 

prove to be complex. Commenters 

varied in their recommendations, some 

suggested 2 years while another 

suggested 4 years. Commenters also 

recommended that CMS apply existing 

good cause rules that allow for 

exceptions to appeal filing deadlines. 

Response: We believe the 1-year (that 

is, 365 calendar day) filing timeframe 

from the implementation date of the 

final rule affords eligible parties 

adequate time to submit appeal requests 

under these new procedures. The 1-year 

timeframe is twice as long as any other 

existing timeframe to file an appeal. 

Moreover, we note that general 

information regarding the forthcoming 

right to appeal has been posted on 

Medicare.gov and CMS.gov since 

2021.12 We also anticipate providing 

more detailed information regarding the 

appeals process online and in Medicare 

publications, including MSNs, in the 

time between publication of the final 

rule and the actual implementation of 

the provisions. Thus, we believe the 

time between publication of the final 

rule and the implementation date, and 

the 1-year timeframe to file from the 

implementation date will give eligible 

parties a reasonable amount of time to 

compile information necessary for their 

case, and to file an appeal (and as we 

explain in this final rule, Medicare 

contractors will assist in obtaining 

medical records if the records cannot be 

submitted with the appeal request). 

Accordingly, we are not adopting the 

recommendations made by the 

commenters to lengthen the filing 

timeframe for retrospective appeals. (We 

note that the procedures in 

§ 405.932(a)(2)(ii) include an exception 

that allows the eligibility contractor to 

accept an untimely filed appeal request 


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if the eligible party establishes good 

cause under the existing appeal 

provisions in § 405.942(b)(2) and (3).) 

Finally, we are making an editorial 

revision in § 405.932(a)(2)(ii) to insert 

the word calendar after the number 365 

for clarity and to be consistent with 

existing language regarding timeframes 

being measured in calendar days, both 

in these procedures and in our existing 

appeals procedures. 

Comment: A commenter 

recommended that CMS create an 

online portal for the submission of 

appeal requests and supporting 

documentation. 

Response: We appreciate the 

recommendation submitted by 

commenter to create an online portal for 

the submission of appeal requests and 

supporting documentation. We 

considered this option as we began to 

plan for implementation of this new 

appeals process, but ultimately found 

this approach to be impracticable due to 

a variety of time, cost, and security 

considerations. The length of 

development time, testing, and sheer 

level of effort required to implement a 

secured beneficiary-facing portal is at 

odds with the complex security 

environment and the need to implement 

these new procedures as quickly as 

possible. Moreover, we are committed to 

mirroring existing appeal procedures as 

much as possible for these new appeals. 

Therefore, we are not adopting the 

recommendation made by the 

commenters. We believe it is 

appropriate for beneficiary appeal 

requests to continue to be submitted via 

mail. CMS will provide clear 

instructions to beneficiaries on where to 

mail their requests. 

Comment: A commenter suggested 

that we consider having beneficiaries 

file appeals with the health plan and 

have the plan conduct the initial 

eligibility determination in addition to 

the appeal. Other commenters 

supported our proposal to use a single 

point of contact for receiving appeals 

and making eligibility determinations. 

Response: We appreciate the 

comments and support for our use of an 

eligibility contractor. We considered 

having MACs conduct the appeal intake 

and make eligibility determinations. 

However, as we explained in the 

proposed rule, we are establishing a 

single point of contact, the eligibility 

contractor, to receive these new appeals 

and to make eligibility determinations. 

We believe a single point of contact will 

relieve beneficiaries of the burden of 

determining which MAC would be 

responsible for performing an appeal 

under these new procedures. In 

addition, we believe a single contractor 

making eligibility determinations will 

promote consistency in such 

determinations. Following the 

determination of eligibility, the 

processing contractor (the MAC) will 

conduct the appeal. We also note that, 

as explained in the proposed rule, these 

new appeals are limited to beneficiaries 

in Medicare Part A and B (‘‘Original 

Medicare’’). Claims processing and first 

level appeals in Original Medicare are 

conducted by MACs and not health 

plans. Thus, we are not adopting the 

recommendation to use a health plan or 

the MACs to make eligibility 

determinations. 

Comment: Many commenters 

supported the availability of a model 

form that could be used to file an appeal 

request. Commenters suggested that we 

make the form available in multiple 

languages, including an ASL 

interpretation of the form. 

Response: We appreciate the support 

of the commenters regarding our 

proposal for a model form that 

beneficiaries may use to submit an 

appeal request. We plan to translate the 

form into different languages as needed. 

Comment: Several commenters 

requested that we provide more 

information about the submission of 

medical records as part of the 

retrospective appeal request and what 

types of records and information would 

be needed as part of the appeal. 

Commenters also suggested that we 

provide eligible parties with instruction 

about how to seek assistance from the 

eligibility contractor in obtaining 

records and suggested other information 

that we should consider including in 

our instructions for filing appeal 

requests (for example, the types of 

records that would be helpful, the dates 

spent in the hospital, orders regarding 

admission and care, etc.). 

Response: We appreciate the 

recommendations submitted by 

commenters for the content of 

instructions related to filing appeal 

requests. We intend to carefully 

consider these recommendations for the 

online educational materials we intend 

to publish prior to implementation of 

the new procedures. We agree that as 

part of our educational efforts, it will be 

helpful to provide beneficiaries with 

information about the types of records 

needed for these new appeals and 

suggestions for how to get access to 

them. 

We would like to emphasize, as we 

did in the proposed rule, that we 

strongly encourage beneficiaries or their 

representatives to submit with their 

appeal request all available medical 

records related to the hospitalization 

and, as applicable, SNF services, and 

documentation of amounts paid out of 

pocket for care that was not covered 

under Part A. However, in these new 

appeals, we understand the difficulty 

some beneficiaries may have in 

obtaining records for services furnished 

many years ago. For that reason, we will 

require the eligibility contractor to work 

with the appropriate MAC to request all 

relevant records that are needed to 

establish eligibility for an appeal from 

the appropriate providers if some, or all, 

of those records are not submitted with 

the appeal request. In addition, as 

necessary, the eligibility contractor and 

MAC will request missing records 

related to the hospital, and as 

applicable, SNF services furnished to 

the beneficiary to determine whether 

coverage under Part A is warranted. 

Such records should be comprehensive 

with respect to the treatment and 

services received and would include, 

but are not limited to, hospital records 

that document admission as an 

inpatient, orders for observation 

services, diagnosis and treatment notes, 

orders and results of testing, discharge 

planning notes, as well as records from 

services furnished by the SNF (as 

applicable). In addition, beneficiaries 

should submit information related to the 

out of pocket payments that were made 

for the services at issue in the appeal, 

particularly SNF services for which a 

provider refund is sought. Such 

information could include provider bills 

and/or invoices, proof of payment in the 

form of a copy of a cashed check, credit 

card statement, etc. 

Comment: A commenter requested 

clarification on how contractors will 

request additional information from 

providers related to an appeal request, 

and who within the provider’s 

organization would be authorized to 

share patient information with the 

contractor. 

Response: Providers have a 

longstanding obligation to provide 

requested information related to 

services furnished to a beneficiary 

under section 1815(a) of the Act. MACs 

will utilize existing methods for 

requesting additional documentation 

and records, that is, the Additional 

Documentation Request (ADR) process, 

where a letter outlining the requested 

records and dates of service is mailed to 

the provider. Providers that have 

registered to receive ADRs and submit 

records in response electronically may 

use the existing system (for example, the 

Electronic Submission of Medical 

Documentation (esMD) system). 

Providers should follow existing privacy 

protocols for the submission of records 

requested by the MAC for these appeals 

in the same manner as they would for 


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other records requests by a MAC or 

other contractor. 

Comment: Several commenters 

recommended that we give individuals 

and providers additional time to submit 

records requested for an appeal. The 

commenters stated that the 60-day 

timeframe in the proposed rule is 

inadequate and suggested we allow 120 

calendar days for the submission of 

missing information. A commenter 

expressed concern about the impact of 

records requests on providers. Some 

commenters also recommended that we 

also allow extensions of the timeframe 

for good cause. Commenters also 

expressed concern about whether 

providers would be penalized for being 

unable to locate records that are older 

than existing record retention 

requirements and urged CMS to ensure 

contractors are aware of record retention 

requirements. 

Response: We understand and 

appreciate the concerns of the 

commenters regarding the potential 

issue some individuals or providers may 

have in locating and producing records 

for services furnished many years ago, 

and the burden of these requests on 

providers. While we are concerned that 

extended timeframes to respond to 

records requests may cause delays in 

establishing eligibility of the beneficiary 

in order to adjudicate valid appeals, we 

agree with the commenters that 

affording up to 120 calendar days to 

submit records to the eligibility 

contractor is reasonable. Accordingly, 

we are revising § 405.932(c)(2) to 

provide that the eligibility contractor 

will allow up to 120 calendar days for 

submission of missing information. 

However, in light of the 365-calendar 

day filing timeframe to request an 

appeal under these procedures and the 

additional 60 calendar days we are 

granting to submit records, we believe it 

is also reasonable not to include 

extensions to the 120-calendar day 

timeframe in which records must be 

submitted to the eligibility contractor. It 

is important to balance the interests in 

affording individuals adequate time to 

obtain records with the interests in 

avoiding extended delays in processing 

appeals. We believe the 365-calendar 

day filing timeframe to request an 

appeal provides individuals with 

adequate time to obtain the necessary 

documentation to support their appeal. 

Should the eligibility contractor still 

need additional information, we believe 

allowing up to another 120 calendar 

days is reasonable. If an individual or 

provider cannot meet the deadline, the 

eligibility contractor will make a 

decision based on the information in the 

record. If the information in the record 

does not establish the individual’s 

eligibility, then the eligibility contractor 

will issue a denial notice. The 

individual (or their representative) may 

request a review of the eligibility 

contractor’s denial in accordance with 

the procedures outlined in § 405.932(e) 

and may submit any records 

subsequently obtained that serve to 

establish eligibility and/or coverage of 

services. 

We acknowledge the concerns raised 

by commenters about the extended 

lookback period for retrospective 

appeals and the ability of providers to 

locate medical records for services that 

were furnished on dates that are not 

covered by existing record retention 

requirements. Medicare requires records 

be retained by providers for 7 years from 

the date of service (42 CFR 424.516(f)). 

While providers are not required to 

maintain records beyond the 7-year 

timeframe specified in regulations, we 

encourage providers to make reasonable 

efforts to search for and furnish any 

records in their possession, including 

those outside the record retention 

requirements. However, contractors are 

aware of existing record retention 

requirements, and we will not penalize 

providers who cannot locate records for 

dates of service that are beyond the 

record retention timeframe. 

Comment: Several commenters stated 

that we should advise beneficiaries in 

our instructions for these new appeals 

that they may still submit retrospective 

appeal requests even if their medical 

records are unavailable. The 

commenters also requested that we 

specify that in the absence of medical 

records, acceptable evidence for the 

determination of Part A coverage would 

include written statements from 

beneficiaries, family members and 

providers who are familiar with the 

facts giving rise to the appeal. 

Response: We agree with these 

commenters that beneficiaries may 

submit a retrospective appeal request 

without medical records. Consistent 

with the proposed rule, under this final 

rule we will require the eligibility 

contractor and the appropriate MAC to 

coordinate with providers to obtain 

necessary medical records to determine 

eligibility and to process the appeal 

regarding the denial of Part A coverage. 

Written statements from a beneficiary or 

family member regarding hospital 

services and, as applicable, SNF 

services furnished to a beneficiary may 

be submitted as evidence in the appeal. 

However, we believe an adjudicator will 

need some form of documentary 

evidence, such as medical records, to 

determine whether specific aspects of 

eligibility are met (for example, whether 

the hospital in fact admitted a patient as 

an inpatient and subsequently changed 

their status, or whether observation 

services were furnished after such 

change in status to outpatient). The 

adjudicator will also need to determine 

whether services meet Part A coverage 

requirements (for example, with 

hospital admissions subject to the 

original two-midnight rule from 2013, 

whether the patient is reasonably 

expected to require a stay of at least two 

midnights, and where the medical 

record includes information to support 

the physician’s or otherwise qualified 

practitioner’s expectation that the 

patient would require a stay of at least 

two midnights). Thus, testimonial 

evidence, such as statements from a 

beneficiary or provider regarding the 

care or treatment received will be 

accepted and considered in an appeal. 

However, without corresponding 

medical documentation, such 

statements by themselves may be 

insufficient to establish eligibility 

and/or determine if Part A coverage 

requirements were met. Thus, we 

decline to adopt the recommendation 

made by the commenters. 

Comment: Several commenters 

recommended that our instructions for 

filing appeals and other guidance 

regarding the new appeals procedures 

explain the relevant standard for 

coverage that beneficiaries will have to 

meet in order to demonstrate that their 

hospital stay met the relevant Part A 

coverage criteria for inpatient hospital 

services. 

Response: We appreciate this 

recommendation, and we agree that 

guidance regarding the coverage 

standards for inpatient admissions will 

be important information for 

beneficiaries eligible for an appeal. We 

intend to provide information regarding 

the relevant standards for inpatient 

hospital coverage and the applicable 

timeframes in materials we will publish 

on our websites. 

Comment: A few commenters 

contended that the regulatory text in the 

proposed rule did not provide sufficient 

detail regarding the information 

contained in the notice related to a 

denial of eligibility for an appeal. The 

commenters suggested that the 

eligibility denial notice should contain 

specific information to assist 

beneficiaries in understanding the 

reason for the denial as well as what 

information is necessary to cure the 

denial. 

Response: We appreciate the 

suggestions made by the commenters. 

We believe the regulatory language 

regarding the content of the denial 

notice in § 405.932(d)(3)(ii) is sufficient 


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with respect to specifying the reason for 

denial of the appeal request (‘‘The 

denial notice explains that the request is 

not eligible for an appeal, the reason(s) 

for the denial of the appeal request, and 

the process for requesting a review of 

the eligibility denial under 

§ 405.932(e).’’). However, we agree that 

it would be appropriate to specify that 

the denial notice include a statement 

about the information needed to cure 

the appeal request to establish 

eligibility. We view this as implied in 

providing the reason(s) for the denial 

but also see the value of including this 

additional requirement in the denial 

notice prepared by the eligibility 

contractor. Therefore, we are revising 

§ 405.932(d)(3)(ii) to state that the denial 

notice explains that the request is not 

eligible for an appeal, the reason(s) for 

the denial of the appeal request, the 

information needed to cure the denial, 

and the process for requesting a review 

of the eligibility denial under 

§ 405.932(e). We appreciate the feedback 

that we received from commenters on 

eligibility determinations and filing 

appeals under these new procedures. 

Based on analysis of the public 

comments, we will be finalizing the 

proposals related to such procedures as 

proposed with the exception of the 

amendments to §§ 405.932(c)(2) and 

405.932(d)(3)(ii), described previously. 

4. Conduct of Appeals by Processing 

Contractors 

Currently, MACs perform the first 

level of administrative appeal for 

Medicare claims (see 42 CFR 405.940 

through 405.958). We proposed a 

similar process for these new appeals, 

utilizing existing procedures, as 

appropriate, with MACs performing the 

first level of retrospective appeals under 

this rule. Specifically, we proposed that 

the MAC that currently has jurisdiction 

over Part A claims from the relevant 

hospital would be responsible for 

conducting the retrospective appeal as 

the processing contractor. Where we 

believed the procedures for the new 

retrospective appeals would need to 

differ from existing claims appeals 

procedures, we proposed new 

processes. For example, in § 405.931(b) 

and (c), we proposed that party status 

for these appeals be limited to the 

eligible class members (or their 

authorized representatives). 

In § 405.932(f)(1), we proposed that if 

the processing contractor determines 

there is necessary information missing 

from the appeal case file, the processing 

contractor would attempt to obtain the 

information from the provider and/or 

the eligible party (or their 

representative), as applicable. We 

proposed that the processing contractor 

afford entities up to 60 calendar days to 

submit requested information. If the 

requested information is not submitted 

in the specified timeframe, we proposed 

that the processing contractor would 

make a decision based on the 

information available. 

In proposed § 405.932(f)(3), we 

required processing contractors to issue 

a written decision within 60 calendar 

days of receipt of a valid appeal request 

from the eligibility contractor. However, 

in cases where the processing contractor 

needs additional information to conduct 

the appeal from the eligible party (or 

their representative) or a provider, in 

§ 405.932(f)(1), we proposed that the 

time between the request for such 

information and when it is received (up 

to 60 calendar days) would not count 

towards the 60-calendar day 

adjudication timeframe. If the requested 

information is not sent to the processing 

contractor, then we proposed that the 

time afforded by the contractor for 

submission of the information would 

not count towards the adjudication 

timeframe. In effect, the 60-calendar day 

timeline on which the processing 

contractor must make its decision will 

be tolled during the period between the 

date the processing contractor requests 

information from the provider and/or 

the eligible party and the later of the 

date that information is received or the 

deadline by which the information is 

requested has passed. 

Under proposed § 405.932(f) and (g), 

based on the information available, the 

processing contractors would determine 

whether the hospital admission, and as 

applicable, SNF services, satisfied the 

relevant criteria for Part A coverage at 

the time of the admission, 

notwithstanding subsequent 

reclassification by the hospital, and 

whether the hospital services, and as 

applicable, SNF services, should have 

been covered under Part A. If the 

processing contractor determines that 

the hospital admission and, as 

applicable, SNF services satisfied the 

relevant criteria for Part A coverage at 

the time services were furnished, it 

would render a favorable decision and 

would send written notice to the eligible 

party (or their representative). The 

notice would explain the rationale for, 

and effect of, the decision, similar to 

existing notices for redeterminations. 

In § 405.932(g)(4), when applicable, 

we proposed that processing contractors 

would send notice of a favorable 

decision to the SNF that furnished 

services to the beneficiary in order to 

inform the SNF of the reason for the 

decision and the effect of the decision. 

In addition, under § 405.932(g)(2) and 

(6), processing contractors would send 

SNFs notice of a partially favorable 

decision where the beneficiary’s 

hospital inpatient admission would 

have met the criteria for Part A 

coverage, but the SNF services 

subsequently received by the 

beneficiary do not meet the relevant 

criteria for Part A coverage (for example, 

if the services are determined not 

medically reasonable and necessary 

under section 1862(a)(1)(A) of the Act). 

The notice of a partially favorable 

decision sent to a SNF informs the SNF 

of the reason the hospital services were 

determined to meet the relevant criteria 

for Part A coverage, and the reasons the 

SNF services were determined not to be 

covered under Part A. We proposed that 

the processing contractor also explain 

that the notice is being sent to the SNF 

for informational purposes only, and 

that only the eligible party (or the 

eligible party’s representative) may 

appeal the decision to the QIC under 

proposed § 405.934. An eligible party 

may appeal a partially favorable 

decision with respect to coverage of 

SNF services to the QIC under proposed 

§ 405.934 in the same manner as 

unfavorable decisions with respect to 

Part A coverage of the hospital services. 

In addition, in § 405.932(g)(5), with 

respect to an appeal filed by a 

beneficiary not enrolled in Medicare 

Part B at the time of hospitalization, we 

proposed that processing contractors 

would send notice of a favorable 

decision to the hospital to inform the 

hospital of the reason for the decision 

and the effect of the decision. 

Providers are reminded that under 

sections 1814 and 1866 of the Act, 

§§ 489.20 and 489.21 of the regulations, 

and the terms of the provider agreement, 

providers may not collect any amounts 

for covered services other than 

applicable coinsurance and deductible. 

Accordingly, in the case of a favorable 

appeal decision that involves SNF 

services paid for by the beneficiary, we 

proposed in § 405.932(g)(4) and (h)(2)(i) 

that SNFs would be required to refund 

any payments collected from the 

beneficiary for the covered SNF services 

(see 42 CFR part 489 Subpart D 

regarding the requirements for handling 

of incorrect collections). Similarly, in 

the case of a favorable appeal decision 

rendered for a beneficiary who was not 

enrolled in Medicare Part B at the time 

of hospitalization, we proposed in 

§ 405.932(g)(5) and (h)(2)(ii) that 

hospitals would be required to refund 

any payments collected for the 

outpatient hospital services. 

Furthermore, we believed that the 

Medicare statute requires a provider of 

services to submit new claims in order 


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13We note that a previously paid claim is still 

subject to reopening under § 405.980 for other 

reasons unrelated to the appeal decision (for 

example, if payment for the claim was procured by 

fraud or similar fault). 

to determine the amount of benefits due 

for covered services and to receive 

payment under Part A of the program. 

Under section 1814(a)(1) of the Act, and 

42 CFR 424.33, and 42 CFR 424.51, 

payment for Part A services furnished to 

an individual may be made only to a 

provider of services eligible to receive 

payment under section 1866 of the Act 

after a request for payment (a claim) is 

filed with Medicare by the provider. 

The clarifying order issued by the court 

stated that the program is not required 

to unwind previously filed Part B 

outpatient hospital claims in order to 

make payment for covered SNF services 

in the case of a favorable decision 

(meaning for the purposes of 

effectuating a favorable decision, any 

existing Part B outpatient hospital claim 

will not be reopened or revised by the 

MAC to reflect an appeal decision that 

the class member’s hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time of the admission, 

and the hospital will not be required to 

submit a claim for inpatient services 

under Medicare Part A 13). However, the 

clarification only applies to beneficiary 

class members who were enrolled in 

Medicare Part B at the time of 

hospitalization. Thus, in the case of a 

beneficiary class member who was not 

enrolled in Medicare Part B at the time 

of hospitalization, we proposed in 

§ 405.932(h)(2)(ii) that following a 

favorable appeal decision and making 

any required refund for payments 

received for covered services, the 

hospital may submit a new Part A 

inpatient claim to Medicare in order to 

determine the appropriate amount of 

benefits and for Medicare to make 

payment for inpatient hospital services 

under Part A. We also proposed in 

§ 405.932(h)(2)(ii) that the claim must be 

submitted by the hospital within 180 

calendar days after the hospital receives 

its notice of a favorable appeal decision 

for the eligible party. 

In addition, if a favorable appeal 

decision includes eligible SNF services 

that are covered, in § 405.932(h)(2)(i), 

we proposed that following a refund of 

amounts collected from the beneficiary, 

the SNF may then submit a claim (or 

claims) for such services to Medicare in 

order to determine the appropriate 

amount of benefits, and for Medicare to 

make payment for the covered SNF 

services. The SNF claim, following a 

favorable appeal decision (that is, the 

hospital admission satisfied the relevant 

criteria for Part A coverage as an 

inpatient at the time of admission and 

the SNF services met relevant Part A 

coverage criteria), would be processed 

without regard to the hospital’s 

erroneous reclassification of the 

beneficiary as an outpatient receiving 

observation services. We also proposed 

in § 405.932(h)(2)(i) that the SNF submit 

the claim within 180 calendar days after 

receiving the notice of a favorable 

appeal decision for the eligible party. 

If the processing contractor 

determines that the hospitalization did 

not meet applicable Part A inpatient 

coverage requirements, we proposed in 

§ 405.932(g)(3) the MAC would send 

notice of its unfavorable decision to the 

eligible party (or their representative). If 

the processing contractor determines 

that the hospital admission meets 

applicable Part A inpatient coverage 

requirements, but the SNF services 

eligible for the appeal do not meet 

applicable coverage requirements, we 

also proposed in § 405.932(g)(2) that the 

processing contractor would send notice 

of its partially favorable decision to the 

eligible party (or their representative). 

The notice of an unfavorable or partially 

favorable decision would inform the 

eligible party (or their representative) of 

the right to request a reconsideration 

with a QIC under proposed § 405.934 

and would provide detailed information 

about the requirements for filing the 

request and where the request must be 

filed. 

We received several comments 

regarding the processing of retrospective 

appeals and the effectuation of favorable 

or partially favorable appeals. 

Comment: A commenter requested 

clarification regarding coordination 

among MACs if a hospital claim and 

SNF claim are processed by different 

MACs. The commenter questioned how 

the MAC processing the appeal would 

get information about the SNF. The 

commenter also inquired about the 

process for handling requests from the 

eligibility contractor that are sent to the 

wrong MAC. 

Response: We appreciate the 

commenter’s questions about how 

contractors will coordinate activities to 

ensure appropriate information is 

available to the eligibility and 

processing contractors. We considered 

the concerns raised by the commenter as 

we were developing the procedures in 

the proposed rule and we intend to 

include a process for contractors to 

coordinate with each other and with 

CMS in the rare case of different 

contractors having responsibility for the 

SNF claim and the hospital claim. This 

will ensure information needed to 

request documentation will be made 

available to the appropriate contractor. 

We will also instruct contractors to 

work with CMS in the event that the 

eligibility contractor sends requests to 

the incorrect MAC. In turn, CMS will 

assist the eligibility contractor, as 

needed, to determine the appropriate 

processing contractor so the appeal will 

be handled in a timely manner. 

Comment: A commenter expressed 

concern about estate recovery under the 

Medicaid program in situations under 

these new procedures where a 

beneficiary could not obtain Medicare 

coverage of SNF services, but ultimately 

received coverage of SNF services from 

Medicaid. The commenter suggested 

that CMS encourage states to use 

hardship waiver authority to relieve 

individuals of estate recovery for 

portions of SNF stays that Medicare 

should have covered. 

Response: We appreciate the concerns 

raised by the commenter. If a State 

Medicaid agency determines that a 

deceased beneficiary may be subject to 

estate recovery, it may only make 

recoveries from the beneficiary’s estate 

under certain circumstances, including 

when recovery would not create an 

undue hardship for survivors. States are 

required by section 1917(b)(3) of the Act 

to have procedures to waive estate 

recovery where it would create an 

undue hardship for the deceased 

Medicaid recipient’s heirs. States have 

flexibility and discretion to design 

reasonable criteria for determining what 

constitutes an undue hardship and who 

may be afforded protection from estate 

recovery in such instances. The State 

plan needs only specify the criteria for 

waiver of estate recovery claims due to 

undue hardship. Individuals will need 

to work directly with their State 

Medicaid Agency to file an undue 

hardship claim. 

Comment: Several commenters 

suggested CMS clarify that due to the 

COVID–19 public health emergency 

(PHE) and the waivers implemented by 

CMS with respect to the 3 consecutive 

day qualifying hospital stay (QHS) 

eligibility requirement for SNF benefits, 

that there should be no appealable SNF 

stays for the period in which the PHE 

waivers were in effect. 

Response: We appreciate the 

commenters’ suggestions on this issue. 

Under the terms of the court order and 

the proposed rule establishing eligibility 

for retrospective appeals (§§ 405.931 

through 405.938), an eligible party may 

appeal the denial of Part A coverage. We 

anticipate an overwhelming majority of 

appeals filed under these new 

provisions will focus on denials of Part 

A SNF coverage due to financial 

liability for the denied SNF services. We 


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agree with the commenter that appeals 

under these new provisions should not 

include SNF services that were paid by 

Medicare as the result of a SNF invoking 

the COVID–19 PHE waiver authority for 

a QHS (or services paid by a third-party 

payer as noted in § 405.932(b)(2)). 

Nevertheless, we would like to clarify 

that we are not restricting an eligible 

party’s right to appeal the denial of Part 

A coverage for hospital services under 

these procedures even if the SNF 

services were covered by Medicare or a 

third-party payer; we do not believe that 

such a restriction is consistent with the 

court order in Alexander. However, 

following the clarifying order by the 

court which does not require the 

unwinding or adjustment of the Part B 

outpatient hospital claim following a 

favorable appeal decision, we do not 

expect many appeals to be filed if the 

beneficiary’s SNF services were 

covered. 

Comment: A few commenters 

suggested that we clarify how the new 

appeals process will interact with 

existing claims appeals processes. A 

commenter requested that we address 

situations where a hospital is pursuing 

a claim appeal under the existing claims 

appeals process and then an eligible 

party initiates a retrospective appeal 

under these new procedures. The 

commenter acknowledged there would 

likely be few such cases. 

Response: We agree with the 

commenter that we expect very few, if 

any, situations where a claim for 

hospital outpatient services is pending 

in the claims appeal process and then 

an eligible party files an appeal for Part 

A coverage under the new process. 

However, in that unlikely situation, the 

determination of coverage under Part A 

for the hospital claim would be 

conclusive with respect to the hospital 

services and would be binding for 

purposes of the beneficiary’s 

hospitalization. 

To illustrate, under existing 

procedures in § 405.940, et seq., if the 

hospital appealed a denial of coverage 

of outpatient hospital services for not 

being medically reasonable and 

necessary under section 1862(a)(1)(A) of 

the Act, that appeal would only address 

the coverage and payment of the 

outpatient services on the hospital’s Part 

B claim submitted to Medicare. An 

appeal filed by a hospital under existing 

procedures would not address whether 

coverage under Part A would have been 

appropriate. However, if an eligible 

party filed an appeal for the denial of 

Part A coverage under the provisions in 

§§ 405.931 through 405.938, then that 

determination would be conclusive for 

the purposes of coverage for the hospital 

services. Adjudicators deciding an 

appeal of the Part B outpatient claim 

would be bound by the determination 

with respect to Part A coverage as a 

result of an appeal under §§ 405.931 

through 405.938. Similarly, if the appeal 

under §§ 405.931 through 405.938 

involves coverage of SNF services, the 

determination would be binding on any 

pending claims appeal under existing 

procedures. 

In order to address the issue raised by 

the commenter, we are revising 

§ 405.931 to add new paragraph (i) to 

explain that the determination of Part A 

coverage made in an appeal decision 

under these procedures is conclusive 

and binding with respect to coverage of 

such services under Part A for any other 

appeal under Part 405 Subpart I. 

Specifically, § 405.931(i) would be 

added to state that, for the purposes of 

appeals under §§ 405.931 through 

405.938, the determination with respect 

to coverage under Part A is conclusive 

and binding with respect to the services 

furnished and shall be applied to any 

existing appeals with respect to 

coverage and payment for hospital 

services under Part B and SNF services 

(as applicable). 

Comment: Several commenters 

expressed support for the process 

outlined in the proposed rule regarding 

applicable refunds to beneficiaries for 

out-of-pocket payments made following 

a favorable or partially favorable appeal 

decision. A commenter suggested that 

CMS clarify that ‘‘family member’’ in 

the context of out-of-pocket payments 

include individuals who are not 

biologically related to the eligible party. 

A commenter requested that CMS state 

that the application of 42 CFR part 489 

Subpart D with respect to handling 

incorrect collections means that 

providers must issue refunds promptly 

(generally within 60 days of a binding 

favorable appeal decision) and must 

comply with existing legal protections. 

A commenter also suggested that CMS 

provide additional explanation for 

situations where a provider has changed 

ownership or has closed, and a refund 

is owed to a beneficiary. A commenter 

also indicated that CMS should consider 

how refunds will get to the appropriate 

individual, particularly with respect to 

appeals filed on behalf of deceased 

beneficiaries. 

Response: We appreciate the 

commenters’ support and suggestions 

on this issue. Our goal in creating this 

new retrospective appeals process is to 

implement the court order in a way that 

provides class members with a 

meaningful opportunity to appeal the 

denial of Part A coverage that is similar 

to the existing claim appeal process and 

provide a remedy for those class 

members who endured uncompensated 

or undercompensated care at SNFs. At 

the same time, there are limits on our 

authority to fashion remedies in 

effectuating favorable appeal decisions. 

For example, payment for hospital and 

SNF services may only be made to 

providers following submission of a 

claim by the provider. Section 

1814(a)(1) of the Act; 42 CFR 424.33 and 

42 CFR 424.51. In addition, existing 

policies for handling incorrect 

collections of funds from a beneficiary 

(42 CFR part 489 Subpart D) do not 

authorize the program to reimburse 

beneficiaries directly except in very 

limited circumstances (see § 489.42(a)). 

For this reason, we must rely on 

providers and the terms of their 

provider agreement to issue refunds to 

beneficiaries where applicable. 

In the proposed rule, we explained 

that we are limiting our review of SNF 

services in these new appeals to 

situations where the beneficiary or a 

family member paid out-of-pocket for 

the SNF services (42 CFR 405.932(b)(2)). 

We explained that payments, including 

cost sharing payments, made by a thirdparty payer do not constitute out-ofpocket payments made on behalf of the 

eligible party. We agree with the 

commenter who suggested that for the 

purposes of determining whether there 

were out-of-pocket payments made for 

SNF services, we consider payments 

made by individuals who are not 

biologically related but who paid out-ofpocket expenses on behalf of a 

beneficiary to be considered as out-ofpocket payments made by a family 

member. This could include, for 

example, close family friends, a former 

spouse, a roommate, or other 

individuals who would not have a legal 

or contractual obligation to pay for a 

beneficiary’s care. We are revising 

§ 405.932(b)(2)(iii) to state that 

payments made by a family member 

(including payments made by an 

individual not biologically related to the 

beneficiary) for an eligible party’s SNF 

services are considered an out-of-pocket 

payment for the eligible party. 

With respect to the comments 

received about the timing of refunds 

that may be required following a 

favorable or partially favorable appeal 

decision, we reiterate our position as 

explained in the proposed rule that 

providers have an obligation to comply 

with applicable statutory and regulatory 

requirements with respect to charging 

for covered services. In the proposed 

rule (88 FR 89514), we stated that 

providers are reminded that under 

sections 1814 and 1866 of the Act, 42 

CFR 489.20 and 489.21, and the terms 


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of the provider agreement, providers 

may not collect any amounts for covered 

services other than applicable 

coinsurance and deductible. Refunding 

amounts previously paid for services 

determined to be covered following an 

appeal is the responsibility of the 

provider, and must be made consistent 

with the provisions in part 489 Subpart 

D. We expect that the provider will 

promptly refund amounts incorrectly 

collected, meaning the refund should be 

issued within 60 days of receipt of the 

decision letter to avoid the set aside 

requirements in 42 CFR 489.41(b). 

With respect to concerns about 

refunds getting to the appropriate 

individual in the case of deceased 

beneficiaries, we note that an appellant 

would need to establish authority to file 

on behalf of a deceased beneficiary as 

they do under existing appeals 

procedures (see 42 CFR 405.906(a)(1)). 

Coordination of any refund owed by a 

provider following a favorable appeal 

decision is a private matter between the 

provider and the individual entitled to 

a refund, and state law would govern in 

the case of a refund owed to a deceased 

beneficiary or their estate, or refunds 

owed by a provider that is no longer 

operating. CMS has limited authority 

under the statute to intervene. CMS may 

only make payment to an individual in 

situations where the provider invokes 

the set aside provision in § 489.41 and 

fails to issue a refund. CMS would then 

determine whether payment of an 

amount equal to the incorrect collection 

should be made under § 489.42. 

However, failure to issue a refund and 

retain funds from sources other than 

Medicare for covered services would 

constitute a violation of section 

1866(a)(1)(A) of the Act and the terms 

of the entity’s provider agreement. 

Finally, in situations where there is 

change of ownership for a provider, 

obligations of the previous entity are 

generally transferred to the new owners. 

In rare situations where the new owners 

do not accept assignment of the 

provider agreement, including prior 

obligations, or in cases where the 

provider is no longer in operation, state 

law would apply with respect to the 

entity’s obligations to remedy a debt. 

Comment: A commenter indicated 

that the proposed rule did not consider 

the implications for the Medicare 

Secondary Payer (MSP) program and the 

impact on other insurers or payers 

involved in the beneficiary’s insurance 

coverage. 

Response: We appreciate the concern 

raised by the commenter. In the 

retrospective appeals process, we 

explained that following a favorable 

decision, to prevent duplicate payment, 

a provider who wishes to submit a claim 

for Part A payment would be obligated 

to refund amounts previously collected 

for Part B services determined, on 

appeal, to be covered under Part A. 

Providers would follow existing 

procedures for making refunds of 

amounts previously collected for such 

Part B services prior to submitting a Part 

A claim for payment as the services are 

considered non-covered under Part B. 

Then providers could collect payment 

for the covered Part A services based on 

the beneficiary’s insurance coverage at 

the time the services were furnished. 

However, consistent with the court’s 

clarifying order issued on December 9, 

2022, with respect to appeals involving 

beneficiaries enrolled in both Medicare 

Part A and B at the time of 

hospitalization, we remind hospitals 

that they are not required to submit a 

claim for Part A hospital services. 

Absent a Part A claim, we will not 

reopen or unwind previous Part B 

outpatient hospital payments in order to 

make payment for any SNF services 

determined to be covered under Part A. 

Comment: A few commenters 

requested that CMS allow providers up 

to 1 year, as well as extensions for good 

cause or hardships, to file a claim 

following a favorable appeal decision. 

Commenters also requested that CMS 

consider all options to facilitate the 

submission of claims for Part A services 

following a favorable retrospective 

appeal decision. A commenter 

suggested that the decision itself could 

be sufficient to adjudicate a Part A claim 

for payment. A commenter questioned 

whether hospitals could collect the Part 

A hospital inpatient deductible 

following refund of any Part B payments 

collected and submission of a Part A 

claim. 

Response: We appreciate the concerns 

raised by commenters about billing for 

services following a favorable or 

partially favorable appeal decision. We 

acknowledge that submitting a claim 

may be complicated in situations where 

services were furnished many years ago, 

and in developing the procedures to 

implement the court order, we 

considered options with respect to 

claims for newly covered Part A 

services. As we stated in the proposed 

rule, under section 1814(a)(1) of the Act, 

and §§ 424.33 and 424.51, payment for 

Part A services furnished to an 

individual may be made only to a 

provider of services eligible to receive 

payment under section 1866 of the Act 

after a request for payment (a claim) is 

filed with Medicare by the provider. In 

addition, under section 1815(a) of the 

Act, providers must furnish information 

as requested in order to determine the 

amounts due for Part A services. Thus, 

while the coverage determination with 

respect to the Part A services is 

conclusive based on the appeal 

decision, we would not make payment 

for covered Part A services solely based 

on a favorable or partially favorable 

appeal decision without a Part A claim 

for payment from the provider, in light 

of section 1814(a)(1) of the Act. 

Moreover, an existing Part B outpatient 

claim cannot be ‘‘adjusted’’ into a Part 

A inpatient claim due to the different 

characteristics and requirements of 

inpatient and outpatient claims. (See 78 

FR 50917, 50926 (August 19, 2013) 

where we explained that we could not 

‘‘adjust’’ a Part A inpatient claim into a 

Part B claim for the purposes of Part B 

inpatient billing.) We are currently 

developing instructions for submission 

of these claims and will have a process 

approved and finalized shortly after this 

final rule is published. 

However, we agree that extending the 

timeframe for providers to submit 

claims in response to a favorable or 

partially favorable decision is warranted 

in light of the complexities that may 

surround such submissions. Thus, we 

are adopting the commenters’ 

suggestion to extend the deadline for 

providers to file a claim(s) from 180 

calendar days to 365 calendar days from 

the date of receipt of the notice of a 

favorable or partially favorable appeal 

decision. Specifically, we are revising 

§§ 405.932(h)(2)(i), 405.932(h)(2)(ii), 

405.934(d)(2)(i), 405.934(d)(2)(ii), 

405.936(e)(2)(i), 405.936(e)(2)(ii), 

405.938(d)(2)(i), and 405.938(d)(2)(ii) to 

replace ‘‘180 calendar days’’ with ‘‘365 

calendar days’’. We note that this 365- 

calendar day timeframe to submit a 

claim is established solely in 

furtherance of implementing operational 

aspects of the court order in the 

Alexander case and is unrelated to 

existing rules for timely filing of claims 

in section 1814(a)(1) of the Act and 42 

CFR 424.44. As suggested by 

commenters, we will also permit 

extensions to the claims filing deadline 

upon establishment of good cause. In 

determining whether a provider has 

established good cause when requesting 

an extension for filing a claim following 

a favorable or partially favorable appeal 

decision under these procedures, we 

will apply the provisions in § 405.942(b) 

and (c) to the provider’s request. 

We also remind hospitals that 

submission of a claim for Part A 

payment of inpatient hospital services is 

not required under these procedures, 

nor is submission of a claim prohibited. 

Hospitals may have received payment 

for Part B outpatient services at the time 

these services were furnished. As a 


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result of the clarifying order issued by 

the court, for beneficiaries who were 

enrolled in both Part A and Part B at the 

time of hospitalization, Medicare will 

not immediately unwind previously 

paid Part B outpatient claims in the case 

of a favorable or partially favorable 

appeal decision for Part A coverage of 

the hospital services. However, if a 

hospital chooses to submit a Part A 

inpatient claim for payment following a 

favorable or partially favorable decision, 

in order to prevent duplicate payment 

for services, we will unwind the Part B 

claim (by canceling the claim) before 

processing the Part A claim, and recover 

any monies paid to the hospital. The 

hospital would also need to refund any 

other payments collected for the 

outpatient services, including payments 

collected from any source related to 

coinsurance and deductibles for the 

outpatient services prior to submitting 

the Part A inpatient claim. Hospitals 

may then collect applicable cost sharing 

based on the beneficiary’s insurance 

coverage at the time of hospitalization 

in accordance with the processed Part A 

claim. 

In order to clarify these points, we are 

amending §§ 405.932(h)(1)(ii), 

405.934(d)(1)(ii), 405.936(e)(1)(ii) and 

405.938(d)(1)(ii) to state that following a 

favorable appeal decision, a prior Part B 

outpatient hospital claim will not be 

reopened and revised (that is, unwound) 

unless a hospital submits a Part A claim 

for inpatient services. These sections 

will be revised to read as follows: For 

the purposes of effectuating a favorable 

[decision type], unless a Part A claim is 

submitted by a hospital, any claims 

previously submitted for outpatient 

hospital services and payments made 

for such services (including any 

applicable deductible and coinsurance 

amounts) are not reopened or revised by 

the MAC, and payment, as applicable, 

for covered SNF services may be made 

by the MAC to the SNF without regard 

to the hospital claim. 

We are amending §§ 405.932(h)(2)(ii), 

405.934(d)(2)(ii), 405.936(e)(2)(ii) and 

405.938(d)(2)(ii) and we are adding 

§§ 405.932(h)(2)(iii), 405.934(d)(2)(iii), 

405.936(e)(2)(iii) and 405.938(d)(2)(iii) 

to clarify that if a hospital chooses to 

submit a Part A inpatient claim 

following a favorable appeal decision 

for any eligible party, the hospital must 

refund any payments collected for the 

outpatient hospital services prior to 

submitting a Part A inpatient claim in 

order to prevent receipt of duplicate 

payment, and to clarify that a refund of 

payments collected for the outpatient 

hospital services is required if the 

favorable or partially favorable appeal 

decision involves a beneficiary who was 

not enrolled in Medicare Part B at the 

time of hospitalization even if the 

hospital does not submit a Part A 

inpatient claim for payment. While we 

do not anticipate hospitals will submit 

Part A claims in situations where they 

previously received Part B payment for 

an outpatient claim, a refund would be 

required before the submission of a Part 

A inpatient claim submitted for any 

eligible party, and not limited to 

situations where a beneficiary was not 

enrolled in Part B at the time of 

hospitalization. 

Accordingly, these sections are being 

revised to state that a hospital that 

furnished services to any eligible party 

(including those enrolled in both 

Medicare Part A and Part B at the time 

of hospitalization) must refund any 

payments collected for the outpatient 

hospital services prior to submitting a 

Part A inpatient claim for such services, 

and that the claim must be submitted 

within 365 calendar days of receipt of 

the notice of a favorable decision. These 

revisions also clarify that if a favorable 

or partially favorable decision is issued 

to a beneficiary who was not enrolled in 

Medicare Part B at the time of 

hospitalization, a refund is required for 

any amounts collected for the outpatient 

hospital services even if a Part A 

inpatient claim for payment is not 

submitted to the program. 

Finally, we are adding 

§§ 405.932(h)(2)(iii), 405.934(d)(2)(iii), 

405.936(e)(2)(iii) and 405.938(d)(2)(iii) 

to differentiate appeals involving 

beneficiaries who were enrolled in 

Medicare Part B at the time of 

hospitalization in order to clarify that 

hospitals must refund any payments 

collected for the outpatient hospital 

services only if the hospital chooses to 

submit a Part A inpatient claim for such 

services following a favorable or 

partially favorable decision for these 

beneficiaries, and the timeframe to 

submit such claims (365 calendar days). 

Comment: Several commenters raised 

questions about billing for services 

following a favorable or partially 

favorable appeal decision. A commenter 

questioned how a favorable decision 

with respect to Part A coverage for both 

the hospital and SNF services would be 

effectuated with respect to the SNF if 

the SNF had previously submitted and 

received payment for Part B services, 

and now decides to submit a claim for 

covered Part A services. Commenters 

also raised questions about specific 

condition codes to be used in billing for 

services, how Common Working File 

(CWF) edits would be implemented to 

accommodate these new claims, and 

how these new claims would be 

identified by the MAC. The commenters 

requested that CMS acknowledge the 

complexity of billing for SNF services 

furnished prior to FY 2020 and that 

CMS address how this will be resolved 

in the final rule. 

Response: Following a favorable 

appeal decision and after issuing a 

refund to the beneficiary for any out of 

pocket payments made for SNF services, 

if a SNF decides to submit a claim for 

covered Part A services, then in order to 

avoid duplicate payment, Medicare 

would recover the funds paid to the 

SNF for the Part B services to the extent 

such Part B services are included in the 

payment made for Part A services. 

Medicare would then process the Part A 

claim and make the appropriate 

payment to the SNF for covered 

services. 

We appreciate the comments about 

the complexity of this billing process 

and understand the complexity 

involved not only in billing, but also in 

processing these claims manually. We 

anticipate that each situation will 

involve subtle differences that will need 

to be addressed on a case-by-case basis. 

We are currently working to make the 

necessary system changes to 

accommodate these claims and to create 

billing instructions that will be 

approved and finalized shortly after 

publication of this final rule. That will 

give providers some advance time to 

work internally and/or with billing 

agents to be able to submit claims 

following a favorable appeal. We will be 

working to implement condition codes 

and remarks codes to be used on claims 

submitted following a favorable 

decision so those claims may be 

identified by the MAC. We anticipate 

the process will be similar to the Part B 

inpatient rebilling process (https://

www.hhs.gov/guidance/sites/default/ 

files/hhs-guidance-documents/ 

MM8185.pdf) implemented in response 

to CMS Ruling CMS–1455–R and the 

provisions in the Fiscal Year 2014 

Hospital Inpatient Prospective Payment 

System final rule (CMS–1599–F, https:// 

www.govinfo.gov/content/pkg/FR-2013- 

08-19/pdf/2013-18956.pdf). But we are 

unable to incorporate this operational 

guidance into this rulemaking. 

Finally, we note that we agree with 

commenters who expressed similar 

concerns about the complexity of this 

process. As explained earlier, we are 

extending the time period to submit 

claims in response to a favorable or 

partially favorable decision to 365 

calendar days from the date of receipt of 

the appeal decision and MACs will 

provide support, as needed, to providers 

who wish to submit Part A claims. 

We appreciate the feedback that we 

received from commenters on the 


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procedures for appeals conducted by 

processing contractors. Based on 

analysis of the public comments, we 

will be finalizing the proposals related 

to such procedures as proposed except 

for the addition of §§ 405.931(i) and 

405.932(h)(2)(iii), and the amendments 

to §§ 405.932(b)(2)(iii), 405.932(h)(1)(ii) 

and 405.932(h)(2)(i) and (ii), described 

previously. 

5. Conduct of Reconsiderations by 

Qualified Independent Contractors 

In § 405.934(a), we proposed that the 

second level of retrospective appeals be 

performed by QICs. As with the first 

level of appeal, we proposed that the 

second level of retrospective appeal 

generally follow existing procedures for 

reconsiderations outlined in §§ 405.960 

through 405.978, as appropriate, except 

as specified in the provisions proposed 

in this rule. Under proposed 

§ 405.934(a), eligible parties (or their 

representative) who are dissatisfied with 

a MAC’s unfavorable decision in 

proposed § 405.932(g)(2) may file a 

request for reconsideration with the QIC 

within 180 calendar days of receipt of 

the MAC’s notice. The MAC’s decision 

would specify the elements required for 

the request for reconsideration, and we 

proposed that those elements would be 

the same as the existing requirements 

for a reconsideration set forth in 

§ 405.964. Requests for reconsideration 

under § 405.934 that are untimely or 

incomplete would be handled 

consistent with existing procedures for 

dismissals in § 405.972. 

Consistent with the conduct of 

reconsiderations under existing 

procedures in § 405.968, the QICs shall 

review all evidence furnished during 

the first level of appeal and any 

additional evidence submitted with the 

request for reconsideration. Under 

proposed § 405.934(c), the QIC 

determines if the inpatient admission, 

and as applicable, SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the QIC issues notice of 

its decision to the eligible party (or their 

representative). 

We proposed in § 405.934(c)(3) that 

the QIC mail or otherwise transmit 

notice of its decision within 60 calendar 

days of receipt of the request for 

reconsideration. We also proposed to 

apply existing procedures in § 405.970 

regarding the calculation of decisionmaking timeframes, and the provisions 

regarding the escalation of cases for a 

QIC’s failure to meet such timeframes, 

as appropriate, to these new appeals. In 

proposed § 405.934(c)(4), the notice of a 

favorable decision sent by the QIC to the 

eligible party (or their representative) 

would include an explanation of the 

decision and information regarding the 

effect of the decision, as well as other 

information similar to that found in 

existing reconsideration notices under 

§ 405.974. 

In § 405.934(c)(5), when applicable, 

we proposed that QICs would send 

notice of a favorable reconsideration to 

the SNF that furnished services to the 

beneficiary in order to inform the SNF 

of the reason for its decision and the 

effect of the decision. In addition, in 

§ 405.934(c)(6), with respect to an 

appeal filed by a beneficiary not 

enrolled in Medicare Part B at the time 

of hospitalization, we proposed that the 

QIC would send notice of a favorable 

decision to the hospital to inform the 

hospital of the reason for its decision 

and the effect of the decision. In 

addition, we proposed that the QIC 

would send the SNF notice of a partially 

favorable decision where the inpatient 

admission meets the criteria for Part A 

coverage, but the SNF services do not 

meet the relevant criteria for Part A 

coverage (for example, if the services are 

determined not medically reasonable 

and necessary under section 

1862(a)(1)(A) of the Act). The notice of 

a partially favorable decision sent to a 

SNF would inform the SNF of the 

reason the hospital services were 

determined to meet the relevant criteria 

for Part A coverage, and the reason the 

SNF services were determined not to be 

covered under Part A. We proposed that 

the QIC also explain that the notice is 

being sent to the SNF for informational 

purposes only, and that only the eligible 

party may appeal the decision to an ALJ 

under § 405.936. An eligible party 

would have the right to appeal such a 

partially favorable decision with respect 

to the coverage of SNF services under 

proposed § 405.936 in the same manner 

as unfavorable decisions with respect to 

Part A coverage of the hospital services. 

Consistent with the processes 

following a favorable first level of 

appeal decision, as previously 

described, in the case of a beneficiary 

who was not enrolled in Medicare Part 

B at the time of hospitalization, we 

proposed in § 405.934(d)(2)(ii) that 

following a favorable appeal decision 

and making any required refund for 

payments received for covered services, 

the hospital may submit a new Part A 

inpatient claim to Medicare in order to 

determine the appropriate amount of 

benefits, and for Medicare to make 

payment for inpatient hospital services. 

We also proposed in § 405.934(d)(2)(ii) 

that the claim must be submitted by the 

hospital within 180 calendar days after 

the hospital receives its notice of 

favorable reconsideration for the eligible 

party. 

In addition, if a favorable appeal 

decision includes eligible SNF services 

that are covered, in § 405.934(d)(2)(i), 

we proposed that following a refund of 

amounts collected from the beneficiary, 

the SNF may then submit a claim (or 

claims) for such services in order to 

determine the appropriate amount of 

benefits, and that Medicare would make 

payment for the covered SNF services. 

We also proposed in § 405.934(d)(2)(ii) 

that the SNF submit the claim within 

180 calendar days after receiving the 

notice of a favorable appeal decision for 

the eligible party. 

If the QIC determines that the 

hospitalization did not meet applicable 

Part A inpatient coverage requirements, 

we proposed in § 405.934(c)(2) that the 

QIC would send notice of its 

unfavorable decision to the eligible 

party (or their representative). If the QIC 

determines that the hospital admission 

meets applicable Part A inpatient 

coverage requirements, but the SNF 

services eligible for the appeal do not 

meet applicable coverage requirements, 

we also proposed in § 405.934(c)(2) that 

the QIC would send notice of its 

partially favorable decision to the 

eligible party (or their representative). 

The notice of an unfavorable or partially 

favorable decision would inform the 

eligible party (or their representative) of 

the right to request a hearing before an 

ALJ (or review by an attorney 

adjudicator) under proposed § 405.936 

and would provide detailed information 

about the requirements for filing the 

request and where the request must be 

filed. 

We did not receive any comments on 

the proposed policies related to QIC 

reconsiderations. We are finalizing our 

policies as proposed with the exception 

of the following modifications, 

described in section III.A.4. of this final 

rule: 

• Amending § 405.934(d)(1)(ii) to 

clarify that existing outpatient claims 

will not be unwound unless the hospital 

files a Part A inpatient claim following 

a favorable appeal decision. 

• Amending §§ 405.934(d)(2)(i) and 

(ii) to extend the time for providers to 

file claims following a favorable 

decision to 365 calendar days. 

• Adding § 405.934(d)(2)(iii) to clarify 

that hospitals must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services following a 

favorable or partially favorable appeal 

decision for beneficiaries who were 

enrolled in Medicare Part B at the time 

of hospitalization. 


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14For calendar year 2025, the minimum amount 

in controversy for a hearing at the OMHA level is 

$190, and for judicial review the minimum amount 

in controversy is $1,900. These amounts are 

calculated annually in accordance with 

section1869(b)(1)(E) of the Act and notice of the 

updated minimum amounts for each calendar year 

is published in the Federal Register and is available 

on https://www.cms.gov/medicare/appealsgrievances/fee-for-service/third-level-appeal. 

6. Conduct of Hearings Before 

Administrative Law Judges and 

Decisions by Administrative Law Judges 

or Attorney Adjudicators 

Currently, the third level of claims 

appeals are performed by ALJs and 

attorney adjudicators within the HHS 

Office of Medicare Hearings and 

Appeals (OMHA). As with the first two 

levels of appeal, we proposed in 

§ 405.936(b) that the third level of 

retrospective appeal generally follow 

existing procedures for claims appeals 

in §§ 405.1000 through 405.1063, as 

appropriate, except as specified in the 

provisions proposed in this rule. Under 

proposed § 405.936(a), eligible parties 

(or their representative) who are 

dissatisfied with either a QIC’s 

dismissal of a request for 

reconsideration, or an unfavorable 

reconsideration in proposed 

§ 405.934(c)(2), may file a request in 

writing with the OMHA within 60 

calendar days of receipt of the QIC’s 

notice. The reconsideration notice 

would specify the elements required for 

the request for hearing, and we 

proposed that these elements would 

mirror existing requirements for appeal 

requests in § 405.1014(a)(1). We also 

proposed that untimely or incomplete 

requests would be handled under 

existing procedures for dismissals in 

§ 405.1014(e) and § 405.1052. 

As we previously noted, in some 

respects, the nature of the appeals 

required by the court order dictate a 

new implementation approach that 

cannot utilize existing procedures. For 

example, ordinarily under current 

claims appeals procedures, adjudicators 

review claims that contain denied items 

or services to determine whether items 

and/or services billed on a Medicare 

claim are covered and whether payment 

may be made. In addition, under 

§ 405.1006, billed charges on claims 

submitted to Medicare serve as the basis 

for determining the amount in 

controversy required for an appeal at the 

third level of appeal and for judicial 

review in federal district court. 

However, under the proposed process, 

with respect to the relevant hospital 

stay, there is no inpatient hospital claim 

and no denial of billed services. 

For retrospective appeals, we 

proposed to incorporate the existing 

amount in controversy requirement 

required for a hearing before an ALJ or 

judicial review in federal court 

consistent with section 1869(b)(1)(E) of 

the Act and § 405.1006.14 However, 

with respect to the methodology for 

calculating the amount in controversy, 

we cannot utilize the existing method 

for claims appeals in § 405.1006(d)(1) to 

calculate such amount. The procedures 

in existing regulations require the use of 

actual charges from the disputed 

claim(s) billed to Medicare, and in the 

scenario giving rise to appeal rights in 

the court order, no Part A inpatient 

claim will have been filed. Without a 

Part A inpatient claim, there are no 

billed charges for the denied Part A 

coverage to serve as the basis for 

calculating the amount in controversy. 

Other methods in § 405.1006(d) for 

calculating the amount in controversy 

are designed for appeals that are 

factually different than these new 

appeals, and thus, we did not believe it 

would be appropriate to adopt other 

existing calculation methods to apply 

them here. 

In the case of a beneficiary who was 

enrolled in Medicare Part B at the time 

of hospitalization, we believe it would 

be appropriate to utilize the billed 

charges on a claim filed by the hospital 

for Part B outpatient hospital services as 

the basis for calculating the amount in 

controversy for these new appeals. 

Since we do not have a Part A inpatient 

claim for the hospital services furnished 

to the beneficiary, we do not have 

available to us the costs of the denied 

Part A services that are at issue in the 

appeal to serve as the basis for the 

amount in controversy. While the billed 

charges for outpatient services will 

differ from those that would have been 

billed on an inpatient claim, we 

believed it was reasonable to use the 

billed charges on the approved 

outpatient claim for the purposes of 

determining the amount in controversy, 

and in § 405.936(c)(2) we proposed 

including those charges in calculating 

the amount in controversy for a hearing 

before an ALJ and for judicial review in 

federal district court. We emphasized 

that, as explained in section III.A.4. of 

this rule, for beneficiaries enrolled in 

Part B at the time of hospitalization, we 

will not make an adjustment of payment 

related to the previously submitted Part 

B outpatient hospital claim (including 

any deductible and coinsurance 

amounts) when effectuating a favorable 

appeal decision. Nevertheless, we 

proposed that the billed charges for the 

outpatient hospital services would be 

included in determining whether the 

amount in controversy requirement is 

met because we do not have available to 

us the costs of the denied Part A 

hospital services at issue in the appeal 

and because we believe that for 

purposes of determining the amount in 

controversy it is appropriate to attribute 

a dollar amount to the hospital services 

at issue, even if ultimately we would 

not adjust the payment for the hospital 

services. 

For any billed SNF services that are 

included in the appeal, the billed 

charges on a claim submitted by the 

SNF would be utilized in calculating the 

amount in controversy. However, in 

cases where a claim was not submitted 

by the SNF because the services were 

not covered, the amount the beneficiary 

was charged for SNF services, as 

reflected in an itemized statement 

received by the beneficiary or evidence 

of payments made by the beneficiary to 

the SNF, would be used in determining 

the amount in controversy. 

Thus, we proposed in § 405.936(c)(2) 

that the billed charges on the Part B 

outpatient claim and the billed charges 

for any SNF claim at issue in the appeal, 

or the billed charges paid by the 

beneficiary in the absence of a claim, 

would serve as the amount in 

controversy for hearings before an ALJ 

and for judicial review in federal district 

court. Furthermore, as the cost sharing 

for a Part A inpatient claim will be 

different than the cost sharing for the 

Part B outpatient claim, we did not 

reduce the amount in controversy by 

any applicable cost sharing, or other 

payments made for the Part B outpatient 

hospital claim as we do for existing 

calculation methods. Nor did we factor 

in any cost sharing or payments made 

related to the SNF claim, as applicable, 

to reduce the amount in controversy. 

For beneficiaries who are eligible 

parties because they were not enrolled 

in Medicare Part B at the time of their 

hospitalization, in most situations, we 

did not believe hospitals would have 

submitted a claim to the program for 

Part B outpatient services. Therefore, for 

beneficiaries who were not enrolled in 

Part B at the time of hospitalization and 

did not have a claim submitted to 

Medicare on their behalf for hospital 

outpatient services, we proposed in 

§ 405.936(c)(3) to calculate the amount 

in controversy by using the hospital’s 

billed charges to the beneficiary for such 

outpatient services. We believed the 

hospital’s charges to the beneficiary, as 

reflected in an itemized statement 

received by the beneficiary, or evidence 

of payments made to the hospital, were 

a reasonable estimation of the financial 

impact of the denial of Part A coverage 

to the beneficiary and the amount at 

issue in the appeal. In addition, the 


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billed charges for SNF services, if any, 

paid by the beneficiary would also be 

used in computing the amount in 

controversy for appeals involving 

beneficiaries not enrolled in Medicare 

Part B at the time of hospitalization. 

Consistent with the conduct of 

appeals before ALJs and attorney 

adjudicators under existing procedures 

in §§ 405.1028 through 405.1030, we 

proposed that ALJs and attorney 

adjudicators review all evidence 

furnished during the first two levels of 

appeal and any additional evidence 

submitted by the beneficiary with the 

request for hearing or request for review 

of a dismissal. Under proposed 

§ 405.936(d), the ALJ or attorney 

adjudicator determines if the inpatient 

admission, and as applicable, SNF 

services, satisfied the relevant criteria 

for Part A coverage at the time the 

services were furnished, and then issues 

notice of the decision to the eligible 

party (or their representative). In 

proposed § 405.936(d)(2), we explained 

that the notice of an unfavorable 

decision or partially favorable decision 

(that is, a decision where Part A 

coverage is approved for the hospital 

admission, but Part A coverage is not 

approved for applicable SNF services 

that are at issue in the appeal) would be 

sent to the eligible party (or their 

representative). In proposed 

§ 405.936(d)(3), the notice of a favorable 

decision sent to the eligible party (or 

their representative) would include an 

explanation of the decision and 

information regarding the effect of the 

decision, as well as other information 

similar to that found in existing notices 

under § 405.1046. 

In § 405.936(d)(4), when applicable, 

we proposed that the ALJ or attorney 

adjudicator would send notice of a 

favorable reconsideration to the SNF 

that furnished services to the 

beneficiary in order to inform the SNF 

of the reason for the decision and the 

effect of the decision. In addition, in 

§ 405.936(d)(5), with respect to an 

appeal filed by a beneficiary not 

enrolled in Medicare Part B at the time 

of hospitalization, we proposed that the 

ALJ or attorney adjudicator would send 

notice of a favorable decision to the 

hospital to inform the hospital of the 

reason for the decision and the effect of 

the decision. In the case of a partially 

favorable decision, we proposed in 

§ 405.936(d)(2) that notice would be 

sent to the SNF as an informational 

copy, and in proposed § 405.936(d)(6) 

we specified the elements included in 

the notice sent to the SNF. The notice 

of a partially favorable decision sent to 

a SNF would inform the SNF of the 

reason the hospital services were 

determined to meet the relevant criteria 

for Part A coverage, and the reason the 

SNF services were determined not to be 

covered under Part A. We proposed that 

the ALJ or attorney adjudicator also 

explain that the notice is being sent to 

the SNF for informational purposes 

only, and that only the eligible party 

may appeal the decision to the Council 

under § 405.938. 

In § 405.936(d)(7), we proposed to 

utilize the existing procedures in 

§ 405.1016 regarding the calculation of 

timeframes within which ALJs and 

attorney adjudicators must issue 

decisions, including applicable waivers 

and extensions to the adjudication 

timeframe, and the option for an eligible 

party (or their representative) to escalate 

an appeal for failure to issue a decision 

in the applicable timeframe. 

Consistent with the processes at the 

first two levels of appeal, as previously 

described, in the case of a beneficiary 

who was not enrolled in Medicare Part 

B at the time of hospitalization, we 

proposed in § 405.936(e)(2)(ii) that 

following a favorable appeal decision 

and making any required refund for 

payments received for covered services, 

the hospital may submit a new Part A 

inpatient claim to Medicare in order to 

determine the appropriate amount of 

benefits, and for Medicare to make 

payment for inpatient hospital services. 

We also proposed in § 405.936(e)(2)(ii) 

that the claim must be submitted by the 

hospital within 180 calendar days after 

the hospital receives its notice of 

favorable decision for the eligible party. 

In addition, if a favorable appeal 

decision includes eligible SNF services 

that are covered, in § 405.936(e)(2)(i), 

we proposed that following a refund of 

amounts collected from the beneficiary, 

the SNF may then submit a claim (or 

claims) for such services in order to 

determine the appropriate amount of 

benefits, and for Medicare to make 

payment for the covered SNF services. 

We also proposed in § 405.936(e)(2)(i) 

that the SNF submit the claim within 

180 calendar days after receiving the 

notice of a favorable appeal decision for 

the eligible party. 

If the ALJ or attorney adjudicator 

determines that the hospital admission 

did not meet applicable Part A inpatient 

coverage requirements, we proposed in 

§ 405.936(d)(2) and (d)(3)(vii) the ALJ or 

attorney adjudicator would send notice 

of the unfavorable decision to the 

eligible party (or their representative). If 

the ALJ or attorney adjudicator 

determines that the hospital admission 

meets applicable Part A inpatient 

coverage requirements, but the SNF 

services eligible for the appeal do not 

meet applicable coverage requirements, 

we also proposed in § 405.936(d)(2) that 

the ALJ or attorney adjudicator would 

send notice of its partially favorable 

decision to the eligible party (or their 

representative). The notice of an 

unfavorable or partially favorable 

decision would inform the eligible party 

(or their representative) of the right to 

request review by the Council under 

proposed § 405.938 and would provide 

detailed information about the 

requirements for filing the request and 

where the request must be filed. 

In proposed § 405.936(e) and (f), we 

explain the effect of an ALJ or attorney 

adjudicator decision as binding on the 

eligible party unless it is further 

appealed or reopened. The reopening of 

an ALJ or attorney adjudicator decision 

would be processed under existing 

procedures in § 405.980(d) and (e). The 

effect of an ALJ or attorney adjudicator 

decision is consistent with the effect of 

decisions at other levels in the appeals 

process, as previously described. We 

proposed that an eligible party (or their 

representative) who is dissatisfied with 

an unfavorable decision by an ALJ or 

attorney adjudicator may request review 

by the Council under proposed 

§ 405.938(a), and the ALJ or attorney 

adjudicator decision notice would 

provide detailed information about the 

process for filing such a request. 

We did not receive any comments on 

the proposed policies related to ALJ 

hearings and decisions by ALJs or 

Attorney Adjudicators. We are finalizing 

our policies as proposed with the 

exception of the following 

modifications, described in section 

III.A.4. of this final rule: 

• Amending § 405.936(e)(1)(ii) to 

clarify that existing outpatient claims 

will not be unwound unless the hospital 

files a Part A inpatient claim following 

a favorable appeal decision. 

• Amending § 405.936(e)(2)(i) and (ii) 

to extend the time for providers to file 

claims following a favorable decision to 

365 calendar days. 

• Adding § 405.936(e)(2)(iii) to clarify 

that hospitals must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services following a 

favorable or partially favorable appeal 

decision for beneficiaries who were 

enrolled in Medicare Part B at the time 

of hospitalization. 

7. Conduct of Review by the Medicare 

Appeals Council 

Under § 405.938, we proposed that 

retrospective reviews at the fourth level 

of appeal would be conducted by the 

Council and would generally follow 

existing procedures for claims appeals 


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15For example, under § 405.1106(a), if a party 

submits a timely filed request for Council review 

with an entity other than the entity specified in the 

notice of the ALJ’s or attorney adjudicator’s action, 

the Council’s adjudication period to conduct a 

review begins on the date the request for review is 

received by the entity specified in the notice of the 

ALJ’s or attorney adjudicator’s action. In other 

words, if an ALJ decision specifies that a party must 

submit a request for Council review with the 

Council, and the party mistakenly files their request 

with, for example, OMHA, then the Council’s 

adjudication time period does not begin until the 

Council receives the request for review from 

OMHA. 

in §§ 405.1100 through 405.1130, except 

as specified in the provisions proposed 

in this rule. Under proposed 

§ 405.938(a), eligible parties (or their 

representative) who are dissatisfied with 

either a dismissal of a request for 

hearing by an ALJ or attorney 

adjudicator, or an unfavorable ALJ or 

attorney adjudicator decision in 

proposed § 405.936(d)(2) may file a 

request in writing with the Council 

within 60 calendar days of receipt of the 

notice from the ALJ or attorney 

adjudicator. The request must include 

the elements specified in the notice 

issued by the ALJ or attorney 

adjudicator, and we proposed to use the 

existing requirements for requests for 

Council review in § 405.1112. We 

proposed that untimely or incomplete 

requests would be handled under 

existing procedures in §§ 405.1100 

through 405.1116. 

We proposed that the Council would 

review appeal requests and requests for 

review of dismissal actions under 

existing procedures in §§ 405.1100 

through 405.1132, as applicable. Under 

proposed § 405.938(c)(1), the Council 

makes a decision or remands the case to 

an ALJ or attorney adjudicator. We 

proposed in § 405.938(c)(2) that the 

Council may adopt, modify, or reverse 

the decision of an ALJ or attorney 

adjudicator, consistent with existing 

Council procedures. In § 405.938(c)(3), 

we proposed the Council would send 

notice of its decision, or its remand to 

an ALJ or attorney adjudicator, to the 

eligible party (or their representative), 

and we proposed that a decision would 

contain information regarding the effect 

of a favorable decision. In the case of an 

unfavorable or partially favorable 

decision, we proposed that the Council 

include information about filing a 

request for judicial review under 

existing procedures in 405.1136. We 

also explained in proposed 

§ 405.938(c)(3) that a partially favorable 

decision issued by the Council refers to 

a determination that the inpatient 

admission satisfied the relevant criteria 

for Part A coverage, but the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. Notice of a 

partially favorable decision is sent to the 

eligible party (or their representative), 

and to the SNF that furnished services 

under appeal, but for informational 

purposes only. 

In addition, we proposed in 

§ 405.938(c)(4), when applicable, the 

Council would send notice of a decision 

favorable to an eligible party to the 

hospital and the SNF that furnished 

services. The notice would explain the 

effect of the decision as specified in 

proposed § 405.938(d), including the 

provider’s obligation to refund 

payments collected for services 

determined to be covered following the 

appeal. The notice would also explain, 

as applicable, the process for a SNF or 

a hospital to submit a claim for the 

covered services to determine the 

amount of benefits due following the 

refund of payments previously 

collected. 

In § 405.938(c)(5), we proposed to 

utilize the existing procedures in 

§ 405.1100 regarding the calculation of 

timeframes within which the Council 

must issue decisions, including 

applicable waivers and extensions to the 

adjudication timeframe,15 and the 

option for an eligible party (or their 

representative) to escalate an appeal for 

failure to issue a decision in the 

applicable timeframe. 

In proposed § 405.938(e) and (f), we 

explained that a Council decision is 

considered final and binding on the 

eligible party unless it is reopened and 

revised, or in the case of an unfavorable 

decision, a Federal district court issues 

a decision modifying the Council 

decision. The reopening of a Council 

decision would be processed under 

existing procedures in § 405.980(d) and 

(e). The effect of a favorable Council 

decision is consistent with the effect of 

decisions at other levels in the appeals 

process, as previously described. We 

proposed in § 405.938(e)(1) that an 

eligible party (or their representative) 

who meets the requirements to escalate 

a case under § 405.1132 or is dissatisfied 

with an unfavorable decision by the 

Council, may request judicial review 

consistent with existing procedures in 

§§ 405.1132 through 405.1136. Based on 

its existing procedures, the Council’s 

decision notice would provide detailed 

information about the process for filing 

such a request. 

We did not receive any comments on 

the proposed policies related to Appeals 

Council review. We are finalizing our 

policies as proposed with the exception 

of the following modifications, 

described in section III.A.4. of this final 

rule: 

• Amending § 405.938(d)(1)(ii) to 

clarify that existing outpatient claims 

will not be unwound unless the hospital 

files a Part A inpatient claim following 

a favorable appeal decision. 

• Amending § 405.938(d)(2)(i) and (ii) 

to extend the time for providers to file 

claims following a favorable decision to 

365 calendar days. 

• Adding § 405.938(d)(2)(iii) to clarify 

that hospitals must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services following a 

favorable or partially favorable appeal 

decision for beneficiaries who were 

enrolled in Medicare Part B at the time 

of hospitalization. 

8. Judicial Review 

We proposed in § 405.938(f)(1) that 

eligible parties dissatisfied with a final 

decision of the Council whose claims 

meet the amount in controversy 

requirement in proposed § 405.936(c) 

may request judicial review in Federal 

district court under the existing 

procedures in § 405.1136. In addition, 

under proposed § 405.938(f)(2), an 

eligible party (or their representative) 

who satisfies the amount in controversy 

requirement in proposed § 405.936(c) 

and is entitled to escalate a case from 

the Council to Federal district court 

upon satisfying the criteria set forth in 

§ 405.1132, may request judicial review 

under the existing procedures in 

§ 405.1136. 

We did not receive any comments on 

the proposed policies related to judicial 

review. We are finalizing our policies as 

proposed. 

We appreciate the support and 

feedback we have received from the 

commenters on our proposals related to 

the retrospective appeals process. After 

review and consideration of all 

comments, we are finalizing the 

regulations for the retrospective appeal 

procedures as proposed with the 

following modifications: 

• We are adding § 405.931(i) to clarify 

that the coverage decision for a 

retrospective Part A patient status 

appeal is conclusive for any pending 

claim appeal. 

• At § 405.932(b)(2)(iii) we are 

clarifying that a family member may 

include individuals who are not 

biologically related to the beneficiary 

(solely for the purpose of determining 

whether out of pocket payments were 

made for SNF services, making those 

services eligible for an appeal). 

• At § 405.932(c)(2) we are extending 

the timeframe for providers to respond 

to a request for medical records to aid 

in establishing a beneficiary’s eligibility 

for an appeal from 60 calendar days to 

120 calendar days. 


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16Under section 1155 of the Act, a beneficiary 

who is entitled to benefits under title XVIII (that is, 

a Medicare beneficiary) and who is dissatisfied with 

a determination made by a QIO in conducting its 

review responsibilities shall be entitled to a 

reconsideration of such determination by the 

reviewing organization (that is, the QIO). For the 

purposes of these appeals, section 1155 of the Act 

authorizes the QIO to conduct a reconsideration of 

its expedited determination regarding the hospital 

reclassification under § 405.1211 to determine if an 

eligible beneficiary is entitled to coverage under 

Part A of the program. 

• At § 405.932(d)(3)(ii) we are 

requiring that the eligibility contractor’s 

notice of denial of eligibility will also 

include an explanation of the 

information needed to cure the denial. 

• At §§ 405.932(h)(1)(ii), 

405.932(h)(2)(ii), 405.934(d)(1)(ii), 

405.934(d)(2)(ii), 405.936(e)(1)(ii), 

405.936(e)(2)(ii), 405.938(d)(1)(ii) and 

405.938(d)(2)(ii) we are revising the 

regulation text to clarify that in the case 

of a favorable appeal decision, a 

hospital who chooses to submit a Part 

A inpatient claim must refund any 

payments received for the Part B 

outpatient claim before submitting the 

Part A inpatient claim. If a Part A claim 

is submitted, the previous Part B 

outpatient claim will be reopened and 

canceled, and any Medicare payments 

will be recouped to prevent duplicate 

payment. In addition, we are revising 

the regulation text to clarify that in the 

case of a favorable decision for a 

beneficiary who was not enrolled in 

Medicare Part B at the time of 

hospitalization, the hospital must 

refund any payments collected for the 

outpatient services even if the hospital 

chooses not to submit a Part A claim for 

payment to the program. 

• At §§ 405.932(h)(2)(i) and (ii), 

405.934(d)(2)(i) and (ii), 405.936(e)(2)(i) 

and (ii) and 405.938(d)(2)(i) and (ii) we 

are amending the content of decision 

letters to specify that a provider’s claim 

filing timeframe will be 365 calendar 

days following a favorable or partially 

favorable decision under the 

retrospective appeals process. 

• We are adding §§ 405.932(h)(2)(iii), 

405.934(d)(2)(iii), 405.936(e)(2)(iii) and 

405.938(d)(2)(iii) to clarify the effect of 

favorable appeals involving 

beneficiaries who were enrolled in 

Medicare Part B at the time of 

hospitalization to explain that hospitals 

must refund any payments collected for 

the outpatient hospital services only if 

the hospital chooses to submit a Part A 

inpatient claim for such services. 

In addition, in drafting this final 

regulation we identified several 

erroneous cross-references in the 

proposed regulations text that we will 

be correcting. Specifically— 

• In proposed § 405.931(a)(1), the 

reference to § 405.931(b)(1) is revised to 

read § 405.931(b); 

• In proposed § 405.932(c)(2), the 

reference to § 405.931(b)(1) is revised to 

read § 405.931(b); 

• In proposed § 405.932(d)(2)(ii), the 

reference to § 405.932(e) is revised to 

read § 405.932(f); and 

• In proposed § 405.932(f)(3), the 

reference to paragraph (e)(1) is revised 

to read (f)(1). 

After publication of this final rule 

regarding the procedures for these new 

appeals, we intend to specify the 

implementation date for filing appeal 

requests for retrospective and 

prospective appeals. When the 

prospective process is fully 

implemented, eligible beneficiaries who 

are hospitalized and receive notice of 

their appeal rights and wish to pursue 

an appeal will be expected to utilize the 

prospective procedures (proposed 

§§ 405.1210 through 405.1212). We will 

announce the implementation dates on 

cms.gov and/or Medicare.gov. 

B. Prospective Appeal Rights 

1. Overview 

This final rule also establishes and 

implements a new notice requirement 

and an expedited appeals process, on a 

prospective basis, for certain 

beneficiaries whose status was changed 

from inpatient to outpatient receiving 

observation services while they were 

still in the hospital. The expedited 

appeals process parallels the process in 

effect for inpatient hospital discharge 

appeals set forth at §§ 405.1205 and 

405.1206, with some differences. In its 

order dated March 26, 2020, the court 

indicated that HHS should use a process 

for the expedited appeals that is 

‘‘substantially similar’’ to the existing 

process for expedited hospital discharge 

appeals at §§ 405.1205 through 

405.1208; under that hospital discharge 

appeals process, beneficiaries receive a 

notice of their rights and may request an 

expedited determination by a Quality 

Improvement Organization (QIO) about 

the hospital’s decision to discharge the 

beneficiary. While the processes are 

largely similar, a notable difference is 

that the issue under appeal in this 

process relates to the change of status 

from an inpatient to an outpatient 

receiving observation services. This 

change of status may affect cost sharing 

for the hospital stay as well as whether 

any post hospital care in a skilled 

nursing facility would be covered by 

Medicare. 

CMS contracts with QIOs, pursuant to 

Title XI, Part B of the Act and section 

1862(g) of the Act, to perform certain 

statutorily required functions and 

contractual quality improvement and 

other activities for the purposes of 

improving the quality of care furnished 

to Medicare beneficiaries with respect to 

Medicare covered items and services. 

The QIO Program is part of the HHS’ 

national quality strategy for providing 

quality and patient centered care to 

Medicare beneficiaries. Section 

1154(a)(1) of the Act establishes certain 

review functions of QIOs, including that 

QIOs review the services furnished to 

Medicare beneficiaries by physicians, 

other healthcare practitioners, and 

institutional and non-institutional 

providers of services (as defined in 

section 1861(u) of the Act and including 

hospitals). In addition, under section 

1154(a)(18) of the Act, QIOs must also 

provide, subject to the terms of their 

contract with CMS, such other activities 

as the Secretary determines may be 

necessary for the purposes of improving 

the quality of care furnished to 

individuals with respect to items and 

services for which payment may be 

made under Medicare. This flexibility 

allows CMS to establish and further 

define the types of reviews performed 

by the QIOs in order to meet evolving 

needs and issues pertaining to 

healthcare delivered under the Medicare 

program. 

As discussed in sections II. and III.A. 

of this rule, a recent court decision 

requires the Secretary to implement an 

appeal process for certain Medicare 

beneficiaries that is substantially similar 

to the existing hospital discharge 

appeals conducted by QIOs under 

§§ 405.1205 through 405.1208. See 

Alexander v. Azar, 613 F. Supp. 3d 559 

(D. Conn. 2020)), aff’d sub nom., 

Barrows v. Becerra, 24 F.4th 116 (2d Cir. 

2022). These new review and appeals 

activities are within the scope of the 

Secretary’s authority under section 

1154(a)(18) of the Act to contract with 

QIOs to perform additional activities 

that are not already specified in section 

1154 of the Act or other provisions. 

Section 1155 of the Act governs appeals 

of QIO determinations that are made 

under Title XI, subpart B, which 

includes section 1154 of the Act. 

Therefore, the proposed new QIO 

determinations, performed under 

section 1154(a)(18) of the Act, are 

subject to the appeal process specified 

in section 1155 of the Act.16 Based on 

the QIOs’ expertise and longstanding 

performance of similar functions, CMS 

has determined that the QIOs are the 

most appropriate entity to perform 

beneficiary-initiated appeals regarding 

hospital reclassifications of inpatients to 

outpatients receiving observation 


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17Since the court order specifically requires the 

provision of appeal rights to a defined set of class 

members, and that definition does not include the 

provider of services (that is, hospitals and SNFs), 

we are limiting party status for these new appeals 

to the defined class members. We note that this 

limitation currently exists for hospital discharge 

appeals procedures in §§ 405.1205 and 405.1206, 

where a provider of services does not have party 

status. 

18 OMB control number 0938–1467. 

19 Section IV.D. of this final rule states that to 

obtain copies of the supporting statement and any 

related forms, individuals should visit the CMS 

website at https://www.cms.gov/regulations-andguidance/legislation/paperworkreductionactof1995/ 

pra-listing. 

services proposed in §§ 405.1211 

through 405.1212. 

We proposed an expedited appeals 

process that would be available to 

beneficiaries 17 who, after formally 

being admitted as an inpatient, have 

subsequently been reclassified by the 

hospital as an outpatient while the 

beneficiary is still in the hospital, 

received observation services following 

the reclassification, and met one of the 

following two criteria: 

• Their stay in the hospital was at 

least 3 days but they were an inpatient 

for fewer than 3 days. 

• They did not have Medicare Part B 

coverage (these eligible beneficiaries 

would not need to remain in the 

hospital for at least 3 days to be eligible 

for an appeal). 

We proposed in new § 405.1210(a)(3) 

the criteria that must be met for a 

beneficiary to be eligible for the new 

prospective appeal rights. We proposed 

to require hospitals to deliver, as soon 

as possible after certain conditions are 

met and prior to release from the 

hospital, a new standardized beneficiary 

notice, informing eligible beneficiaries 

of the change in their status, the 

resulting effect on Medicare coverage of 

their stay, and their appeal rights if they 

wish to challenge that change. This new 

notice will be called the Medicare 

Change of Status Notice (MCSN).18 This 

new notice follows the format and 

structure of the Important Message from 

Medicare (IM), which is the notice 

hospitals are required, by § 405.1205, to 

provide to beneficiaries to inform them 

of their right to appeal an inpatient 

hospital discharge. See section IV.D. of 

this final rule for details on how to 

obtain a copy of the MCSN.19

We considered alternatives to creating 

a new notice for this process. One 

consideration was standardizing and 

adding appeals information to the 

required written Condition Code 44 

notification used by hospitals to inform 

beneficiaries when their status is 

changed from inpatient to outpatient 

after review by a hospital utilization 

review committee and the entire 

episode will be billed as outpatient. 

However, those eligible for this new 

process would be a small subset of the 

population receiving the existing 

Condition Code 44 notification. 

Specifically, individuals would not only 

require a change of status from inpatient 

to outpatient, they must also meet the 

criteria set forth in proposed § 405.1210 

(a)(2) and (3) to pursue an appeal 

regarding a change in status. The vast 

majority of beneficiaries receiving the 

existing notification of inpatient to 

outpatient change will not be eligible for 

this new appeals process and would 

likely find the inclusion of information 

about an appeals process for which they 

are not eligible confusing. We also 

considered adding appeals information 

to the Medicare Outpatient Observation 

Notice (MOON). The MOON (42 CFR 

489.20(y)) is used to inform 

beneficiaries who receive observation 

services for a certain amount of time 

that they are not hospital inpatients, but 

rather outpatients receiving observation 

services. However, like the change in 

status notice mentioned earlier, the 

MOON would be overbroad and the vast 

majority of beneficiaries receiving it 

would not be eligible for an appeal in 

this new process. Further, per section 

1866(a)(1)(Y) of the Act, the MOON is 

only required for beneficiaries who have 

been outpatients receiving observation 

services for more than 24 hours, yet we 

proposed that, for prospective appeals, 

beneficiaries reclassified from inpatients 

to outpatients receiving observation 

services be eligible for an appeal if any 

amount of time is spent in observation 

following the status change (in this 

respect, we are expanding the 

population of beneficiaries eligible for 

an appeal beyond the class as defined 

by the court, and not limiting eligibility 

to those beneficiaries who have received 

a MOON). Because the MOON is not 

required for observation stays shorter 

than 24 hours, using the MOON would 

likely result in not all eligible 

beneficiaries receiving notification of 

their appeal rights under the proposed 

new process. We concluded that a 

targeted appeals notice, delivered only 

to those beneficiaries eligible for this 

specific appeal, would be the most 

effective and efficient means of 

informing eligible beneficiaries of their 

appeal rights. 

The proposed MCSN contains a 

similar layout and language to the IM 

and includes information on the change 

in coverage, a description of appeal 

rights and how to appeal, and the 

implications for SNF coverage following 

the hospital stay. We believed that by 

proposing the delivery of this largely 

generic notice, the notice delivery 

burden on hospitals would be as 

minimal as possible, without any 

adverse effect on patient rights. 

We reviewed the notice delivery 

procedures for the IM notice related to 

inpatient hospital discharges and have 

mirrored that process in this new 

process, wherever possible. In 

proposing this approach, our goal was to 

design notice procedures that balance a 

beneficiary’s need to be informed about 

his or her appeal rights in an 

appropriate and timely manner, without 

imposing unnecessary burdens on 

hospitals. 

We proposed to require hospitals to 

deliver the notice to eligible 

beneficiaries as soon as possible after a 

beneficiary is eligible for this process 

per § 405.1210(a)(2) and (3), but no later 

than 4 hours prior to release from the 

hospital. For beneficiaries with Part B, 

we proposed that the notice must be 

delivered as soon as possible after the 

hospital reclassifies the beneficiary from 

inpatient to outpatient receiving 

observation services and the third day 

in the hospital is reached. Beneficiaries 

will likely not reach this required third 

day in the hospital until very close to 

release from the hospital. This is 

because these will be beneficiaries that 

hospitals have determined do not need 

an inpatient level of care and thus, the 

overall length of the hospital stay is not 

expected to exceed a few days. For 

beneficiaries without Medicare Part B 

coverage, we proposed that hospitals 

must deliver the notice as soon as 

possible after the change in status from 

inpatient to outpatient receiving 

observation services because a 3-day 

hospital stay is not required for these 

beneficiaries to be part of the class 

specified in the court order. 

We believed the approach we 

proposed would not be overly 

burdensome for hospitals as the 

proposed notice is standardized and 

requires very little customization by the 

hospital before delivery. The proposed 

notice was modeled after the existing 

hospital discharge appeals notice (IM), 

and like that notice, does not require 

extensive time for hospitals to prepare 

and deliver to beneficiaries. We 

believed that the number of 

beneficiaries that are eligible for this 

proposed appeal process would be 

significantly lower than the volume that 

receive the hospital discharge appeals 

notification. (Please see section IV.B. for 

more information on assumptions and 

estimates related to this proposed 

appeals process.) Additionally, the 

delivery of the MCSN notice to the 

beneficiary would mimic the process 

already in place for hospitals delivering 


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the IM, so implementing this process 

should not be overly difficult or 

burdensome. 

One notable difference, as compared 

to that for inpatient hospital discharge 

appeals, is that under this new appeals 

process beneficiaries will not have 

financial liability protection for hospital 

services received while their appeal is 

adjudicated. Section 

1869(c)(3)(C)(iii)(III) of the Act, which 

provides beneficiaries with coverage 

during the inpatient hospital discharge 

appeal, only applies to beneficiaries 

being discharged from a Medicare 

covered inpatient hospital stay, and 

thus would not be applicable to 

beneficiaries pursuing an appeal 

regarding the change in status from 

inpatient to outpatient receiving 

observation services. 

We proposed that the QIOs perform 

these reviews. The nature of these 

reviews is consistent with the mission 

and functions of the QIO Program. QIOs 

have contracts with CMS under section 

1862(g) of the Act and Part B of Title XI 

of the Act to perform certain statutorily 

required reviews of the services 

furnished to Medicare beneficiaries and 

to implement quality improvement 

initiatives involving Medicare 

beneficiaries, providers, and their 

communities. (See 42 CFR parts 475 

through 480.) Historically, QIOs have 

performed expedited discharge reviews 

for beneficiaries appealing inpatient 

discharges (42 CFR 405.1205 through 

405.1208, 422.620 and 422.622) as well 

as similar expedited reviews for 

termination of provider services in nonhospital settings (42 CFR 405.1202 

through 405.1204, 422.624, and 

422.626). Currently, these reviews, as 

well as other case reviews related to the 

quality of care received by Medicare 

beneficiaries, compliance with certain 

conditions of coverage for inpatient 

services, and reviews of the validity of 

certain diagnostic and procedural 

information supplied by hospitals 

among other types of care reviews, are 

performed by the Beneficiary and 

Family Centered Care QIOs (BFCC– 

QIOs), while quality improvement 

initiatives are performed by a different 

type of QIO. We stated that if the 

proposed rule was finalized, we would 

require the BFCC–QIOs to perform this 

new type of appeal because their scope 

of knowledge, expertise and experience 

with beneficiary appeals and Medicare 

coverage ensures an adequate and 

reliable review. 

Finally, the court order only requires 

that an expedited appeals process be 

made available to class members ‘‘who 

have stayed, or will have stayed, at the 

hospital for 3 or more consecutive 

days.’’ For class members who lacked 

Part B and did not stay in the hospital 

for 3 or more consecutive days, it would 

appear that a non-expedited appeals 

process might be sufficient. 

Nonetheless, we proposed to use the 

expedited process for all prospective 

appeals, with minor differences 

depending on whether the expedited 

appeal request is made timely. In other 

words, an eligible beneficiary may 

request the QIO review at or around the 

time of receiving the notice in a 

hospital, or after a claim is filed, and in 

both instances, beneficiaries will be 

afforded a review and determination by 

the QIO. An appeal filed outside of the 

expedited timeframes may be referred to 

herein as a standard or untimely appeal. 

Comment: The vast majority of 

commenters supported the proposed 

prospective appeals process that would 

provide eligible beneficiaries with the 

right to pursue an appeal regarding a 

hospital reclassification from inpatient 

to outpatient receiving observation 

services. Many commenters stated the 

policy would protect beneficiary access 

to medically necessary post-acute care 

services, specifically skilled nursing and 

occupational therapy services. Several 

commenters noted appreciation that the 

prospective appeals process would 

protect beneficiaries from the 

potentially detrimental effects of 

hospital status changes. A few 

commenters believed the appeals 

process would increase transparency for 

beneficiaries receiving hospital care. 

Response: We appreciate the 

commenters’ support for the proposed 

prospective appeals process. 

Comment: Multiple commenters 

strongly recommended CMS finalize 

and implement the proposed 

prospective appeals process as soon as 

possible, with a commenter suggesting 

beneficiaries have lacked recourse to 

hospital reclassifications for too long 

already. Conversely, several 

commenters requested CMS delay 

implementation of the prospective 

appeals process for at least 1 year to 

allow hospitals to better understand 

their responsibilities and have time to 

integrate the appeals processes into 

existing workflows, with a commenter 

urging CMS to not finalize the proposed 

rule without addressing commenters’ 

concerns and reducing the potential 

administrative burden the process 

would place on hospitals. Lastly, a 

commenter sought clarification on the 

implementation timeline and whether 

the prospective appeals process would 

be permanent. 

Response: We appreciate the 

commenters’ perspectives on the 

policy’s implementation schedule. 

When considering the implementation 

timeline, we are balancing the need to 

provide beneficiaries access to the 

prospective appeals process as soon as 

possible with the time needed for 

finalizing guidance and notices and 

educating the industry on the new 

requirements, as well as the time 

needed by hospitals to integrate the new 

process into their existing workflows. 

We believe scheduling implementation 

as soon as operationally feasible not 

only meets the Court’s order but strikes 

the proper balance between ensuring 

beneficiaries are adequately protected 

and providing hospitals sufficient lead 

time to prepare for and comply with the 

new requirements. 

Comment: Multiple commenters 

strongly recommended CMS monitor 

hospital compliance with the 

prospective appeals process after 

implementation and to identify 

unintended consequences and make 

updates to the appeals process as 

necessary. A commenter suggested 

specifically monitoring the impact the 

prospective appeals process may have 

on SNF intake and hospital length of 

stay statistics. Another commenter 

suggested CMS monitor the impact the 

prospective appeals process may have 

on quality improvement reporting 

programs. 

Another commenter suggested CMS 

coordinate and align the proposed 

appeals process with the Medicare 

Secondary Payer (MSP) program and 

ensure beneficiaries rights and benefits 

are not adversely affected. Another 

commenter predicted hospital inpatient 

admissions would decrease as a result of 

the proposed prospective appeals 

process because hospitals would want 

to avoid having their reclassifications 

effectively overturned. 

Response: We appreciate the input 

from commenters and the suggested 

areas for increased monitoring as we 

implement the new prospective appeals 

process. While we did not propose to 

establish any oversight programs 

specific to the new appeals process, we 

plan to utilize existing program 

oversight authorities related to Medicare 

provider agreements to ensure industry 

compliance. We note, however, as 

explained in the proposed rule, the class 

of beneficiaries eligible to appeal a 

denial of Part A coverage relating to a 

hospital reclassification from inpatient 

to outpatient receiving observation 

services in any given year is relatively 

small (we estimated hospitals will 

deliver 15,655 beneficiary notices and 

the QIOs will process approximately 

8,000 appeals, per year). Because of the 

relative few numbers of appeals, and 

proportionally fewer anticipated appeal 


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20 The Independent Review Entity (IRE) 

referenced in §§ 422.624 and 422.626 is the BFCC– 

QIO. 

overturns, we do not believe this new 

appeals process will have a disruptive 

effect on other areas of the Medicare 

program, including the MSP program 

operations. Similarly, we do not believe 

approximately 8,000 annual appeals 

will meaningfully affect the regimented 

decision-making currently used by 

hospitals when determining the medical 

necessity of inpatient admissions for 

millions of beneficiaries annually. 

Nevertheless, if in our monitoring, we 

identify the new appeal process having 

unintended adverse consequences on 

the Medicare program, beneficiaries, or 

the hospital industry, we will respond 

with additional rulemaking or guidance, 

as we deem appropriate. 

Comment: Multiple commenters 

urged CMS to conduct education and 

outreach to ensure impacted 

beneficiaries and their representatives 

are aware of the new prospective 

appeals process. A commenter 

suggested outreach efforts should 

specifically focus on culturally diverse 

populations, beneficiaries with limited 

English-speaking, and beneficiaries with 

visual or hearing impairments. The 

commenter also suggested CMS educate 

SHIPs and other beneficiary-assistance 

programs on the finalized prospective 

appeal procedures. In addition, several 

commenters suggested CMS also ensure 

the hospital industry is properly 

educated on the requirements of the 

new appeals process. Lastly, a 

commenter suggested CMS provide 

beneficiaries with educational material 

on Medicare inpatient coverage criteria 

and the reasons hospitals decide to 

reclassify them from inpatient to 

outpatient receiving observation 

services. 

Response: We appreciate the 

commenters’ suggestions for ensuring 

beneficiaries, associated assistance 

programs, and the hospital industry are 

properly informed of their respective 

rights and requirements of the 

prospective appeals process. As we 

finalize the prospective appeals 

requirements, we plan to add 

information on the appeals process to 

Medicare publications, manuals, and 

websites, as necessary and appropriate. 

Through this process we can explore 

whether providing information related 

to criteria for Medicare Part A coverage 

of inpatient admissions and common 

rationales for hospitals reclassifying 

certain beneficiaries from inpatient to 

outpatient receiving observation 

services will help beneficiaries 

understand the new prospective appeals 

process. Beneficiaries do not need prior 

knowledge of their appeal rights in 

order to avail themselves of the 

prospective appeals process, as relevant 

appeal submission information will be 

included in the Medicare Change of 

Status Notice (MCSN). 

Comment: A commenter sought 

clarification whether the prospective 

appeals process requirements apply to 

MA enrollees with several commenters 

recommending that CMS expand the 

prospective appeals process to the MA 

program. 

Response: The retrospective appeals 

process (addressed in section III.A. of 

this final rule) and the prospective 

appeals process (addressed in section 

III.B. of this final rule) do not apply to 

the MA program and will not be 

available for MA plans for MA 

enrollees. We did not propose extending 

application of the prospective appeals 

requirements to the MA program. We 

explained in the proposed rule that the 

terms of the court order refer to denials 

of Part A coverage. Consistent with the 

court order, the appeals processes in 

this rule do not extend to enrollees in 

MA plans. MA plan enrollees have 

existing rights that afford enrollees the 

ability to appeal a plan organization 

determination where the plan refuses to 

provide or pay for services, in whole or 

in part, including the type or level of 

services, that the enrollee believes 

should be furnished or arranged for by 

the MA organization (see 42 CFR 

422.562(b)(4)). For example, if an MA 

plan refuses to authorize an inpatient 

admission, the enrollee may request a 

standard or expedited plan 

reconsideration of that organization 

determination pursuant to §§ 422.578 

through 422.590, and 422.633. As such, 

we are declining commenters’ 

suggestions to extend the prospective 

appeals processes in this rule to MA 

enrollees. To the extent we identify 

additional processes that may be 

necessary for the MA program, any such 

proposals would be subject to notice 

and comment rulemaking. We note that 

MA enrollees do have access to QIO 

reviews of quality of care concerns, 

hospital discharges, and terminations of 

services furnished by home health 

agencies (HHAs), skilled nursing 

facilities (SNFs), and comprehensive 

outpatient rehabilitation facilities 

(CORFs) that is similar to the QIO 

reviews available for Original Medicare 

beneficiaries. See §§ 422.562(a)(2)(ii), 

422.564(c) and (e)(3), 422.622 through 

422.626.20

Comment: A few commenters 

requested that CMS define certain terms 

related to the prospective appeals 

process. A commenter requested that 

CMS explain ‘‘what is considered a 

change in patient status’’ and how such 

a change must be documented. Another 

commenter requested that CMS define a 

‘‘formal admission.’’ The same 

commenter also requested that CMS 

clarify when a beneficiary is considered 

discharged or released from the 

hospital. 

Response: We proposed at 

§ 405.1210(a)(2) that, for purposes of the 

prospective appeals process, a change of 

status occurs when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation 

services (as defined in § 405.931(h)). As 

we discussed in the proposed rule, 

hospitals are already required to deliver 

the written Condition Code 44 

notification to enrollees whose status is 

changed from inpatient to outpatient 

after review by a hospital utilization 

review committee and the entire 

episode will be billed as outpatient. As 

this process is already in place, we did 

not propose any new documentation 

requirements related to a beneficiary’s 

change in status and will not be making 

any modifications in this final rule. 

We did not propose specific 

definitions for the terms ‘‘formal 

admission’’ or ‘‘discharge’’ since these 

terms are frequently used in the 

healthcare industry and, as used in the 

preamble of the proposed rule and at 

proposed §§ 405.1210(a)(3)(i) (for 

‘‘formally admitted’’) and 

405.1210(a)(3)(iv) (for ‘‘discharge’’), 

their meaning should be ascribed to 

their common usage and parlance in the 

healthcare context. Therefore, we 

decline the commenter’s suggestion to 

establish these definitions in this final 

rule. 

Comment: A commenter disagreed 

with CMS’s proposal to allow hospitals 

to bill beneficiaries for reasonable costs 

associated with duplicating and 

delivering documentation provided to 

the QIO, when requested by the 

beneficiary, believing it was extremely 

burdensome on the beneficiary. 

Response: We proposed at 

§ 405.1211(d)(2) a requirement for 

hospitals, upon request, to provide a 

beneficiary with any documentation, 

including written records of any 

information provided by telephone, it 

provides to the QIO. We explained in 

the proposed rule that we intended for 

§ 405.1211(d)(2) to operate the same 

way as the existing regulation at 

§ 405.1206(e)(3), specifically that the 

hospital may charge the beneficiary a 

reasonable amount to cover the costs of 

duplicating and delivering the requested 

materials. We note that the proposal 

mirrors an existing policy that has been 

in effect for many years, and from our 


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programmatic experience, it has not 

shown to be burdensome on 

beneficiaries. Thus, we do not agree 

with the commenter that the proposed 

regulation is unduly burdensome and 

are finalizing § 405.1211(d)(2) as 

proposed. 

Comment: A commenter requested the 

QIOs publish detailed annual reports on 

the new appeals process, including data 

on the number of appeals, the appeal 

dispositions, the general geographic 

location area of appeal requests, and 

information confirming whether 

beneficiaries are being reimbursed upon 

a successful appeal. Another commenter 

recommended CMS publish statistics on 

the number of times the ALJ overturns 

a QIO decision under the new appeals 

process. The commenter suggested to 

apply the data as a quality measure 

when considering renewing the QIO 

contracts. 

Response: We did not propose and are 

not finalizing a process to publicly 

disclose any data related to the new 

prospective appeals process. CMS 

routinely tracks the timeliness of 

resolving beneficiary appeals for 

internal monitoring and evaluation 

purposes, and will do so for these new 

prospective appeals. We appreciate the 

commenters’ interest in program 

transparency and may consider 

requiring such data disclosures at a later 

time. 

We appreciate the comments received 

on the general structure of the proposed 

prospective appeals process. After 

consideration of the comments, we are 

finalizing these provisions as proposed. 

2. Notifying Eligible Beneficiaries of 

Appeal Rights When a Beneficiary Is 

Reclassified From an Inpatient to an 

Outpatient Receiving Observation 

Services (§ 405.1210) 

To implement the changes discussed 

previously, we proposed to revise 

Subpart J of 42 CFR 405 to add new 

§§ 405.1210 through 405.1212. These 

new proposed regulations were largely 

modeled after the existing regulations at 

§§ 405.1205 through 405.1206 

controlling notices to beneficiaries and 

the QIO review of hospital discharges. 

Proposed new § 405.1210(a) set forth 

the applicability and scope of this new 

appeals process along with definitions 

of specific terms used in the proposed 

new regulations. Specifically, in 

§ 405.1210(a)(1) we proposed to define a 

hospital as, for purposes of the new 

notice requirements and appeals 

process, any facility providing care at 

the inpatient hospital level, to include 

short term or long term, acute or nonacute, paid through a prospective 

payment system or other reimbursement 

basis, limited to specialty care or 

providing a broader spectrum of 

services and including critical access 

hospitals (CAHs). This broad definition 

tracks § 405.1205(a). 

Paragraphs (a)(2) and (a)(3) of 

proposed § 405.1210 addressed the 

circumstance and eligibility of 

beneficiaries for appeals in this new 

process. A change in status occurs when 

a hospital reclassifies a beneficiary from 

an inpatient to an outpatient receiving 

observation services. The phrase 

‘‘outpatient receiving observation 

services’’ used in §§ 405.1210 through 

405.1212 was used as defined in 

proposed § 405.931(h) to mean when the 

hospital changes beneficiary’s status 

from inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services. An eligible 

beneficiary, consistent with the court 

order, would be one who: (1) was 

formally admitted as a hospital 

inpatient; (2) while in the hospital was 

subsequently reclassified as an 

outpatient receiving observation 

services; and (3) either (A) was not 

enrolled in Part B coverage at the time 

of the beneficiary’s hospitalization, or 

(B) stayed at the hospital for 3 or more 

consecutive days but was classified as 

an inpatient for fewer than 3 days. We 

also proposed to be explicit in new 

§ 405.1210(a)(iv)) that the period ‘‘3 or 

more consecutive days’’ is counted 

using the existing rules for determining 

coverage of SNF services under section 

1861 of the Act and § 409.30 of this 

chapter. This meant that the admission 

day is counted as a day, but the 

discharge day is not. For example, if a 

beneficiary is admitted to a Medicare 

covered inpatient hospital stay on a 

Monday and discharges on the 

following Wednesday, Monday, and 

Tuesday are counted towards the ‘‘3 or 

more consecutive days’’, but Wednesday 

is not. 

The provisions of proposed 

§ 405.1210(b) are designed to track 

closely with the provisions of 

§ 405.1205 that require delivery of a 

notice to beneficiaries about inpatient 

hospital discharges. We proposed in 

§ 405.1210(b)(1) that hospitals would be 

required to deliver a standardized, 

largely generic, notice informing eligible 

beneficiaries about the availability of 

the new appeals process. 

We proposed to require hospitals to 

deliver the notice to eligible 

beneficiaries as soon as possible after a 

beneficiary is eligible for this process 

per § 405.1210(a)(2) and (3) and no later 

than 4 hours prior to release from the 

hospital. For beneficiaries with Part B, 

we proposed that the notice must be 

delivered as soon as possible after the 

hospital reclassifies the beneficiary from 

inpatient to outpatient receiving 

observation services and the third day 

in the hospital is reached. For 

beneficiaries without Medicare Part B 

coverage, we proposed that hospitals 

must deliver the notice as soon as 

possible after the change in status from 

inpatient to outpatient receiving 

observation services because a 3-day 

hospital stay is not required for these 

beneficiaries to be eligible for an appeal. 

Per proposed § 405.1210(b)(2), the 

new notice would include (1) the 

beneficiary’s right to request an 

expedited determination regarding the 

decision to change the beneficiary’s 

status from an inpatient to an outpatient 

receiving observation services, 

including a description of the process as 

specified in § 405.1211, and the 

availability of possible appeals 

procedures if the beneficiary’s request is 

untimely; (2) an explanation of the 

implications of the decision to change 

the status of the eligible beneficiary 

from an inpatient to an outpatient 

receiving observation services, the 

potential change in beneficiary hospital 

charges resulting from a favorable 

decision, and subsequent eligibility for 

Medicare coverage for SNF services; and 

(3) any other information required by 

CMS. As to category 2 (see 

§ 405.1210(b)(2)(ii)) regarding the 

implications of the decision, this notice 

would describe for eligible beneficiaries 

the possible changes in the charges for 

their hospital stay as well as the 

potential for non-coverage if they enter 

a SNF after the hospital stay. 

Proposed new § 405.1210(b)(3) and (4) 

provided that notice delivery would be 

valid when the notice is delivered as 

required in § 405.1210(a)(3) and the 

beneficiary signs and dates the notice to 

indicate receipt and that the beneficiary 

understands the notice. Further, if a 

beneficiary refuses to sign the notice to 

acknowledge receipt, the hospital may 

annotate its copy of the beneficiary’s 

notice to indicate the refusal. The date 

of refusal would be considered the date 

of receipt of the notice. The hospital 

would be required to maintain a copy of 

the signed or annotated notice as part of 

its records regarding the stay, per 

federal or state law. 

As with existing beneficiary notice 

requirements, hospitals generally would 

need to determine whether a patient is 

capable of comprehending and signing 

the notice. Hospitals would be required 

to comply with applicable State laws 

and CMS guidance regarding the use of 

representatives and have procedures in 


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83266 Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations 

21 Section IV.D. of this final rule states that to 

obtain copies of the supporting statement and any 

related forms, individuals should visit the CMS 

website at https://www.cms.gov/regulations-andguidance/legislation/paperworkreductionactof1995/ 

pra-listing. 

place to determine an appropriate 

representative. 

We received the following comments 

regarding our proposed requirements 

related to notification of appeals rights. 

Comment: Multiple commenters were 

supportive of our proposal to require 

hospitals to deliver a standardized 

notice to eligible beneficiaries, 

informing them of the change in their 

hospital status, the resulting effect on 

Medicare coverage of their stay, and 

their appeal rights. 

Several commenters approved of the 

proposed requirement for hospitals to 

deliver the standardized notice as soon 

as possible after a beneficiary becomes 

eligible for the appeal process. A 

commenter agreed that timely notice 

will provide beneficiaries with an 

opportunity to properly evaluate 

whether they want to pursue an appeal 

relating to their status change before 

leaving the hospital, consider whether 

to enter a SNF for post-acute care, and 

resolve questions about liability for their 

hospital stay. Lastly, another commenter 

agreed that a targeted appeals notice, 

delivered only to those eligible to 

appeal, would be the most effective and 

efficient means of informing eligible 

beneficiaries of their appeal rights. 

Response: We appreciate the 

commenters’ support and agree that it is 

imperative eligible beneficiaries receive 

notice of the change in their hospital 

status, the resulting effect on Medicare 

coverage of their stay, and information 

on their appeal rights in a format and 

manner that is readily understandable. 

Comment: Many commenters urged 

CMS to apply specific revisions to the 

proposed MCSN. A few commenters 

suggested we ensure the final MCSN 

clearly describes, using plain language, 

the fact that the beneficiary was 

reclassified from inpatient to outpatient 

receiving observation services and the 

availability of appeal rights. Other 

commenters requested CMS ensure the 

finalized MCSN accurately describes the 

benefits and risks of the proposed 

appeal process. 

A commenter suggested we 

incorporate check boxes to the list of 

ramifications for hospitals to use when 

completing the MCSN. The commenter 

believes the check boxes will assist 

beneficiaries in identifying the 

information that is relevant to them and 

may reduce hospital burden when 

delivering the MCSN by reducing the 

number of beneficiary questions. The 

same commenter suggested we add a 

new section explaining that 

beneficiaries without Part B may be 

charged for the full cost of their stay. 

Another commenter felt the MCSN is 

directed to a broader class of 

beneficiaries than set forth at 

§ 405.1210(a) and suggested all the 

elements from § 405.1210(a) be listed on 

the MCSN. 

Several commenters suggested we 

remove from the beneficiary 

acknowledgement and signature block 

the statement ‘‘I also understand if I win 

my appeal, my hospital charges will be 

different and possibly higher.’’ The 

commenters found the tone of this 

language alarming and believe the 

statement may act to deter beneficiaries 

from appealing their reclassification 

when, in many cases, the beneficiary’s 

risk of higher hospital charges is 

relatively low. 

Other commenters recommended we 

add a disclaimer to the proposed MCSN 

explaining beneficiaries do not have 

financial liability protection while their 

appeal is pending. Several commenters 

requested we add a statement to the 

proposed MCSN advising beneficiaries 

that leaving the hospital will not impact 

a pending appeal and they will still 

receive notice of the appeal decision. 

Similarly, a commenter predicted 

beneficiaries would be concerned about 

the impact leaving the hospital would 

have on a pending appeal. 

A commenter suggested we reorder 

the list of potential ramifications from a 

status reclassification, found in the 

introductory paragraph, to have 

information related to SNF coverage 

precede, rather than follow, information 

related to changes to the beneficiary’s 

hospital bill. The commenter reasoned 

SNF eligibility is relevant to all 

beneficiaries that receive the MCSN, has 

a greater financial impact, and has a 

more immediate impact on a 

beneficiary’s health than potential 

changes to a beneficiary’s hospital 

charges. 

Response: We appreciate the 

commenters’ support and wide range of 

suggested modifications for the 

proposed MCSN 21 and we will be 

incorporating several commenters’ 

suggested edits to the proposed MCSN 

that we believe will increase beneficiary 

understanding of the status change and 

the potential ramifications. 

We added check boxes to the list of 

potential ramifications for the hospital 

staff to indicate which items apply to 

the beneficiary receiving the notice. We 

also added an explanation that eligible 

beneficiaries without Part B may be 

charged for the full cost of the 

outpatient stay, due to the hospital 

status change. Further, we simplified 

and streamlined language throughout 

the notice, including in the list of 

potential ramifications, to increase 

readability. 

We also revised the MCSN to confirm 

that a beneficiary may initiate a 

standard appeal after leaving the 

hospital and to clarify that a beneficiary 

who requested a timely expedited 

determination will receive notice of the 

QIO decision even if they leave the 

hospital before the decision is made. We 

agree with commenters on the 

importance of including these 

clarifications on the MCSN to enhance 

beneficiaries understanding and 

comfortability with the new appeals 

process. 

In addition, we added text to the 

MCSN to explain if the beneficiary 

remains in the hospital during the 

appeals process and they receive an 

unfavorable appeal decision, the 

beneficiary could be responsible for the 

cost of the Part B coinsurance and 

applicable deductible for any covered 

services and the full cost of any noncovered services received during the 

appeals process. We agree with 

commenters on the importance of 

beneficiaries understanding that the 

appeals process does not provide the 

same liability protections afforded when 

being discharged from a covered 

inpatient stay. However, we did not add 

an explanation that a hospital could 

release a beneficiary during an appeal, 

as suggested by some commenters, 

because hospital decisions related to 

safely releasing patients following 

treatment falls outside the scope of this 

appeals process. Hospitals must 

continue to assess the appropriateness 

of release by applying the beneficiary’s 

particular medical circumstances, using 

their usual operating procedures, and in 

accordance with all applicable laws. 

We have removed from the 

beneficiary acknowledgement and 

signature block text stating beneficiaries 

may face higher hospital charges upon 

a successful appeal. We agree with 

commenters that some beneficiaries 

could be alarmed by such a warning and 

potentially not proceed with an appeal 

they otherwise would want to pursue. 

We did not believe it necessary or 

prudent to add details on the criteria 

necessary for a beneficiary to receive the 

MCSN and pursue an appeal relating to 

their hospital status reclassification. We 

believe including such detailed 

information about the appeals criteria 

would likely be confusing to 

beneficiaries and is unnecessary for 

them to decide whether to appeal. 

Importantly, the MCSN will only be 


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22 This testing methodology is set forth and 

approved in OMB collection 0938–1382 Gen IC #11. 

delivered to those beneficiaries eligible 

to appeal. 

Finally, while we agree that Medicare 

not covering a SNF stay following a 

status change from inpatient to 

outpatient receiving observation 

services is an important ramification for 

beneficiaries, we did not reorder the list 

in the notice to reflect this. Through the 

course of consumer testing of the MCSN 

after reordering the notice to list SNF 

coverage information before information 

on potential hospital coverage, it was 

apparent that discussing SNF coverage 

after discussing the hospital coverage 

was confusing to beneficiaries.22

Comment: A commenter suggested the 

proposed MCSN be further developed 

with beneficiary input to ensure that the 

information conveyed by the notice is 

accessible and understandable to 

beneficiaries. 

Response: We agree seeking 

beneficiary input is vital when 

developing new notices and that it is 

essential for the MCSN to clearly inform 

the beneficiary of their change in status 

and related financial implications as 

well as how they may appeal this 

change. To that end, we edited the 

proposed MCSN to use research-based 

plain language that should be more 

understandable to beneficiaries. In 

addition, before distribution, the MCSN 

will have undergone consumer testing. 

We will also continue to refine the 

notice for future revisions. 

Comment: A commenter 

recommended we require hospitals 

specify the exact appeal timeframes and 

deadlines for each beneficiary that 

receives the MCSN. 

Response: We appreciate the 

commenter’s intent to have beneficiaries 

receive as personalized a notice as 

possible. We proposed for the MCSN to 

contain a statement that, if a beneficiary 

wishes to pursue an appeal, the 

beneficiary should request an appeal as 

soon as possible and before leaving the 

hospital, which is the proposed 

deadline for an expedited 

determination. We believe such a 

statement is preferable to a customized 

notice as it sufficiently advises 

beneficiaries of their appeal timeframes 

while not further increasing the burden 

that would come from hospitals having 

to customize each notice before 

delivery. We also are hesitant to create 

a notice with a glut of dates and 

information that could inadvertently 

lead to beneficiary confusion and may 

detract from other important and 

actionable material on the MCSN. We 

note this level of information is 

consistent with similar appeals notices, 

such as the IM, that have not elicited 

complaints related to uncertainty of 

when to appeal. 

Comment: A few commenters asserted 

that hospitals only change a 

beneficiary’s status from inpatient to 

outpatient when they are certain the 

change is appropriate and that the 

guidelines for inpatient versus 

outpatient coverage and payment are 

complicated. The commenters suggested 

the MCSN include specific information 

on the criteria for Medicare inpatient 

coverage and medical review for 

inpatient admissions to inform 

beneficiaries. One of the commenters 

also suggested such information and 

additions to the MCSN would assist 

preventing potential overuse of the 

proposed appeals process. 

Response: We appreciate the 

commenters’ perspective on the 

appropriateness of hospital decisions to 

change a beneficiary’s status from 

inpatient to outpatient receiving 

observation services. However, the 

purpose of the proposed prospective 

appeal process is not to validate the 

hospital change of status decision, but 

to provide beneficiaries with the ability 

to pursue an appeal relating to a change 

in a beneficiary’s status, when certain 

criteria are met, because of the 

substantial impact these decisions may 

have on beneficiaries. We believe a core 

component of creating an effective 

appeals process is to ensure ease of 

access and understanding for Medicare 

beneficiaries. We do not believe 

including detailed coverage criteria in 

the MCSN would promote beneficiary 

understanding on the effect of their 

change in status or their right to appeal 

such change. Indeed, considering the 

commenters’ acknowledgement that 

coverage and medical review criteria are 

complicated, we believe including this 

information on the MCSN would only 

risk confusing beneficiaries and 

possibly dissuading them from 

requesting appeals. 

Lastly, we are unclear of the 

commenter’s meaning when they 

expressed concern of potential overuse 

of the appeals process. In accordance 

with the Court’s order, access to the 

prospective appeals process is limited to 

eligible beneficiaries. Once the appeal 

process is established, we strongly 

believe all eligible enrollees who wish 

to pursue a valid appeal should have the 

ability to do so with reasonable ease. We 

believe including complex coverage 

criteria on the notice, with a stated 

purpose to dissuade otherwise valid 

appeals, would be antithetical to the 

Court’s order and our proposed goals. 

Therefore, we decline the commenter’s 

suggestion to include material in the 

MCSN when the inclusion is intended 

to reduce otherwise valid appeals. 

Comment: Multiple commenters 

provided feedback on the proposed 

requirements related to the timing of 

delivery of the notice. A few 

commenters were uncertain when the 

MCSN must be delivered, some 

commenters requested that hospitals be 

given more time for delivery, and 

another commenter requested a flexible 

delivery timeframe. Commenters based 

their feedback on wanting to minimize 

the risk of confusion on the part of the 

beneficiary, reduce provider burden, 

and not wanting to delay hospital 

releases (and affecting beneficiary 

options for SNF placement). 

Response: We proposed a requirement 

at § 405.1210(b) that hospitals would be 

required to deliver a standardized notice 

informing eligible beneficiaries of their 

right to appeal a denial of Part A 

coverage relating to a hospital’s decision 

to reclassify them from inpatient to 

outpatient receiving observation 

services. We proposed at 

§ 405.1210(b)(1) to require hospitals to 

deliver the notice to eligible 

beneficiaries as soon as possible after 

the beneficiary is eligible for this 

process per § 405.1210(a)(2) and (3) and 

no later than 4 hours prior to release 

from the hospital. This means, for 

beneficiaries with Part B, the notice 

must be delivered as soon as possible 

after the hospital reclassifies the 

beneficiary from inpatient to outpatient 

receiving observation services and after 

the beneficiary has been in the hospital 

for 3 consecutive days. For beneficiaries 

without Part B, hospitals must deliver 

the notice as soon as possible after the 

change in status from inpatient to 

outpatient receiving observation 

services because a 3-day hospital stay is 

not required for these beneficiaries to be 

eligible to appeal. 

We believe the MCSN delivery 

timeframes, as with other beneficiary 

notices, appropriately balance the 

interests of beneficiaries with the 

necessary burden placed upon 

hospitals. As we explained in the 

proposed rule, we reviewed the notice 

delivery procedures for other 

beneficiary notices, specifically the IM 

notice related to inpatient hospital 

discharges, and have mirrored those 

processes for delivery of the MCSN, 

wherever possible. Accordingly, the 

timeframe to deliver the MCSN is 4 

hours prior to a beneficiary’s scheduled 

release time from the hospital, as is 

existing practice for the IM. We believe 

it impractical to expect a beneficiary to 

understand the ramifications of their 

status change and have time to fully 


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consider whether they wish to file an 

appeal before leaving the hospital if the 

notice were to be given closer to the 

beneficiary’s release. 

Comment: Several commenters 

questioned the hospital’s role in 

delivering the MCSN. A commenter 

requested that CMS provide clear 

directives for hospitals to operationalize 

the delivery of the MCSN and integrate 

the notice into existing hospital 

workflows. 

Commenters also requested 

clarification in the following areas: 

• Is a hospital required to verbally 

explain the MCSN to beneficiaries and, 

if so, specify how detailed the 

explanation must be? 

• When must a hospital deliver the 

MCSN in circumstances where a 

beneficiary’s hospital status is 

reclassified shortly after their formal 

inpatient admission and then remains in 

outpatient receiving observation for 3 

days? 

• Must a beneficiary receive 4 hours 

of observation services after receiving 

the standardized notice? 

• Should hospitals document when a 

beneficiary voluntarily leaves the 

hospital less than 4 hours from 

receiving the MCSN? 

• To what extent are hospitals 

required to document delivery of the 

MCSN when a beneficiary refuses to 

sign the notice? 

A few commenters suggested that 

CMS prohibit hospitals from filling in 

the date and time in the beneficiary 

signature block because it may result in 

inaccurate information. Another 

commenter supported CMS’ proposal 

for hospitals to annotate the MCSN if a 

beneficiary refuses to sign or 

acknowledge receipt. 

Response: We proposed at 

§ 405.1210(b)(3) that a hospital’s 

delivery of the notice is considered 

valid when the hospital issues the 

notice timely, in accordance with 

§ 405.1210(b)(1), the notice contains all 

required elements, in accordance with 

§ 405.1210(b)(2), and the eligible 

beneficiary or their representative signs 

and dates the notice to indicate receipt 

and comprehension of its contents. 

We did not propose to require 

hospital staff to orally convey the 

information on the MCSN to eligible 

beneficiaries. Instead, the hospital is 

only required to complete and timely 

deliver the MCSN while ensuring the 

beneficiary can comprehend its 

contents. As we explained in the 

proposed rule, as with existing 

beneficiary notice requirements, 

hospitals generally would need to 

determine whether a patient is capable 

of comprehending and signing the 

MCSN. We continue to believe that the 

clinicians treating a beneficiary are in 

the best position to determine whether 

their patients are capable of receiving 

and comprehending a notice, and 

whether a representative should be 

contacted. It would not be practicable to 

establish specific criteria to ascertain 

whether a hospital properly assessed 

beneficiary ‘understanding’ for the 

purposes of receiving the MCSN. The 

determination should fall within the 

practiced day-to-day assessments a 

hospital is making when 

communicating with, and providing 

care to, beneficiaries. 

We note, the proposed requirement at 

§ 405.1210(b)(1) only governs the 

timeframes in which hospitals must 

deliver the MCSN to eligible 

beneficiaries. We did not propose to 

require hospitals to render observation 

services during that timeframe nor did 

we propose to restrict beneficiaries from 

choosing to leave the hospital earlier 

than their scheduled release time. 

Instead, we expect for hospitals to build 

this relatively brief 4-hour window into 

their standard patient release planning 

processes, as appropriate, for 

beneficiaries receiving the MCSN, and 

for delivery to occur, no later than, 4 

hours from the anticipated end of 

medically necessary services. Hospitals 

are already adept at timing the issuance 

of other beneficiary notices to 

correspond with the end of medically 

necessary services. In the event a 

beneficiary voluntarily leaves the 

hospital prior to the hospital’s schedule 

time of release, the hospital may 

document the time of and circumstances 

surrounding the beneficiary’s departure 

on their copy of the MCSN. 

If the beneficiary or their 

representative refuses to sign the notice, 

we proposed at § 405.1210(b)(4) to 

permit a hospital to annotate its copy of 

the notice of the beneficiary’s refusal to 

sign. The hospital would be required to 

maintain a copy of the signed or 

annotated notice as part of its records 

regarding the stay, pursuant to federal 

and state law. In the December 2023 

proposed rule (88 FR 89521), we further 

explained that a hospital would need to 

determine whether the beneficiary is 

capable of comprehending and signing 

the notice in the same manner as 

existing beneficiary notice 

requirements. 

As suggested by some commenters, 

the proposed delivery requirements do 

not permit hospital staff to prefill the 

date and time elements of the 

beneficiary receipt acknowledgement 

section before delivery of the MCSN. 

Proposed § 405.1210(b)(3)(A) states 

valid delivery of the MCSN only occurs 

when, among other criteria, an ‘‘eligible 

beneficiary (or the eligible beneficiary’s 

representative) has signed and dated the 

notice to indicate that he or she has 

received the notice and can comprehend 

its contents [or when annotated if the 

beneficiary refuses to sign the notice].’’ 

Because a beneficiary’s 

acknowledgement of receipt and 

comprehension is recorded through 

their (or their representative’s) signing 

and dating the document, hospital staff 

must not prefill these sections before 

delivery. Our proposed rules do not 

prevent hospital staff from assisting 

beneficiaries with completing the 

necessary elements after delivery. 

We agree with commenters that the 

hospital responsibilities for delivering 

the MCSN should be delineated as 

clearly as possible and appreciate the 

interest in appropriately implementing 

the MCSN into hospital workflows. 

Following finalization of this rule, we 

plan to issue sub-regulatory guidance to 

further explain specific operational 

practices as we have for other 

beneficiary notices. 

Comment: A commenter sought 

clarification on the consequences 

hospitals would face for failing to 

deliver the MCSN in accordance with 

the proposed requirements. 

Response: We did not propose and are 

not finalizing new consequences or 

penalties for hospitals that specifically 

fail to comply with the prospective 

appeal requirements. Hospitals will 

continue to be subject to existing 

enforcement actions related to noncompliance with Medicare conditions of 

participation. As always, we would 

determine the degree and manner of any 

potential enforcement action on a caseby-case basis. 

Comment: Multiple commenters 

suggested the proposed MCSN should 

not be finalized because the notice was 

too confusing for beneficiaries and 

hospitals. Several commenters worried 

the proposed MCSN would confuse 

beneficiaries by unnecessarily adding to 

the amount of documentation 

beneficiaries already receive. 

A few commenters suggested the 

proposed MCSN might confuse 

beneficiaries in situations where the 

beneficiary receives notice of their right 

to appeal, through the proposed MCSN, 

before they receive notice of their 

reclassification. (The commenters 

incorrectly inferred the purpose of the 

MOON is to notify beneficiaries that 

they have been reclassified from 

inpatient to outpatient receiving 

observations services.) 

Some commenters expressed concern 

that the MCSN could be confused with 

other existing standardized notices, 


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such as the MOON and other 

commenters suggested CMS not create a 

new standardized notice but, instead, 

incorporate language on hospital status 

reclassifications into the MOON or, in 

the alternative, require delivery of the 

new notice at the same time as the 

MOON. 

Response: We appreciate and share 

the commenters’ mindfulness for 

avoiding beneficiary and hospital 

confusion related to the proposed 

MCSN. We explained in the proposed 

rule that after determining the need for 

beneficiaries to receive notice of their 

right to appeal, we considered several 

options and, ultimately, decided the 

creation of a new standardized notice 

that would only be provided to eligible 

beneficiaries would be the least 

confusing and burdensome option 

available. In addition, we mirrored the 

notice delivery procedures to the IM 

notice procedures, a beneficiary notice 

with which hospitals are already 

familiar. We believe this approach 

balances a beneficiary’s need to be 

informed of their appeal rights in an 

appropriate and timely manner, without 

imposing unnecessary burdens on 

hospitals. 

We do not agree with commenters 

that merely creating a new beneficiary 

notice will inevitably lead to beneficiary 

confusion. While CMS has several 

beneficiary notices that must be 

delivered by hospitals, each has a 

discrete purpose and not all are 

provided at one time. As we have 

explained, the MCSN is a dedicated 

notice that will only be provided to the 

relatively few eligible beneficiaries who 

have the right to appeal based on a 

hospital reclassification from inpatient 

to outpatient receiving observation 

services. This means most beneficiaries 

will not receive the notice, drastically 

reducing the risk of beneficiary 

confusion. In addition, to enhance 

comprehension, we derived much of the 

verbiage used on the MCSN from other 

consumer-tested CMS beneficiary 

notices. Because of the narrow scope of 

the MCSN, the limited audience that 

will receive the notice, and our focus to 

use clear and concise language to 

convey the purpose of the notice, we 

believe we have taken all necessary 

steps to limit beneficiary and hospital 

confusion. 

We explained in the proposed rule 

that we considered alternatives to 

creating a new notice for this process, 

including adding appeals information to 

the MOON or other existing beneficiary 

notifications. However, as discussed in 

the proposed rule, the vast majority of 

beneficiaries receiving the MOON will 

not be eligible for an appeal under this 

new process. Therefore, we believe 

using the MOON instead of, or in 

addition to, the MCSN, would be 

confusing to the nearly 600,000 

beneficiaries receiving the MOON per 

year who would not be eligible for this 

appeal process. 

Further, the MOON is only required 

for beneficiaries who have been 

outpatients receiving observation 

services for more than 24 hours. We 

proposed, however, the prospective 

appeals process would be available to 

eligible beneficiaries that received 

observation services for any amount of 

time after their reclassification from 

inpatient to outpatient. Therefore, 

because the MOON is not required for 

observation stays shorter than 24 hours, 

using the MOON, or attaching delivery 

of the MCSN to delivery of the MOON, 

would result in eligible beneficiaries not 

receiving notification of their right to 

appeal regarding a hospital status 

reclassification. 

We also do not agree that beneficiaries 

will be confused if they receive the 

MCSN before the MOON. The MOON 

does not indicate whether the hospital 

has changed the beneficiary’s status 

from inpatient to outpatient receiving 

observation services and, importantly, 

would not be required to be delivered to 

beneficiaries that have had their status 

changed and receive less than 24 hours 

of observation services. Instead of the 

MOON, hospitals are currently required 

to provide a written Condition Code 44 

notification to inform beneficiaries 

when their status is changed from 

inpatient to outpatient after review by a 

hospital utilization review committee 

and the entire episode will be billed as 

outpatient. 

We decided against adding 

information on the prospective appeals 

process to the Condition Code 44 notice, 

however, because the number of 

beneficiaries eligible for this new 

appeals process would only be a small 

subset of the population receiving the 

existing Condition Code 44 notification. 

Therefore, we believe the MCSN and 

Condition Code 44 notification have 

distinct roles that will also provide 

complementary information to 

beneficiaries eligible for this appeals 

process. 

Comment: Multiple commenters 

generally asserted the requirement for 

hospitals to deliver a new standardized 

notice specific to beneficiaries 

reclassified from inpatient to outpatient 

receiving observation services is too 

burdensome for hospitals and 

recommended against finalizing the 

policy. A commenter suggested the new 

delivery requirement, combined with 

existing workforce issues, would create 

an undue burden for hospitals and 

would be logistically almost impossible 

for hospitals to comply. Another 

commenter suggested hospitals already 

struggle with the timely delivery of the 

MOON and IM and adding another 

notice with a shorter deadline would 

compound an already administratively 

burdensome process. A commenter 

asserted the notice requirement would 

be an enormous burden on hospitals for 

what is estimated to be a small volume 

of appeals. 

A commenter predicted the notice 

requirement would exacerbate hospital 

nursing shortages because the QIOs will 

need to hire new staff, thereby 

decreasing the pool of hirable nurses. A 

few commenters recommended CMS 

minimize the role of providers in 

delivering the proposed MCSN to 

protect the providers’ patient care time. 

However, another commenter 

recommended CMS require hospitals 

use clinical staff to deliver the notice. 

Response: We estimated in the 

proposed rule that hospitals would be 

required to give 15,655 MCSNs to 

beneficiaries each year, which we 

acknowledged is likely an 

overestimation based on limitations to 

our data collection. The current number 

of Medicare-certified hospitals in the 

country is approximately 6,162. 

Therefore, we estimate a single 

Medicare-certified hospital would 

deliver on average fewer than 3 notices, 

per year. While we understand the act 

of delivering new notices, even in a low 

volume, is an appreciable increase in 

responsibilities for hospitals, we do not 

believe the new appeals process will 

significantly affect operations or staffing 

within hospitals. 

As we explained in the proposed rule, 

when considering developing the MCSN 

we needed to balance hospital burden 

with the need to appropriately notify 

beneficiaries of their appeal rights. We 

strongly believe the use of a dedicated, 

standardized notice, delivered by 

hospital staff to patients while still in 

the hospital is the most efficient and 

effective manner by which to inform 

beneficiaries of their appeal rights. We 

considered but ruled out adding the 

appeals language to existing beneficiary 

notices because, primarily, the appeals 

information would not be applicable to 

most beneficiaries receiving those 

notices. In addition, we are wary of 

adding too much information onto a 

single notice as consumer research 

consistently demonstrates that 

beneficiaries are not adept at selfselecting information. We, therefore, 

believe using a notice exclusively for 

those beneficiaries eligible to pursue an 

appeal relating to a hospital status 


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reclassification will ensure beneficiaries 

understand their appeal rights and how 

to exercise them. 

The proposed delivery requirements 

for the MCSN were derived from the 

existing procedures hospitals must 

follow when delivering the IM. Our 

intention for mirroring the delivery 

processes was to leverage the familiarity 

that existing hospital processes and staff 

have with the IM procedures to more 

easily incorporate the new MCSN 

delivery requirements. Further, we 

developed the new MCSN to be a largely 

generic notice that would only require 

hospital staff to complete a few fields 

before delivering to the beneficiary. We 

strongly believe that considering the 

limited estimated volume of MCSNs 

hospitals would need to deliver 

annually, the similarity between the IM 

and new MCSN delivery procedures, 

and the familiarity existing hospital 

processes and staff have with the IM, 

will allow for hospital compliance with 

very limited increase in burden. 

Finally, while we used a registered 

nurse’s hourly rate to compute our 

burden calculation, we would like to 

clarify that there is no requirement for 

hospitals to use clinical personal to 

deliver the MCSN. As with similar 

notices, such as the IM and MOON, we 

do not feel it appropriate or necessary 

to regulate which hospital staff are 

capable of delivering the MCSN. Such 

decisions are best left to hospitals to 

make based on their internal protocols 

and staffing requirements. In regard to 

the impact the new appeals process will 

have on QIO-hiring demands, we 

estimated that the QIO will receive an 

estimated 8,000 appeals per year. While 

we do anticipate the QIO will need to 

hire additional clinical staff to review 

the increasing appeal volume, we do not 

anticipate an impact on hospital hiring 

practices on a national level. Thus, we 

do not foresee this new appeals process 

having a significant impact on clinical 

care resources or the demand for nurse 

labor. 

We appreciate the feedback we 

received from commenters on the 

notification requirements. We will be 

finalizing the proposals at § 405.1210 as 

proposed. (We note that changes to the 

MCSN will be reflected in OMB control 

number 0938–1467 which is discussed 

in section IV.B.2. of the final rule.) 

3. Expedited Determination Procedures 

When a Beneficiary Is Reclassified From 

an Inpatient to an Outpatient Receiving 

Observation Services (§ 405.1211) 

Proposed new § 405.1211 sets forth 

the procedures for the new expedited 

QIO review leading up to issuance and 

effect of the QIO’s determination. We 

stated in the proposed rule that 

proposed § 405.1211 would establish 

the responsibilities of the hospitals, 

QIOs, and beneficiaries relative to the 

process. 

Proposed § 405.1211(a) described a 

beneficiary’s right to request an 

expedited determination by a QIO when 

they are reclassified by their hospital 

from an inpatient to an outpatient 

receiving observation services, and the 

beneficiary meets the criteria to be 

eligible for an appeal as established in 

§ 405.1210(a)(3). As previously 

discussed, QIOs are experienced in 

performing expedited appeals for 

beneficiaries in a hospital setting and 

thus, are well prepared to implement 

and execute this new appeals process in 

an effective and expeditious manner. 

Currently, Beneficiary and Family 

Centered QIOs (BFCC–QIOs) perform 

the case review functions that are 

similar to the reviews that would be 

required by §§ 405.1211 and 405.1212, 

so we proposed to assign these new 

reviews to BFCC–QIOs under our 

contracts with them; in the event that 

CMS reconsiders in the future how QIO 

functions are assigned and the 

categorization of QIOs, we stated that 

we intended that the type of QIOs that 

perform case review functions (see 42 

CFR 405.1200 through 405.1208, 

475.102, 476.1 et seq.) would also 

perform these new reviews of changes 

in status. 

In new § 405.1211(b), we proposed 

the process for eligible beneficiaries to 

request an expedited determination by 

the QIO. First, the eligible beneficiary’s 

request must be by telephone to the 

QIO, or in writing. We did not propose 

any parameters of what a request in 

writing would constitute, but it could be 

an email or fax transmitted to the QIO. 

We also proposed at § 405.1211(b)(1) the 

timeframe for requesting such an 

appeal: eligible beneficiaries would be 

required to request an appeal to the QIO 

prior to release from the hospital. The 

notice required under proposed 

§ 405.1210 would identify the BFCC– 

QIO that serves the geographic area that 

includes the hospital so that this 

information is available to the eligible 

beneficiary. 

Proposed sections 405.1211(b)(2) and 

(b)(3) explained the responsibilities of 

beneficiaries to discuss the case, if 

requested by the QIO, and their right to 

submit written evidence to be 

considered by the QIO. Per proposed 

§ 405.1211(b)(4), if an eligible 

beneficiary requests an appeal timely, 

they would not be billed during the QIO 

appeals process. However, if the appeal 

is untimely, the hospital may bill a 

beneficiary before this QIO process is 

complete; proposed paragraphs (b)(4) 

and (e) make this clear. Finally, we also 

proposed, in § 405.1211(b)(5), that an 

eligible beneficiary may file a request 

for review by the QIO regarding the 

change in status after the deadline 

established in proposed § 405.1211(b)(1) 

(that is, the beneficiary may file the 

request after release from the hospital) 

but that the QIO’s determination will be 

provided on a different timeframe and 

the eligible beneficiary will not be 

entitled to the billing protection 

proposed in paragraph (e). Keeping 

untimely appeals with the QIO will 

provide beneficiaries with a decision far 

sooner though (2 calendar days), than if 

those beneficiaries were provided with 

the timeframes set forth in the standard 

claims appeals (60 days at the first level 

of the claims appeals process). We 

proposed that these untimely requests 

may be made at any time in order to 

afford maximum opportunity for 

beneficiaries to exercise their appeal 

rights. Of most concern are those 

beneficiaries who may have had a SNF 

stay following their change in status 

from an inpatient to an outpatient 

receiving observation services. These 

beneficiaries should have the maximum 

opportunity to appeal and potentially 

obtain coverage for what might have 

been a costly out-of-pocket outlay. 

Proposed § 405.1211(c)(1) through 

(c)(5) described the procedures that the 

QIO would be required to follow in 

performing the expedited 

determination. We proposed at 

§ 405.1211(c)(1) that the QIO must 

immediately notify the hospital that a 

request for an expedited appeal has 

been made. In addition, as proposed in 

§ 405.1211(c)(2) and (3), the QIO would 

be required to determine whether valid 

notice was delivered and examine 

medical and other relevant records that 

pertain to change in status. As proposed 

at § 405.1211(c)(4) and (5), the QIO 

would be required to solicit the views 

of the beneficiary and provide the 

hospital an opportunity to explain why 

the reclassification of the beneficiary 

from an inpatient to an outpatient 

receiving observations services is 

appropriate. The QIO will review the 

information submitted with the appeal 

request and any additional information 

it obtains to determine if the inpatient 

admission satisfied the relevant criteria 

for Part A coverage at the time the 

services were furnished. 

Proposed section 405.1211(c)(6) 

addressed the timing of the QIO’s 

determination. Per proposed paragraph 

(c)(6)(i), the QIO must render a decision 

and notify all relevant persons and 

entities within 1 calendar day of 

receiving all requested pertinent 


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23 The proposed regulations text at 

§ 405.1211(c)(6)(ii) contained a typographical error 

that stated that the QIO must render a decision for 

untimely requests within 1 day. This was an error 

that will be corrected in this final rule. 

information if the eligible beneficiary 

requested the expedited determination 

as specified in proposed 

§ 405.1211(b)(1) (that is, no later than 

the day of release from the hospital). 

Based on current experience regarding 

documentation submitted by hospitals 

under other expedited beneficiary 

appeal timeframes, we did not 

anticipate that the QIO will encounter 

delays in receiving any information 

necessary from the hospital once the 

hospital is notified of the appeal (see 

proposed § 405.1211(d)(1)). This 

timeframe is as rapid as possible to 

minimize potential liability for 

beneficiaries as well as to maximize 

their potential for coverage in a SNF 

should they obtain a favorable decision 

by the QIO. A Medicare covered SNF 

stay must begin within 30 days of a 

beneficiary’s discharge from a hospital. 

To that end, QIOs would make their 

decisions as quickly as possible so 

beneficiaries receiving favorable 

decisions will have time to plan for and 

begin a SNF stay within the 30-day 

parameter. 

Proposed § 405.1211(c)(6)(ii) provided 

that the 1 calendar day QIO decision 

deadline does not apply if a beneficiary 

makes an untimely request for an 

expedited appeal, but that the QIO 

would still accept the request and 

render a decision within 2 calendar 

days after the QIO receives all requested 

information that the hospital must 

provide per proposed 

§ 405.1211(d)(1).23 This provides a 

beneficiary with the maximum ability to 

exercise their right to an expedited 

appeal, and the opportunity to obtain 

SNF coverage within the Medicare 

coverage limitation of 30 days after 

leaving a hospital, should their appeal 

to the QIO be favorable. 

In § 405.1211(c)(7) we proposed that if 

the QIO does not receive the 

information needed to make its 

decision, the QIO may move forward 

and make a decision based on the 

information it has at the time. This is to 

protect the interests of the beneficiary 

by ensuring they receive their decision 

within the QIO’s required timeframes of 

1 calendar day for a timely request and 

2 calendar days for an untimely request. 

The QIO decision, as required by 

proposed § 405.1211(c)(8), must be 

conveyed to the eligible beneficiary, the 

hospital, and SNF (if applicable) by 

telephone followed by a written notice. 

We proposed that the QIO’s written 

notice of its determination must include 

the basis for the determination, a 

detailed rationale for the QIO decision, 

an explanation of the Medicare payment 

consequences of the determination, and 

information about the beneficiary’s right 

to an expedited reconsideration as set 

forth in § 405.1212, including how and 

in what time period a beneficiary may 

make that reconsideration request. The 

basis of a decision is a description of, 

and citations to, the Medicare coverage 

rule, instruction, or other policies 

applicable to the review. A detailed 

rationale is an explanation of why 

services do or do not meet the relevant 

criteria for Part A coverage based on the 

facts specific to the beneficiary’s 

situation and the QIO’s review of the 

pertinent information provided by the 

hospital (as with other expedited 

beneficiary appeals of hospital 

discharges and service terminations). 

Proposed § 405.1211(d) set forth the 

responsibilities of hospitals in the 

expedited appeals process. Section 

405.1211(d)(1) provided that the 

hospital must supply all information 

that the QIO needs, no later than noon 

of the calendar day after the QIO 

notifies the hospital of the appeals 

request. We also proposed that at the 

discretion of the QIO, the hospital must 

make the information available by 

phone or in writing (with a written 

record of any information not 

transmitted initially in writing). Section 

405.1211(d)(2) required that hospitals, 

upon request, must provide the 

beneficiary any documentation, 

including written records of any 

information provided by telephone, it 

provides to the QIO. We proposed that 

this obligation work the same way that 

it does under § 405.1206(e)(3), 

specifically that the hospital may charge 

a reasonable amount to cover the costs 

of duplicating and delivering the 

requested materials and must 

accommodate such a request by no later 

than close of business of the first day 

after the material is requested by the 

beneficiary or the beneficiary’s 

representative. 

In § 405.1211(e), we proposed that a 

hospital may not bill a beneficiary who 

has appealed timely for any services at 

issue in the appeal until the expedited 

determination process (and 

reconsideration process) is complete. 

Although there is liability protection in 

the inpatient discharge expedited 

appeals process under section 

1869(c)(3)(C)(iii) of the Act 

(incorporating the financial liability 

protection in section 1154(e)(4) of the 

Act in effect prior to the enactment of 

section 1869(c)(3)(C) of the Act), there is 

no statutory provision protecting the 

beneficiary from financial liability for 

the hospital stay and services furnished 

during the pendency of the QIO’s 

review proposed here. Therefore, we 

proposed only that the hospital may not 

bill the beneficiary until after the QIO 

has issued its determination. This 

proposal mirrored existing procedures 

for the similar expedited appeals 

procedures the termination of nonhospital services found at § 405.1202(g). 

This process would not extend coverage 

available to beneficiaries during an 

appeal, which is consistent with 

§ 405.1202(g). 

Proposed § 405.1211(f) set forth that a 

QIO determination is binding for 

payment purposes on the beneficiary, 

hospital, and MAC, unless the 

beneficiary pursues an expedited 

reconsideration per § 405.1212. The 

decision is binding for purposes of 

payment only, such that if the hospital 

submits a claim under Part A, CMS will 

make payment. 

We received the following comments 

regarding our proposed requirements 

related to the prospective appeal 

determination procedures. 

Comment: Many commenters 

expressed approval that the proposed 

prospective appeals process would be 

available to all beneficiaries who have 

been reclassified by a hospital from an 

inpatient to an outpatient receiving 

observation services, rather than 

limiting the class of eligible 

beneficiaries to those who receive a 

MOON, which is only required to be 

delivered when outpatient services 

reach 24 hours in duration. Multiple 

commenters strongly supported that 

beneficiaries with Part A but not Part B 

would not need to remain in the 

hospital for at least 3 days in order to 

be eligible for an appeal. 

Response: We thank the commenters 

for their support of the proposed 

prospective appeals policy and our 

expansion of the population of 

beneficiaries eligible for an appeal. 

Comment: Multiple commenters 

sought clarification on the criteria 

required for beneficiaries to access the 

proposed prospective appeals process. 

A few commenters questioned whether 

a beneficiary who is reclassified from 

inpatient to outpatient but does not 

receive observation services may appeal 

the reclassification. A few commenters 

questioned whether it was CMS’s intent 

to require a beneficiary to receive the 

MOON in order to be eligible to appeal 

regarding a hospital status 

reclassification. 

A commenter questioned whether a 

beneficiary may use the proposed 

appeals process when they have been 

reclassified from inpatient to outpatient 

receiving observation services, do not 


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have Medicare Part B, but have other 

insurance coverage for outpatient 

observation services. A few commenters 

questioned whether a beneficiary must 

specify they are seeking SNF care in 

order to request an appeal. A 

commenter questioned how the 

proposed appeals process would be 

affected if a beneficiary exhausts their 

Medicare inpatient coverage and 

whether beneficiaries, in those 

circumstances, could pursue an appeal 

under the proposed prospective appeals 

process. 

Response: We proposed at 

§ 405.1211(a) that a beneficiary has the 

right to request an appeal by a QIO 

when they are reclassified by their 

hospital from an inpatient to an 

outpatient receiving observation 

services, and the beneficiary meets the 

eligibility criteria established in 

§ 405.1210(a)(3). Pursuant to proposed 

§ 405.1210(a)(3), an eligible beneficiary 

would be one who was formally 

admitted as a hospital inpatient, was 

subsequently reclassified as an 

outpatient receiving observation 

services, and either was not enrolled in 

Medicare Part B at the time of the 

beneficiary’s hospitalization or stayed in 

the hospital for 3 or more consecutive 

days but was classified as an inpatient 

for fewer than 3 days. 

We explained in the proposed rule the 

provisions of the prospective appeals 

process are intended to implement the 

District Court order in Alexander v. 

Azar, 613 F. Supp. 3d 559 (D. Conn. 

2020), aff’d sub nom., Barrows v. 

Becerra, 24 F.4th 116 (2d Cir. 2022). The 

Court’s order required new appeal 

procedures be afforded to a specific 

class of Medicare beneficiaries who, 

among other criteria, have or will have 

been subsequently reclassified by the 

hospital as an outpatient receiving 

observation services. In accordance with 

the court order, we established the 

beneficiary eligibility criteria for this 

new appeal process at § 405.1210(a)(3), 

which requires eligible beneficiaries to 

have been reclassified by their hospital 

to an outpatient receiving observation 

services, among other criteria. We 

defined the phrase ‘‘outpatient receiving 

observation services’’ at proposed 

§ 405.931(h) to mean when the hospital 

changes the beneficiary’s status from 

inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services. Thus, we 

believe it to be explicitly clear that a 

beneficiary must have received at least 

some observation services after being 

reclassified from an inpatient to 

outpatient in order to be eligible for the 

proposed appeals process. 

As discussed in the proposed rule, a 

beneficiary does not need to receive the 

MOON in order to be eligible to request 

a prospective appeal. The MOON is a 

beneficiary notice furnished by a 

hospital to beneficiaries who receive 

observation services as an outpatient for 

more than 24 hours. However, in 

accordance with the proposed 

§ 405.1210(a)(3) beneficiaries are 

eligible for the prospective appeals 

process after being reclassified from 

inpatient to outpatient receiving 

observation services if any time is spent 

in observation following the 

reclassification. Thus, the MOON is not 

required to be received by, and likely 

would not be received by many, 

beneficiaries in order to be eligible to 

appeal regarding a hospital status 

change under the new process. We 

acknowledge, as we did in the proposed 

rule, that this policy expands the 

population of beneficiaries eligible for 

an appeal beyond the class defined by 

the court in Alexander. 

As we have previously explained, 

eligible beneficiaries include those 

whose hospital status was changed from 

inpatient to outpatient receiving 

observation services and were not 

enrolled in Medicare Part B at the time. 

We did not propose to include 

consideration of non-Medicare 

insurance among the required elements 

for appeal eligibility and do not believe 

it is prudent to do so now for several 

reasons. First, we do not believe 

verifying non-Medicare insurance in 

real-time during a fast-moving 

expedited process would be practical 

without risking delays to the appeal 

decisions if the QIO must first confirm 

a beneficiary does not have other 

outpatient insurance coverage. In 

addition, a beneficiary’s possession of 

non-Medicare outpatient insurance does 

not actually guarantee coverage in all 

circumstances. Such decisions would be 

made on a case-by-case basis by the 

other insurer. Lastly, the Medicare 

program does not limit a beneficiary’s 

appeal eligibility based on having 

outside insurance in other 

circumstances. Thus, we do not believe 

it reasonable to limit a beneficiary’s 

right to appeal under the prospective 

appeals process merely because they 

may possess outpatient insurance 

coverage from another source. 

Similarly, we did not propose at 

§ 405.1210 (a), establishing the scope of 

prospective appeals process, a 

requirement for beneficiaries to request 

SNF services to be eligible to pursue an 

appeal regarding a hospital 

reclassification from inpatient to 

outpatient receiving observation 

services. While we expect SNF coverage 

to be a driving factor for many 

beneficiaries considering whether to 

pursue a prospective appeal, this is not 

the only reason an appeal might be 

warranted. For example, a beneficiary 

may want to appeal because they expect 

that their out-of-pocket costs would be 

lower as an inpatient or, in another case, 

the beneficiary may not have Part B and 

would want to appeal in order to not be 

liable for the full cost of the hospital 

stay. More importantly, some 

beneficiaries may not want to enter 

post-acute SNF care and, in those cases, 

we do not feel it would be just to 

condition a beneficiary’s ability to 

pursue an appeal regarding a hospital 

reclassification on the requirement that 

they seek SNF care. Thus, while 

eligibility for a covered SNF stay is an 

important consideration for many 

beneficiaries considering an appeal, we 

believe it would be improper to 

significantly limit the class of eligible 

beneficiaries by requiring a beneficiary 

to seek SNF care as a prerequisite for 

appealing based on a hospital 

reclassification. 

Finally, an implicit requirement for 

beneficiaries seeking inpatient coverage 

through the prospective appeals process 

is having available Medicare Part A 

benefits. The proposed appeals process, 

as with other similar appeals processes, 

does not override statutory benefit 

limits, such as the availability of 

inpatient hospital days. Should a 

beneficiary begin an appeal and it 

becomes evident that inpatient days are 

exhausted, the appeal decision will be 

unfavorable. Even if the QIO is unaware 

that the beneficiary had exhausted their 

inpatient days, the usual claim edits 

would trigger, and coverage would not 

be available to the beneficiary upon the 

submission of a claim. This appeals 

process does not confer benefits in 

excess of Medicare statutory limits. 

Comment: A commenter 

recommended CMS permit SNF staff to 

file appeals under the prospective 

appeals process on behalf of eligible 

beneficiaries. The commenter asserted 

beneficiaries often lack the necessary 

support to work through appeals 

processes on their own and SNFs would 

be motivated to ensure they receive 

proper payment for services they render. 

Another commenter questioned whether 

hospital staff may assist a beneficiary in 

the proposed appeals process by 

answering questions and guiding the 

beneficiary through the appeals process. 

Response: We appreciate the 

commenter’s suggestion to permit a SNF 

to file an appeal on behalf of an 

enrollee; however, we do not agree that 


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party status should be extended to 

providers for the new appeals process. 

The prospective appeals process, 

proposed at §§ 405.1210 through 

405.1212, is available to eligible 

beneficiaries who, after formally being 

admitted as an inpatient, have 

subsequently been reclassified by the 

hospital as an outpatient receiving 

observation services. We explained in 

the proposed rule that the court order 

specifically required the provision of 

appeal rights to a defined set of class 

members, and that definition did not 

include the provider of services (that is, 

hospitals and SNFs). Accordingly, we 

proposed limiting party status for these 

new appeals to the defined class 

members. The same limitation currently 

exists for hospital discharge appeals 

procedures in §§ 405.1205 and 

405.1206, where a provider of services 

does not have party status. 

While we are not extending party 

status to SNFs or other provider types, 

we are not modifying existing rules 

related to appointed representatives 

who may act on behalf of a beneficiary, 

nor have we restricted hospital or 

provider staff from assisting 

beneficiaries as they navigate their 

status reclassification and appeals 

process. We believe hospital and other 

provider staff already routinely engage 

in support activities for beneficiaries in 

their care and we endorse providers 

extending such support to eligible 

beneficiaries appealing based on a 

hospital reclassification. We do not 

believe it is necessary to strictly define 

or limit the type of support that may be 

provided to an eligible beneficiary but 

believe such support could include 

answering questions, providing 

explanations on the reclassification and 

appeals process, or assisting the 

beneficiary or their representative in 

contacting a State Health Insurance 

Program, 1–800–MEDICARE, or the 

QIO. We note that we do not believe 

support includes hospital staff 

completing the beneficiary specific 

portions of the MCSN that document the 

beneficiary’s comprehension of the 

notice and the date/time of receipt 

before delivery to the beneficiary. 

Comment: Multiple commenters 

commended CMS for not placing a 

deadline on when an eligible 

beneficiary may submit an appeal 

request to the QIO after leaving the 

hospital. A few commenters sought 

clarification on whether there is a 

deadline for eligible beneficiaries to 

submit an appeal to the QIO after 

leaving the hospital. 

Response: We thank commenters for 

their support on the proposed appeal 

submission timeframes and for 

recognizing our intent to afford 

beneficiaries maximum flexibility when 

considering whether to request an 

appeal under the prospective appeals 

process. We proposed in 

§ 405.1211(b)(5) that an eligible 

beneficiary may file a request for review 

by the QIO regarding their change in 

hospital status after the deadline 

established for expedited 

determinations, at proposed 

§ 405.1211(b)(1). More specifically, the 

beneficiary may file an appeal request 

after they are released from the hospital. 

In addition, we proposed that these 

untimely appeal requests, which we 

also referred to as ‘‘standard’’ appeal 

requests, may be made ‘‘at any time.’’ 

We did not propose a deadline for these 

appeal requests in order to afford 

beneficiaries flexibility when exercising 

their appeal rights, especially those who 

may have had a SNF stay following their 

change in status from inpatient to 

outpatient receiving observation 

services. We continue to believe 

beneficiaries should have the maximum 

opportunity to pursue an appeal 

regarding their status change and 

potentially obtain coverage for SNF 

services which they may have paid outof-pocket. 

Comment: A commenter suggested 

CMS extend the timeframe for eligible 

beneficiaries to request an expedited 

determination to 48 hours after leaving 

the hospital. The commenter explained 

that an extended submission timeframe 

would better protect a beneficiary’s 

rights by affording the shortest appeal 

decision timeframe available. 

Response: We understand and 

appreciate the commenter’s intent to 

provide beneficiaries with as long as 

possible to request and receive an 

expedited determination from the QIO. 

When proposing the expedited appeal 

submission timeframe, we weighed the 

benefit of providing beneficiaries ample 

time to submit an appeal request with 

ensuring beneficiaries submit the appeal 

request as soon as possible. Because 

there is no liability coverage during the 

proposed appeals process, we believe it 

is in beneficiaries’ best interest to 

receive an appeal decision as soon as 

possible. In addition, we believe rapid 

decisions will provide beneficiaries 

with a more accurate picture of their 

inpatient coverage status and better 

inform their future financial and health 

care decisions, such as electing postacute care services. If a beneficiary 

obtains a favorable decision from the 

QIO, a rapid decision will also 

maximize their potential for coverage in 

a SNF or other post-acute care facility. 

We believe the proposed policy 

requiring beneficiaries to submit an 

expedited appeal before leaving the 

hospital strikes an effective balance that 

incentivizes beneficiaries to submit 

appeals quickly, so to receive a faster 

appeal decision, with ensuring untimely 

appeals are still processed 

expeditiously. An expedited appeal 

timely submitted to the QIO will be 

decided within 1 calendar day of 

receiving all relevant requested 

information. An untimely expedited 

appeal submission to the QIO will be 

decided within 2 calendar days of 

receiving all relevant requested 

information. This policy, while slightly 

slower than the expedited 

determination timeframes, still provides 

beneficiaries with a decision far sooner 

than if they had to request an appeal 

under the standard claims appeal 

timeframes (60 days at the first level of 

the claims appeals process). 

Comment: Multiple commenters 

sought clarification from CMS on 

whether the proposed regulations 

require hospitals to retain beneficiaries 

for the duration of an expedited QIO 

review. A few commenters suggested 

CMS clarify that the QIO must continue 

to process an expedited determination 

request whether the beneficiary is 

present in the hospital or not. Several 

commenters recommended CMS permit 

hospitals to discharge or release 

beneficiaries from the hospital, as 

reasonable and necessary, during the 

pendency of an expedited 

determination. Other commenters 

warned the proposed policy will 

needlessly delay beneficiaries’ safe 

release from hospitals and warned that 

requiring hospitals to keep beneficiaries 

in the facilities would increase the risk 

of beneficiaries contracting hospital 

infections and may lead to increased 

mortalities. 

Response: We did not propose and are 

not finalizing a requirement that would 

restrict hospitals from safely releasing 

eligible beneficiaries that are awaiting a 

decision from the QIO on an expedited 

determination request. We explained in 

the proposed rule that the court in 

Alexander indicated that HHS should 

use a process for expedited appeals 

regarding hospital status changes that is 

‘‘substantially similar’’ to the existing 

process for expedited hospital discharge 

appeals at §§ 405.1205 through 

405.1208. While we believe we have 

appropriately followed the direction of 

the court, we noted in the proposed rule 

that there are certain differences 

between the proposed expedited 

determination process and the existing 

hospital discharge appeals process. 

Most notably, we explained that the 

proposed expedited determination 

process does not afford beneficiaries 


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protection from financial liability for 

services furnished during the pendency 

of the QIO’s review. Instead, we 

proposed that the hospital may not bill 

the beneficiary until after the QIO has 

issued its expedited determination or 

issued a decision in response to a timely 

reconsideration request, as applicable. 

We noted that this billing protection 

does not extend coverage to 

beneficiaries during the appeal, which 

is consistent with § 405.1202(g). 

Although we believed the policy was 

clearly described in the proposed rule, 

as several commenters had similar 

misunderstandings, we explicitly state 

here that the new appeals process does 

not direct hospitals to house or treat a 

beneficiary with medically unnecessary 

care during the pendency of their 

appeal. Hospitals should continue to 

follow all existing federal, state, and 

local rules and internal standard 

operating procedures when considering 

the release of a beneficiary who no 

longer requires hospital services. The 

only interaction this appeals process has 

with an eligible beneficiary’s release 

from the hospital is the proposed 

requirement for hospitals to deliver the 

MCSN no later than 4 hours before the 

beneficiary’s release from the hospital. 

We continue to believe that hospitals 

are equipped to accurately estimate, to 

within 4 hours, when an enrollee will 

cease to need medical care and should 

be able to comply with the MCSN 

delivery requirement. 

Because we did not propose and are 

not finalizing a requirement that 

restricts hospitals from releasing eligible 

beneficiaries during an appeal, we do 

not believe we need to address the 

comments related to unnecessarily 

housing patients that do not need 

hospital-level care in hospitals. 

Comment: Multiple commenters 

requested CMS clarify whether enrollees 

receive financial liability protection for 

services received while their appeal is 

pending. Several commenters urged 

CMS to hold beneficiaries harmless for 

the costs of services received while an 

expedited appeal is pending. These 

commenters suggested CMS will violate 

the court’s direction that CMS should 

use a process for the expedited appeals 

that is ‘‘substantially similar’’ to the 

inpatient hospital discharge appeals 

process if beneficiaries are not held 

financially harmless while an expedited 

appeal is pending. 

Several commenters requested 

guidance on how to code and bill 

beneficiaries for time spent in the 

hospital during their appeal. These 

commenters incorrectly believed the 

hospital could not release patients 

during the appeals process and 

suggested the hospital would need to 

bill for custodial care. Similarly, other 

commenters questioned how to properly 

inform a beneficiary that they will be 

financially liable for services received 

during their appeal. 

Response: We appreciate the 

commenters’ concerns and interests in 

protecting beneficiaries’ financial 

liability during the expedited appeals 

process. As we previously explained, 

we believe the proposed structure of the 

expedited appeals process complies 

with the court order indicating we 

should use a process for expedited 

appeals regarding hospital status 

changes that is ‘‘substantially similar’’ 

to the existing process for expedited 

hospital discharge appeals at 

§§ 405.1205 through 405.1208. 

Nevertheless, there are certain 

important differences between the two 

appeals processes. Most notably, the 

proposed expedited determination 

process does not afford beneficiaries 

protection from financial liability for 

services furnished during the pendency 

of the QIO’s review. As discussed in the 

proposed rule, Section 

1869(c)(3)(C)(iii)(III) of the Act (by 

incorporating the financial liability 

protection in section 1154(e)(4) of the 

Act in effect prior to the enactment of 

section 1869(c)(3)(C)) provides 

beneficiaries with coverage during the 

inpatient hospital discharge appeal 

process. However, this statute only 

applies to beneficiaries being discharged 

from a Medicare covered inpatient 

hospital stay. Under the proposed 

appeals process, beneficiaries are 

eligible to appeal based on a hospital’s 

reclassification of their inpatient status 

to outpatient receiving observation 

services. Because the new appeals 

process is not an appeal of a covered 

inpatient hospital discharge, section 

1869(c)(3)(C)(iii)(III) is inapplicable to 

the new appeals process. Thus, we did 

not propose and are not finalizing 

financial liability protections for eligible 

beneficiaries that appeal regarding a 

hospital reclassification from inpatient 

to outpatient receiving observation 

services. 

We note that most of the commenters 

requesting guidance on notification and 

coding related to billing beneficiaries 

during the appeals process seem to 

misinterpret our proposed regulations to 

require hospitals to retain beneficiaries 

during the appeals process even if they 

no longer meet the requirements for 

medically necessary care. As we 

addressed in a previous comment, the 

proposed appeals procedures do not 

prevent hospitals from safely releasing 

beneficiaries based on their particular 

medical circumstances. Therefore, 

hospitals should continue to follow all 

existing federal, state, and local 

requirements for providing, and 

notifying beneficiaries of their financial 

liability related to non-covered care. 

Comment: A few commenters urged 

CMS to grant beneficiaries presumptive 

SNF coverage from the date a 

prospective appeal is requested to at 

least the date of the QIO decision. 

Response: While we appreciate the 

commenters’ suggestion, we decline to 

create a policy that would provide 

presumptive SNF coverage for the days 

in which a prospective appeal is being 

adjudicated by the QIO. To qualify for 

SNF services coverage, section 1861(i) 

of the Act requires Medicare 

beneficiaries to have a medically 

necessary 3-consecutive-day inpatient 

hospital stay within 30 days of 

admission to a SNF. However, 

beneficiaries eligible for the proposed 

prospective appeals process had their 

hospital status changed from inpatient 

to outpatient receiving observation 

services. This means the beneficiaries 

may not have acquired the necessary 3- 

day stay to qualify for SNF coverage. 

Indeed, this is one of the primary 

reasons the court in Alexander directed 

CMS to create an expedited 

determination process for eligible 

beneficiaries. Therefore, in order to 

meet the 3-day stay requirement, as 

established by statute, most eligible 

beneficiaries would have to receive a 

favorable decision from the QIO. If CMS 

were to provide presumptive SNF 

coverage for the days in which a QIO is 

adjudicating a prospective appeal, but 

then a beneficiary did not receive a 

favorable decision from the QIO, the 

SNF stay would likely result in noncovered SNF care, with potentially 

significant beneficiary out-of-pocket 

expenses, regardless of any previous 

presumption of coverage. We believe the 

commenters’ suggestion would, 

therefore, lead to inequitable outcomes 

for beneficiaries that receive 

unfavorable QIO decisions. 

Comment: Multiple commenters 

supported our proposed requirement 

prohibiting hospitals from billing 

eligible beneficiaries until the expedited 

determination and reconsideration, 

when applicable, processes are 

complete. A commenter sought 

clarification on the appropriate time to 

bill a beneficiary for services after an 

expedited determination has been made. 

The commenter also questioned 

whether the hospital should rescind a 

bill issued to a beneficiary in the time 

between when the beneficiary received 

an expedited determination and 

requested a timely reconsideration. 

Separately, a few commenters requested 


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CMS extend the beneficiary billing 

protections for expedited appeals to 

untimely appeals. 

Response: We appreciate the 

commenters support for our proposal. 

We proposed in § 405.1211(e) that a 

hospital may not bill a beneficiary who 

requested a timely appeal for any 

services at issue in the appeal until the 

expedited determination process (and 

reconsideration process, when 

applicable) is complete. This policy 

mirrors existing procedures for appeals 

related to the termination of nonhospital services found at § 405.1202(g). 

If a hospital inadvertently bills a 

beneficiary during a period in which the 

proposed requirements restrict hospital 

billing, we agree with the commenter 

that the hospital should immediately 

rescind the bill. 

With respect to extending beneficiary 

billing protections for untimely appeals, 

we appreciate the commenters’ 

suggestion and interest in enhancing 

beneficiary protections. However, 

pursuant to our proposed policy, 

eligible beneficiaries may at any time 

request a standard (that is, untimely) 

appeal relating to a hospital’s decision 

to reclassify their status from inpatient 

to outpatient receiving observation 

services. While this policy provides 

beneficiaries with maximum flexibility 

when considering an appeal relating to 

a hospital reclassification, the timing of 

appeal requests could be unpredictable 

and, in some cases, a standard appeal 

request could be submitted after a 

beneficiary receives a hospital bill. We 

believe adopting such a proposal would 

be administratively impractical for 

hospitals to comply with as they could 

not be expected to reasonably anticipate 

when they would be barred from billing 

a beneficiary. 

Comment: A commenter suggested the 

adjudication timeframes for ‘‘regular 

appeals’’ could result in financial 

uncertainty for hospitals as 

organizations could wait 2 years before 

the issuance of a final decision. 

Response: We are unclear how the 

commenter estimated hospitals may 

have to wait 2 years before receiving a 

final decision. We posit the commenter 

considered the potential cumulative 

adjudication times if an eligible 

beneficiary appealed an adverse 

expedited reconsideration decision to 

the ALJ or beyond. Nevertheless, as 

stated in the proposed rule at 

§§ 405.1211(e) and 405.1212(e), a 

hospital is only prohibited from billing 

a beneficiary during the expedited 

levels of the determination and 

reconsideration processes. However, 

hospitals are permitted to bill 

beneficiaries after the QIO expedited 

determination and reconsideration 

levels of appeal are complete. As with 

other Medicare expedited and claim 

appeal processes, the higher levels of 

administrative appeal may not conclude 

until well after the service and billing 

are completed. Even so, we do not 

believe the proposed appeals 

adjudication timeframes would 

introduce significant financial 

uncertainty for hospitals due to the very 

low anticipated first level appeals 

volume of around 8,000 appeals 

nationally, per year. 

Comment: Multiple commenters 

sought clarification on the impact of a 

beneficiary receiving a favorable 

expedited or standard determination 

from the QIO. Their questions were as 

follows: 

• Upon the QIO issuing a favorable 

expedited determination to a beneficiary 

who remained in the hospital during 

their appeal, is the hospital required to 

present the IM before the beneficiary 

may be discharged? 

• Would a beneficiary in that scenario 

be able to appeal the hospital inpatient 

discharge to the QIO, if desired? 

• Upon a successful appeal, must a 

new inpatient order be entered or is the 

hospital reclassification decision 

considered null and void? 

• Must the inpatient order be revised 

if a beneficiary received a favorable 

standard appeal decision and already 

released from the hospital? 

• May a hospital collect the Part A 

deductible from the beneficiary upon a 

favorable determination by the QIO? 

(The commenter also wanted CMS to 

understand that some beneficiaries may 

have higher out-of-pocket costs when 

they receive a favorable appeal, due to 

the higher Part A deductible.) 

• Must hospitals use a specific 

condition code when rebilling a Part A 

claim after a favorable standard appeal 

decision that was requested after the 

hospital had billed Part B? 

Another commenter suggested 

hospitals should not have to refund to 

an eligible beneficiary any payments 

collected prior to the beneficiary 

receiving a favorable standard appeal 

decision from the QIO. The commenter 

suggested the Part B claim should be 

reopened instead and the hospital 

should be paid any remaining balance 

before the hospital is required to refund 

the beneficiary, as necessary. 

Response: We did not propose and are 

not finalizing any changes to other 

hospital notice delivery requirements. If 

a beneficiary is still present in the 

hospital when a hospital’s 

reclassification is reversed by a QIO, the 

beneficiary would again be deemed an 

inpatient under the original hospital 

admission order for purposes of 

Medicare Part A coverage. Hospitals 

would then be required to follow all 

applicable Medicare inpatient 

requirements when treating and 

discharging the beneficiary to include 

following the standard IM delivery 

guidelines set forth at § 405.1205(1). 

However, we expect most beneficiaries 

will receive their appeal decisions after 

being released from the hospital as 

hospitals historically have reclassified 

beneficiaries close to termination of 

hospital services. We will issue 

instructions for the submission or 

adjustment of claims affected by a 

disregarded reclassification in program 

instructions following this rule. The 

instructions will make use of existing 

standard claim coding and submission 

processes familiar to the affected 

providers. 

We appreciate the feedback we 

received from commenters on the 

expedited determination procedures. 

Based on analysis of the public 

comments, we will be finalizing these 

provisions as proposed. 

4. Expedited Reconsideration 

Procedures When a Beneficiary Is 

Reclassified From an Inpatient to an 

Outpatient Receiving Observation 

Services (§ 405.1212) 

In new § 405.1212 we proposed to set 

forth the procedures for the new 

expedited reconsideration process. 

Proposed § 405.1212 contained the 

responsibilities of the hospitals, QIOs, 

and beneficiaries relative to the 

reconsideration process. 

Proposed § 405.1212(a) described an 

eligible beneficiary’s right to request an 

expedited reconsideration by a QIO 

when they are dissatisfied with the 

expedited determination decision by the 

QIO. 

In § 405.1212(b) we proposed a 

process for beneficiaries to request an 

expedited reconsideration by a QIO. 

Proposed paragraph (b)(1) provided that 

beneficiaries must request an appeal to 

the QIO no later than noon of the 

calendar day following the initial 

notification of the expedited 

determination by the QIO. Under this 

proposal, the earlier of the calendar day 

of the QIO’s notification of the 

beneficiary by telephone or in writing of 

its determination (under 

§ 405.1211(c)(8)) would start the 

timeframe for the beneficiary to request 

an expedited reconsideration. The 

beneficiary’s request for a 

reconsideration may be in writing or by 

telephone. 

Proposed §§ 405.1212(b)(2) and (b)(3) 

also explained the responsibilities of 

beneficiaries to discuss the case, if 


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24 We referred to ‘‘BFCC–QIO’’ in the proposed 

rule but note that we are making a technical change 

at § 405.1211(d) to change to ‘‘QIO’’ so that it 

comports with all other references to the QIO in this 

subpart. 

25 Under section 1155 of the Act, for an appeal 

with an ALJ, the amount in controversy must be 

$200 or more, and for judicial review, the amount 

in controversy must be $2,000 or more. 

requested by the QIO, as well as 

beneficiaries’ right to submit written 

evidence to be considered by the QIO. 

Finally, proposed (b)(4) and (b)(5) stated 

that if a beneficiary requests an appeal 

timely, they would not be billed until 

the QIO makes its reconsideration 

decision; however, if the beneficiary’s 

request for an expedited reconsideration 

is untimely, the hospital may bill a 

beneficiary before the reconsideration 

determination has been made. 

Proposed §§ 405.1212(c)(1) through 

405.1212(c)(4) described the procedures 

that the QIO must follow in performing 

the expedited reconsideration. 

Specifically, we proposed in 

§ 405.1212(c)(1) that the QIO must 

immediately notify a hospital that a 

request for an expedited reconsideration 

has been made; this means that the 

notice to the hospital must be the day 

the QIO receives the request for 

expedited reconsideration. Per proposed 

§ 405.1212(c)(2), the QIO would be 

required to offer both the beneficiary 

and the hospital an opportunity to 

provide further information. An 

example of further information from the 

hospital could include an explanation of 

why the beneficiary was reclassified 

from an inpatient to an outpatient 

receiving observation services. 

Similarly, an example of further 

information from the eligible beneficiary 

could include an explanation of why 

inpatient status should have been 

maintained. 

Proposed § 405.1212(c)(3)(i) provided 

that the QIO must render a decision and 

notify all relevant persons and entities 

within 2 calendar days of receiving all 

information necessary to complete the 

appeal if the beneficiary requested the 

reconsideration by noon of the day after 

receiving notice of the QIO’s 

determination under § 405.1211. This 

timeframe is as rapid as possible to 

minimize potential liability for 

beneficiaries as well as to maximize 

their potential for coverage in a SNF 

should they obtain a favorable 

reconsideration decision by the QIO. A 

Medicare-covered SNF stay must begin 

within 30 days of a beneficiary’s 

discharge from a hospital. To that end, 

we proposed a review process for QIOs 

to make their decisions as quickly as 

possible so beneficiaries receiving 

favorable decisions will have time to 

plan for and begin a SNF stay within the 

30-day limit for coverage. 

Proposed § 405.1212(c)(3)(ii) provided 

that if a beneficiary makes an untimely 

request for an expedited 

reconsideration, the QIO must still 

accept the request and render a decision 

within 3 calendar days. Under this 

proposal, the 2-calendar day QIO 

decision deadline does not apply in the 

case of an untimely request for an 

expedited reconsideration. However, the 

expeditious 3-day untimely timeframe 

affords a beneficiary the ability to 

exercise their right to an expedited 

appeal and potentially be entitled to 

SNF coverage within the 30-calendar 

day time limit for SNF coverage 

following hospital release, should they 

receive a favorable expedited 

reconsideration determination from a 

QIO. 

The QIO decision, as required by 

proposed § 405.1212(c)(4)(i–iv), must 

include the basis and detailed rationale 

for the QIO decision. The basis of a 

decision is a description of, and 

citations to, the Medicare coverage rule, 

instruction, or other policies applicable 

to the review. A detailed rationale 

includes the facts specific to the 

beneficiary’s situation and a detailed 

explanation of why the inpatient 

admission did or did not satisfy the 

relevant criteria for Part A coverage at 

the time the services were furnished. 

The decision must also include the 

potential financial ramifications, such 

as deductibles or coinsurance for the 

beneficiary, the beneficiary’s right to a 

hearing by an ALJ, and how a 

beneficiary may make a request for an 

expedited reconsideration. 

Proposed § 405.1212(d) set forth the 

responsibilities of hospitals in the 

expedited appeals process. As proposed, 

a hospital may, but is not required to, 

submit evidence to be considered by a 

QIO in making its reconsideration 

decision. If a hospital does not furnish 

a QIO with requested additional 

information, the QIO may proceed to 

make a decision based on the 

information used in the expedited 

determination. This is to protect the 

interests of the beneficiary by ensuring 

they receive their decision within the 

QIO’s 24 required timeframes of 2 

calendar days for a timely request and 

3 calendar days for an untimely request. 

This proposed policy is consistent with 

obligations on hospitals in the second 

level expedited review of a hospital 

discharge and on providers of services 

in the second level expedited review of 

a termination of provider services 

(§ 405.1204(e)). 

In § 405.1212(e) we proposed that a 

hospital may not bill a beneficiary who 

has appealed timely for any services at 

issue in the appeal until the expedited 

reconsideration process is complete. 

Proposed § 405.1212(f) set forth that a 

QIO reconsideration is binding on the 

beneficiary, hospital, and MAC unless 

the beneficiary pursues an appeal with 

an ALJ in accordance with 42 CFR part 

478 subpart B. This concept is 

consistent with the existing claims 

appeals process currently established 

under §§ 405.1000 through 405.1140. 

The decision is binding for purposes of 

payment only, such that if the hospital 

submits a claim under Part A or Part B, 

CMS will make payment. 

Per section 1155 of the Act, a 

beneficiary who is dissatisfied by a 

QIO’s reconsideration of its initial 

decision may seek additional 

administrative review and, ultimately, 

judicial review, if the amount in 

controversy limits are met.25 Our 

proposal followed that process. 

We received the following comments 

regarding our proposed requirements 

related to the prospective appeal 

reconsideration procedures. 

Comment: Several commenters 

supported the proposed reconsideration 

procedures when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation 

services. A commenter believed the 

proposed timelines for beneficiaries to 

request, and QIOs to render, a 

reconsideration decision were 

reasonable and would protect the ability 

of beneficiaries to potentially obtain 

SNF benefits within the 30-day period 

following release from a hospital. 

Response: We thank the commenters 

for their support. 

Comment: A commenter suggested 

CMS harmonize the proposed 

prospective appeals procedures with 

existing Parts A and B claims appeal 

procedures because the commenter 

believed the proposed appeal 

procedures do not clearly identify if 

beneficiaries may continue to appeal 

after receiving an unfavorable QIO 

reconsideration decision. 

Response: We explained in the 

proposed rule that a beneficiary who is 

dissatisfied by a QIO’s reconsideration 

of its initial determination may seek 

additional administrative review and, 

ultimately, judicial review, if the 

amount-in-controversy limits are met. 

This means a beneficiary may appeal an 

adverse QIO reconsideration decision to 

an ALJ, if the amount in controversy is 

$200 or more, then to the Medicare 

Appeals Council (MAC), and, if the 

MAC denies the request for review or 

issues an unfavorable decision, to 


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federal district court, as long as the 

amount in controversy is $2,000 or 

more. 

Comment: A commenter asserted 

beneficiaries should be given up to 24 

hours to request an appeal of a QIO 

expedited determination, rather than 

noon of the next day, as was proposed 

in § 405.1212 (b). The commenter was 

concerned that beneficiaries may not 

understand the appeals process in time 

to receive an expedited reconsideration. 

Another commenter generally suggested 

beneficiaries receive more time to 

request an expedited reconsideration. 

Response: We appreciate the 

commenters’ interest in providing 

beneficiaries sufficient time to request a 

timely reconsideration. We proposed 

the expedited reconsideration request 

timeframes to mirror appeal submission 

timeframes for similar processes, such 

as inpatient hospital discharge appeals. 

In our experience, beneficiaries have 

sufficient opportunity to request an 

expedited reconsideration under the 

proposed timeframes. Additionally, 

when a QIO provides an expedited 

determination by phone, the QIO 

personnel will ask the beneficiary, or 

their representative, if the beneficiary 

would like to request an expedited 

reconsideration during the same phone 

call. This means a beneficiary, or their 

representative, may immediately request 

a second-level appeal (an expedited 

reconsideration) at the time they receive 

their first-level decision (expedited 

determination), without having to take 

any additional actions. 

We note that even if the beneficiary 

fails to timely request an expedited 

reconsideration, the QIO will process an 

untimely request and the beneficiary 

will receive a decision in 3 calendar 

days (instead of 2 calendar days, which 

is the expedited processing timeframe). 

Comment: A commenter requested 

that CMS acknowledge that hospitals 

may submit claims and receive Part A 

payment for services that are on appeal 

to an ALJ under the proposed 

prospective appeals process. 

Response: We believe the commenter 

meant to request that CMS confirm that 

hospitals may bill Medicare and receive 

Part B payment while an appeal 

regarding a hospital status change is 

pending before an ALJ. If a hospital 

decides to reclassify a beneficiary from 

inpatient to outpatient receiving 

observation services, then the hospital 

would only bill Medicare under Part B. 

Nevertheless, we confirm that a hospital 

may bill Medicare for covered services 

while an appeal is pending at the ALJ. 

Comment: A commenter requested 

CMS clarify which beneficiary notice a 

hospital must deliver to a beneficiary to 

notify them of their financial liability 

following an unfavorable expedited 

reconsideration decision. 

Response: We proposed at 

§ 405.1212(c)(4)(i) through (iv) that a 

QIO reconsideration decision must 

include, among other items, the 

potential financial ramifications, such 

as deductible and coinsurance for the 

beneficiary. Thus, the QIO is 

responsible for informing a beneficiary 

of their potential financial liability 

related to an unfavorable 

reconsideration decision. 

We appreciate the feedback we 

received from commenters on the 

expedited reconsideration procedures. 

Based on analysis of the public 

comments, we will be finalizing these 

provisions as proposed. 

5. Conforming Changes Beneficiary 

Notice of Discharge or Change in Status 

Rights (§ 489.27) 

In conjunction with the proposed 

notice provisions §§ 405.1210 through 

405.1212, we proposed to make 

conforming changes to a related existing 

regulatory provision. We proposed to 

amend the provider agreement 

requirements in § 489.27(b) to crossreference the proposed notice 

requirements. Thus, proposed 

§ 489.27(b) specified that delivery of the 

proposed appeals notice was required as 

part of the Medicare provider 

agreement. Lastly, to account for this 

conforming change, we proposed to 

change the title of § 489.27 to include 

‘‘change in status’’ to more accurately 

reflect the actions that would require 

the issuance of a notice. 

We did not receive any comments on 

the proposed changes related to these 

conforming changes. As a result, we are 

finalizing our policies as proposed. 

6. Conforming Changes to Quality 

Improvement Organization (QIO) 

Review Regulations 

We also proposed to amend the QIO 

regulations at § 476.71(a) to conform 

with the proposed changes in review 

responsibilities at §§ 405.1210 through 

405.1212. The proposed amendment to 

the QIO regulations would add a new 

review type to the currently enumerated 

list of reviews performed by QIOs, 

specifically for beneficiary appeals 

regarding hospital reclassifications of a 

fee-for-service beneficiary’s inpatient 

status to that of outpatient receiving 

observation services when the eligibility 

requirements to file a prospective 

appeal being finalized in this rule are 

met. The beneficiary eligibility 

requirements for filing expedited 

appeals and the required processes for 

those appeals are described in sections 

III.B.1. through III.B.5. of this final rule. 

This proposed amendment to the QIO 

regulation specified that QIOs perform 

review functions for these beneficiary 

appeals in a manner that is consistent 

with other QIO review functions while 

ensuring alignment with the proposed 

beneficiary eligibility and process 

requirements for such appeals. 

The QIO regulations at 42 CFR 

476.1(a) define ‘‘QIO review’’ as a 

review performed in fulfillment of a 

contract with CMS, either by the QIO or 

its subcontractors. Under regulations at 

§ 476.71, the QIO’s review 

responsibilities include: (1) whether 

services are or were reasonable and 

medically necessary for diagnosis or 

treatment; (2) whether the quality of the 

services meets professionally recognized 

standards of health care, as determined 

through the resolution of oral 

beneficiary complaints; (3) whether care 

and services furnished or proposed on 

an inpatient basis could be effectively 

furnished more economically on an 

outpatient basis or in another inpatient 

setting; (4) diagnostic related group 

(DRG) validation of diagnosis and 

procedure information provided by 

hospitals; (5) the completeness, 

adequacy and quality of hospital care 

provided; (6) medical necessity, 

reasonableness and appropriateness of 

hospital admissions and discharges; (7) 

medical necessity, reasonableness and 

appropriateness of inpatient hospital 

care for which additional outlier 

payment is sought; and (8) whether a 

hospital has misrepresented admission 

or discharge information resulting in 

unnecessary or multiple admissions, or 

inappropriate billing. 

We stated in the proposed rule that 

our proposed amendment to § 476.71(a) 

would add paragraph (9) to this list of 

QIO review responsibilities to include 

the new beneficiary-initiated appeals for 

when a hospital reclassifies certain feefor-service beneficiaries’ admission 

status from inpatient to that of 

outpatient. 

In considering the existing hospital 

discharge appeals process, CMS 

determined that the circumstances for 

these new appeals, and the potential 

impact of such appeal decisions on Part 

A coverage for subsequent care in other 

settings, necessitated a new notification 

process and review timelines which 

differ from the processes that govern the 

existing hospital discharge appeals 

process. These new appeals are 

discussed in section III.B. of this final 

rule and appear at §§ 405.1210 through 

405.1212. 

The proposed amendment to the QIO 

regulations, as previously discussed, 

applied to the processes and timeframes 


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for the new appeals discussed in section 

III.B. of this final rule, which have been 

designed to meet the needs of 

beneficiaries who have had their 

inpatient status reclassified to 

outpatient receiving observation 

services. 

In general, we received comments that 

were supportive of having the BFCC– 

QIOs conduct the new expedited and 

standard appeals and reconsiderations 

as a new type of QIO review under 

proposed § 476.71(a)(9), and for which 

QIOs would follow the processes 

specified under §§ 405.1211 and 

405.1212. 

Comment: Commenters indicated that 

QIOs’ expertise conducting similar 

types of beneficiary appeals as well as 

reviewing patient status under the 2- 

midnight rule places them in an ideal 

position to review the new appeals 

under the prospective appeals process. 

Response: We thank the commenters 

for their recognition of the QIOs’ 

experience with beneficiary appeals and 

ability to conduct these new beneficiary 

appeals. QIOs have been performing 

expedited reviews for beneficiaries 

appealing inpatient discharges and 

termination of provider services in nonhospital settings for decades. We believe 

placing responsibility for reviewing the 

new prospective appeals with the QIOs 

will ensure consistent and timely 

review. 

CMS is finalizing the conforming 

change to the QIO regulation as 

proposed, which adds the new 

prospective appeals to the enumerated 

list of QIO review responsibilities under 

§ 476.71(a)(9). 

A few commenters requested further 

clarification on specific topic areas 

which we address below. 

Comment: A few commenters 

requested clarification on the decisionmaking criteria that would be used by 

the BFCC–QIOs for whether an inpatient 

admission order was valid; citing the 

potential for uncertainty, inconsistency 

and discretion in medical decision 

making. 

Response: Consistent with existing 

CMS medical review guidance, in 

determining whether an initial inpatient 

admission met the criteria for Part A 

coverage, the QIOs would only consider 

the medical evidence which was 

available to the physician at the time an 

admission decision was made. 

Information which became available 

only after admission (for example, test 

results) would not be taken into 

consideration ‘‘except in cases where 

considering the post-admission 

information would support a finding 

that an admission was medically 

necessary’’ as stated in the Medicare 

Benefits Policy Manual, Ch. 1, § 10. 

Comment: A commenter requested 

clarification regarding whether the QIOs 

will be staffed over weekends and 

holidays to conduct appeals and 

whether hospitals are expected to 

respond to requests from QIOs for 

patient records (as described in 

proposed § 405.1211(d)(1)) over 

weekends. 

Response: We clarify that pursuant to 

their contracts, BFCC–QIOs are required 

to maintain operations 24 hours a day, 

7 days a week. Should a beneficiary file 

a request for an expedited appeal over 

a weekend or holiday, the QIO will 

proceed with contacting the hospital to 

notify the hospital of the request and 

obtain medical documentation for the 

appeal. The hospital is required to 

respond by noon of the calendar day 

after the QIO notifies the hospital of the 

request for an expedited appeal. 

However, should a beneficiary or their 

representative request that the hospital 

provide them with a copy of the records 

it provided to the QIO for the appeal, 

the hospital will be required to provide 

the records by no later than close of 

business of the first day after the 

material is requested by the beneficiary 

or the beneficiary’s representative under 

42 CFR 405.1211(d)(2). We clarify that 

for administrative functions ‘‘close of 

business’’ generally means 5:00 p.m. in 

the hospital’s time zone. 

Comment: A few commenters 

requested clarification on how the QIO 

will communicate decisions to the 

hospital and to the beneficiary. 

Response: QIOs employ multiple 

modes of communication with 

beneficiaries and providers during 

current expedited appeals processes 

under 42 CFR 405.1202 and will do so 

for the expedited appeals finalized in 

this rule. These multiple modes of 

communication are used by the QIOs to 

ensure timely intake, patient record 

requests, and communication of 

decisions to both beneficiaries and 

providers. Currently a beneficiary 

appeal may be initiated via phone but 

would be formalized in writing by the 

QIO as required for expedited appeals 

under 42 CFR 405.1202(e)(8). QIO 

patient record requests for appeals, and 

appeal status tracking typically occur 

via web-based systems and phone. 

Under §§ 405.1211 and 405.1212, QIOs 

are required to notify the eligible 

beneficiary, the hospital, and SNF, if 

applicable, of their decision by 

telephone and issue written decisions 

for both initial determinations and 

reconsiderations. 

Comment: Commenters suggested that 

CMS provide clear and objective 

guidelines for the BFCC–QIOs to follow 

when conducting the new appeals to 

ensure consistency. 

Response: We appreciate the 

commenters’ suggestion and will 

consider developing further 

implementation guidance for the BFCC– 

QIOs. 

Comment: A commenter suggested 

that the BFCC–QIOs should issue 

written notices of their decisions to both 

the beneficiaries and the hospitals that 

contain the reasons and evidence for 

their determinations. 

Response: We appreciate the need for 

beneficiaries and hospitals to 

understand the basis and rationale for 

the QIO’s decision. Under §§ 405.1211 

and 405.1212, QIOs are required to issue 

written decisions for both initial 

determinations and reconsiderations. 

These written decisions contain the 

reasons for their decision-making and 

the content that was evaluated to make 

their decisions. 

Comment: A commenter suggested 

that CMS track the timeliness of the 

BFCC–QIOs in adjudicating the appeals 

and to report information on these and 

other appeals to the public. 

Response: CMS routinely tracks the 

timeliness of resolving beneficiary 

appeals and will do so for these new 

prospective appeals. We appreciate the 

public’s interest in ensuring 

accountability for the timely conduct of 

these appeals and may consider 

additional reporting in the future. 

Comment: A few commenters 

suggested that CMS establish an 

electronic means for the BFCC–QIO to 

provide updates on appeals to hospitals. 

Response: The QIOs currently 

maintain electronic/web-based means of 

communicating with providers for 

beneficiary appeals—both for patient 

record requests, and for appeal 

decisions. 

Comment: A commenter expressed 

concern that the BFCC–QIOs may not 

have adequate resources to conduct 

these reviews, and this may divert 

resources from other areas like quality 

improvement and quality reporting. The 

BFCC–QIOs may need to hire a large 

number of clinical staff for these 

appeals, thus contributing to healthcare 

workforce shortages. Another 

commenter was concerned that the new 

appeals could negatively affect the 

QIOs’ ability to work on quality 

reporting and improvement programs 

for hospitals. 

Response: We do not believe the new 

appeals process will significantly affect 

operations or staffing within hospitals 

due to the low annual volume 

anticipated. While we anticipate the 

BFCC–QIOs will need to hire additional 


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clinical staff to review the additional 

appeals, we do not anticipate this would 

have an impact on the clinical 

workforce on a national level. Thus, we 

do not foresee this new appeals process 

having a significant impact on clinical 

care resources. 

We thank the commenters for their 

feedback and recommendations for the 

prospective appeals process. After 

consideration of the public comments, 

we will be finalizing our policies as 

proposed. However, we note that we are 

making the following editorial/technical 

corrections: 

• In § 405.1211(c)(6)(ii), we are 

correcting a typographical error in the 

proposed regulations text and stating 

that for untimely requests, the QIO must 

make a determination within 2 calendar 

days. 

• In § 405.1211(d), we are changing 

‘‘BFCC–QIO’’ to ‘‘QIO’’ to comport with 

all other references to the QIO in this 

subpart. 

• In § 405.1211(d)(7), we are making 

technical edits for clarity. 

• In § 405.1212 — 

++ In paragraph (c)(3)(i), we are 

revising the phrase ‘‘A timely request 

from in accordance’’ to ‘‘A timely 

request in accordance’’; 

++ In paragraph (c)(4), we are revising 

the phrase ‘‘When the QIO issues an 

reconsideration’’ to ‘‘When the QIO 

issues a reconsideration’’, and 

++ In paragraph (d), we are revising 

the phrase ‘‘beyond that furnished to the 

BFCC–QIO’’ to ‘‘beyond that furnished 

to the QIO’’ to be consistent with other 

references to the QIO. 

• In § 476.71(a)(9), we are correcting 

the cross-reference in the last sentence 

of the paragraph to refer more broadly 

to ‘‘§ 405.1212’’. 

As noted previously, after publication 

of this final rule regarding the 

procedures for these new appeals, we 

intend to specify the implementation 

date for filing appeal requests for 

retrospective and prospective appeals. 

When the prospective process is fully 

implemented, eligible beneficiaries who 

are hospitalized and receive notice of 

their appeal rights and wish to pursue 

an appeal will be expected to utilize the 

prospective procedures (proposed 

§§ 405.1210 through 405.1212). We will 

announce the implementation dates on 

CMS.gov and/or Medicare.gov. 

C. Other/Out of Scope Comments 

We also received comments that are 

outside the scope of this rulemaking, 

summarized as follows. 

Comment: Several commenters urged 

CMS to address policy issues related to 

outpatient stays and observation 

services and the impact on SNF 

coverage for Medicare beneficiaries. 

Some commenters recommended that 

CMS count all time in the hospital 

towards satisfying the requirement of a 

3-day qualifying inpatient hospital stay 

for SNF coverage. A commenter 

suggested that CMS directly address the 

issue of long outpatient stays with 

hospitals to avoid the need for 

beneficiaries to use an appeals process 

when they disagree with their 

outpatient status. The commenter 

suggested that CMS should implement 

policies to prohibit or severely restrict 

hospital reclassifications from inpatient 

to outpatient and long outpatient stays, 

and further suggested that hospitals 

should bear the burden of justifying 

long outpatient stays (lasting more than 

two-midnights). 

Response: We appreciate the concerns 

raised by commenters related to 

observation services and long outpatient 

stays. This final rule implements the 

court order in Alexander v. Azar for the 

limited purpose of establishing appeal 

processes for certain Medicare 

beneficiaries who are initially admitted 

as hospital inpatients but are 

subsequently reclassified as outpatients 

receiving observation services during 

their hospital stay and meet other 

eligibility criteria. It is beyond the 

limited scope of this rule to address the 

concerns raised by commenters 

regarding observation services, the 

counting of all hospital days towards 

satisfying the statutory requirement of a 

3-day qualifying inpatient hospital stay 

for SNF coverage, and restricting 

hospital decisions regarding the length 

of outpatient stays or reclassifications. 

CMS acknowledges this feedback and 

may further consider it in future 

policymaking. 

D. Severability 

The various provisions of this final 

rule are intended to implement the 

court order in Alexander v. Azar, 613 F. 

Supp. 3d 559 (D. Conn. 2020), aff’d sub 

nom., Barrows v. Becerra, 24 F.4th 116 

(2d Cir. 2022). As detailed in the 

preamble, this final rule establishes 

processes for retrospective appeals and 

prospective appeals (standard 

prospective appeals and expedited 

prospective appeals). To the extent a 

court may enjoin any part of this final 

rule, the Department intends that other 

provisions or parts of provisions remain 

in effect. For example, the portions of 

this rule addressing retrospective 

appeals and prospective appeals are 

mutually severable from each other. Per 

the court order, the retrospective 

appeals process applies to class 

members whose due process rights may 

have been violated prior to the 

availability of the procedural 

protections set forth in the prospective 

appeals process, whereas the 

prospective appeals process applies to 

class members whose due process right 

may be violated in the future. In 

addition to applying to different 

beneficiaries, the retrospective and 

prospective appeals processes involve 

different timeframes for the reviews to 

take place, different contractors to 

perform the reviews, and potentially 

different claims. The existence of the 

prospective appeals process does not 

depend on the existence of the 

retrospective appeals process, and vice 

versa. These distinct processes can 

function independent of each other and 

are thus mutually severable. This 

example is not intended to be 

exhaustive and should not be viewed as 

an intention by HHS to consider specific 

provisions of the rule as not severable 

from other provisions of the rule. To the 

extent a court enjoins any part of this 

final rule, the other provisions of the 

rule would still further the purpose of 

implementing the court order and 

establishing appeals processes for 

qualifying beneficiaries. 

We did not receive comments on this 

issue, and we intend to apply the 

concept of severability to this final rule 

as described. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et seq.) 

we are required to provide 30-day notice 

in the Federal Register and solicit 

public comment before a ‘‘collection of 

information’’ requirement is submitted 

to the Office of Management and Budget 

(OMB) for review and approval. For the 

purpose of the PRA and this section of 

the final rule, collection of information 

is defined under 5 CFR 1320.3(c) of the 

PRA’s implementing regulations. 

To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the PRA requires that we solicit 

comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on each 

of these issues for the following sections 

of this document that contain 

information collection requirements and 


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83280 Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations 

26 https://aspe.hhs.gov/sites/default/files/ 

migrated_legacy_files//176806/VOT.pdf. 

27 https://fred.stlouisfed.org/series/

LEU0252881500A. 

28The data used in this report came from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

comments are responses are discussed 

in the following. 

A. Wage Estimates 

1. Private Sector 

To derive average costs, we used wage 

data from the U.S. Bureau of Labor 

Statistics’ (BLS) May 2023 National 

Occupational Employment and Wage 

Estimates (https://www.bls.gov/oes/ 

2023/may/oes_nat.htm). In this regard, 

Table 1 presents BLS’ mean hourly 

wage, our estimated cost of fringe 

benefits and other indirect costs, and 

our adjusted hourly wage. 

TABLE 1—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES

Occupation title Occupation code 

Mean hourly 

wage 

($/hr) 

Fringe benefits 

and other 

indirect costs 

($/hr) 

Adjusted hourly 

wage 

($/hr) 

Registered Nurse ............................................................................. 29–1141 45.42 45.42 90.84 

As indicated, we are adjusting our 

hourly wage estimate by a factor of 100 

percent. This is necessarily a rough 

adjustment, both because fringe benefits 

and other indirect costs vary 

significantly from employer to 

employer, and because methods of 

estimating these costs vary widely from 

study to study. Nonetheless, we believe 

that doubling the hourly wage to 

estimate the total cost is a reasonably 

accurate estimation method. 

2. Beneficiaries 

We believe that the cost for 

beneficiaries undertaking administrative 

and other tasks on their own time is a 

post-tax wage of $23.18/hr. 

The Valuing Time in U.S. Department 

of Health and Human Services 

Regulatory Impact Analyses: Conceptual 

Framework and Best Practices 26

identifies the approach for valuing time 

when individuals undertake activities 

on their own time. To derive the costs 

for beneficiaries, a measurement of the 

usual weekly earnings of wage and 

salary workers of $1,117 27 for 2022, 

divided by 40 hours to calculate an 

hourly pre-tax wage rate of $27.93/hr. 

This rate is adjusted downwards by an 

estimate of the effective tax rate for 

median income households of about 17 

percent or $4.75/hr ($27.93/hr × 0.17), 

resulting in the post-tax hourly wage 

rate of $23.18/hr ($27.93/hr¥$4.75/hr). 

Unlike our State and private sector wage 

adjustments, we are not adjusting 

beneficiary wages for fringe benefits and 

other indirect costs since the 

individuals’ activities, if any, would 

occur outside the scope of their 

employment. 

B. Information Collection Requirements 

(ICRs) 

This final rule sets forth new appeals 

procedures as required by the court 

order in the case Alexander v. Azar, 613 

F. Supp. 3d 559 (D. Conn. 2020)), aff’d 

sub nom., Barrows v. Becerra, 24 F.4th 

116 (2d Cir. 2022). Certain beneficiaries 

in Original Medicare, who are initially 

admitted to a hospital as an inpatient by 

a physician or otherwise qualified 

practitioner but whose status during 

their stay was changed to outpatient 

receiving observation services by the 

hospital, thereby effectively denying 

Part A coverage for their hospital stay, 

may pursue an appeal under this final 

rule. The appeal is filed with Medicare 

to decide if the inpatient admission 

meets the relevant criteria for Part A 

coverage. 

1. ICRs Regarding Retrospective Appeals 

Requests (§ 405.932) 

The provisions in new § 405.932 were 

submitted to OMB for review under 

control number 0938–1466 (CMS– 

10885). OMB will issue the control 

number’s expiration date upon their 

approval of the final rule’s collection of 

information request. The issuance of 

that date can be monitored at 

www.Reginfo.gov. 

As discussed in section III.A.3. of this 

final rule, § 405.932 establishes that 

eligible parties may file in writing an 

appeal related to a change in patient 

status which resulted in the denial of 

Part A coverage. A written appeal 

request must be received by the 

eligibility contractor no later than 365 

days after the implementation date of 

the final rule. Details regarding the 

deadline to file an appeal and where 

such appeals should be filed would be 

posted to Medicare.gov and/or CMS.gov 

once the retrospective appeals process is 

operational. The written request must 

include the following information: 

• Beneficiary name. 

• Beneficiary Medicare number (the 

number on the beneficiary’s Medicare 

card). 

• Name of the hospital and dates of 

hospitalization. 

• Name of the SNF and the dates of 

stay (as applicable). 

If the appeal includes SNF services 

not covered by Medicare, the written 

request must also include an attestation 

to the out-of-pocket payment(s) made by 

the beneficiary for such SNF services 

and must include documentation of 

payments made to the SNF for such 

services. 

We estimate that it would take an 

individual approximately 30 minutes 

(0.5 hr) to complete the appeal request 

including the attestation and 

documentation of out-of-pocket 

payments for SNF services and submit 

the completed information to the 

eligibility contractor. Because this is a 

new appeal right and associated 

process, CMS does not have precise data 

and cannot meaningfully estimate how 

many individuals may request an appeal 

under the new appeals process. 

However, we believe that the closest 

equivalent is using the rate of 

individuals who appeal denials of 

initial claim determinations under the 

claim appeals process at the first level 

of appeal to a MAC (which is 3 percent) 

and aligning it with the appeal rates of 

higher levels of appeal (ranging from 21 

percent to 27 percent) to arrive at an 

estimate of 20 percent. This estimate 

reflects our expectation that eligible 

parties in this process will be more 

motivated than in the claim appeals 

process to avail themselves of this 

unique opportunity for a retrospective 

appeal on potentially high dollar claims. 

Based on these data, we estimate that 

the total number of eligible beneficiaries 

is 32,894.28 Assuming that 20 percent of 


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are available from the Integrated Data Repository 

(IDR). The IDR contains a subset of data transmitted 

by the Common Working File (CWF), a 

computerized database maintained by CMS in 

connection with its processing and payment of 

Medicare claims. 

29The data used in this report come from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the CMS Chronic Condition Data 

Warehouse (www2.ccwdata.org/web/guest/home), 

accessed August 2023. 

individuals (6,579 = 32,894 × 0.20) who 

are eligible to appeal will file a request, 

we estimate a one-time burden of 3,290 

hours (6,579 requests × 0.5 hr/request) 

at a cost of $76,262 (3,290 hr × $23.18/ 

hr). 

2. ICRs Regarding Notifying 

Beneficiaries of Appeal Rights When 

Hospital Inpatient Coverage Is 

Reclassified to Coverage as an 

Outpatient Receiving Observation 

Services (§ 405.1210) 

The provisions in new § 405.1210 

were submitted to OMB for review 

under control number 0938–1467 

(CMS–10868). OMB will issue the 

control number’s expiration date upon 

their approval of the final rule’s 

collection of information request. The 

issuance of that date can be monitored 

at reginfo.gov. 

Section 405.1210 requires hospitals to 

deliver, prior to release from the 

hospital, a standardized notice 

informing eligible beneficiaries of the 

change in status from an inpatient to an 

outpatient receiving observation 

services, and their appeal rights if they 

wish to challenge that change. 

The Medicare Change of Status Notice 

(MCSN) is new and is intended to be 

furnished only to those beneficiaries 

eligible for this specific new appeal 

process. The MCSN notice contains only 

two fields that hospitals must complete: 

(1) the beneficiary’s name, and (2) the 

beneficiary’s identifier number. The 

remaining information (information on 

the change in coverage, a description of 

appeal rights and how to appeal, and 

the implications for skilled nursing 

facility coverage following the hospital 

stay) is standardized. 

For beneficiaries with Medicare Part B 

coverage, hospitals will be required to 

deliver the notice to eligible 

beneficiaries as soon as possible after 

hospital reclassifies the beneficiary from 

an inpatient to an outpatient and the 

beneficiary has stayed in the hospital for 

3 or more consecutive days but was an 

inpatient for fewer than 3 days. The 

notice must be delivered no later than 

4 hours before the beneficiary is 

released from the hospital. 

For beneficiaries without Medicare 

Part B coverage, hospitals will be 

required to deliver the notice to eligible 

beneficiaries as soon as possible after 

the change from inpatient to outpatient 

with observation services is made as a 

3-day hospital stay is not required for 

these beneficiaries. The notice must be 

delivered no later than 4 hours before 

the beneficiary is released from the 

hospital. 

We estimate it would take 10 minutes 

(0.1667 hr) at $90.84/hr for a Registered 

Nurse to complete the two data fields 

and deliver each notice to the applicable 

beneficiary. 

The 10-minute estimate is same as 

that for our Important Message from 

Medicare (CMS–10065/10066; OMB 

0938–1019), which the proposed MCSN 

notice is modeled after. 

In 2022 there were approximately 

15,655 instances where hospital stays 

met the criteria for an appeal.29 With 

regard to this final rule we estimate that 

hospitals would be required to give an 

estimated 15,655 MCSN notices to 

beneficiaries each year. In aggregate, we 

estimate an annual hospital burden of 

2,610 hours (15,655 notices × 0.1667 hr/ 

notice) at a cost of $237,092 (2,610 hr 

× $90.84/hr). 

Please note, our data does not permit 

us to determine whether the observation 

services occurred prior to the initial 

inpatient stay or followed the change in 

status from inpatient to outpatient, as 

required to qualify for an appeal. As a 

result, 15,655 MCSN notices likely 

overstates the number of beneficiaries 

eligible for an appeal. 

Please see section IV.D. of this final 

rule for information on how to view the 

draft standardized notice and 

supporting documentation. 

3. ICRs Regarding Applicable QIO 

Review Regulations (§ 476.71 and 

§ 476.78) 

In section III.B. of this final rule, we 

provided that the QIOs will review the 

prospective expedited appeals under 

their contracts with the Secretary. CMS 

expects to revise the BFCC–QIO’s 

contracts under the 13th Statement of 

Work to include the new prospective 

expedited appeals requirements after 

publication of the final rule. The 

additional costs to the government for 

the BFCC–QIOs to review the new 

appeals would include payment for the 

additional level of effort associated with 

communicating with beneficiaries and 

hospitals for the duration of the appeal, 

collecting and reviewing patient 

records, performing reconsiderations if 

requested, and providing case files 

requested for further levels of review if 

needed. It also would include the cost 

of reimbursing hospitals for the 

submission of patient records for 

prospective expedited appeals. 

Hospitals would submit patient records 

and request reimbursement from the 

QIO using the process established in the 

existing memorandums of agreement 

(MOAs) under § 476.78(a) between 

hospitals and the QIO having 

jurisdiction over the particular State in 

which the hospital stay occurred. 

As discussed in section III.B. of this 

final rule, hospitals will be required to 

submit patient records to the QIOs for 

prospective expedited appeals under 

§ 405.1211(d). Existing QIO regulations 

at § 476.78(b)(2) and (c) require 

providers and practitioners to 

electronically submit patient records to 

the QIOs for purposes of one or more 

QIO functions and allow for the 

reimbursement of providers and 

practitioners by the QIO for the 

electronic submission of patient records 

for one or more QIO functions at a rate 

of $3.00 per submission under 

§ 476.78(e)(2). Hospitals that have 

waivers for the required electronic 

submission of records under § 476.78(d) 

may be reimbursed by the QIO at a rate 

of $0.15 per page for submission of the 

patient records under § 476.78(e)(3). 

The estimation methodology used to 

determine the reimbursement rates for 

electronic and non-electronic 

submission of patient records for one or 

more QIO functions is discussed further 

in section IX.A. of the preamble of the 

Fiscal Year (FY) 2021 Hospital Inpatient 

Prospective Payment System (IPPS)/ 

Long-Term Care Prospective Payment 

System (LTCH PPS) final rule (85 FR 

58977 through 58985). This estimation 

methodology is appropriate when 

applied to the proposed prospective 

expedited appeals due to the substantial 

similarity of its requirements and 

processes to those of other QIO 

functions upon which these rates were 

determined. 

In section III.B.6. of this final rule, we 

established the addition of a QIO review 

type at § 476.71(a)(9) making the QIO’s 

review of the prospective expedited 

appeals under proposed § 405.1211(d) a 

QIO function using our authority in 

section 1154(a)(18) of the Act. As 

established earlier in the ICR section, 

the prospective appeals process would 

constitute a CMS administrative action 

toward a specific individual or entity. 

Thus, the preparation and submission of 

the appeal, supporting documentation 

needed for the appeal, and 

communications between the QIO and 

parties to the appeal are not subject to 


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the PRA as stipulated under 5 CFR 

1320.4(a)(2). 

C. Summary of Annual Burden 

Estimates for Changes 

TABLE 2—ANNUAL REQUIREMENTS AND BURDEN ESTIMATES

Regulation section(s) under 

Title 42 of the CFR 

OMB Control No. 

(CMS ID No.) Respondents Total responses 

Time per response 

(hours) 

Total 

time 

(hours) 

Labor 

cost 

($/hr) 

Total cost 

($) 

§ 405.932 ........................... 0938–1466 (CMS–10885) 32,894 beneficiaries .......... 6,579 0.5 (30 min) ............... 3,290 23.18 76,262 

§ 405.1210 ......................... 0938–1467 (CMS–10868) 6,162 hospitals .................. 15,655 0.1667 (10 min) ......... 2,610 90.84 237,092 

Total ............................ ............................................ 39,056 ............................... 22,234 varies ......................... 5,900 varies 313,354 

D. Submission of Comments 

We have submitted a copy of this final 

rule to OMB for its review of the rule’s 

information collection requirements. 

The requirements are not effective until 

they have been approved by OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

collections discussed previously, please 

visit the CMS website at https://

www.cms.gov/regulations-andguidance/legislation/paperwork

reductionactof1995/pra-listing, or call 

the Reports Clearance Office at 410– 

786–1326. 

Comment: Multiple commenters 

believed CMS underestimated the 

burden estimates related to hospitals 

timely delivering the new MCSN. A 

commenter believes the estimated 

annual volume of expedited appeals is 

generally understated because it failed 

to include appeals from beneficiaries 

with Part A but without Part B. Another 

commenter suggested CMS should be 

able to easily calculate the average 

annual number of eligible beneficiaries 

without Part B and should publish the 

number. 

Another commenter disputed our 

estimate that the MCSN would take 

hospital staff 10 minutes to prepare and 

deliver because it does not account for 

any time the staff will need to answer 

beneficiary questions upon delivery. 

Another commenter stated the burden 

estimate failed to account for the 

hospital time and resources needed, 

including the hiring of new personnel, 

to establish a new workflow, to provide 

requested records to the QIO, and to 

rebill claims and refund beneficiaries 

who obtained a successful appeal. 

Response: We acknowledge that the 

proposed rule estimates did not include 

hospital reclassifications of beneficiaries 

from inpatient to outpatient receiving 

observation services for beneficiaries 

that did not have Medicare Part B. 

Based on certain data collection 

limitations, it is not possible for CMS to 

fully estimate the number of 

beneficiaries with Part A but not Part B 

who are eligible to appeal in this 

process. Hospital stays for this 

population without Part B coverage who 

were changed from inpatient to 

outpatients receiving observation 

services are not reflected in Medicare 

claims data, as non-covered Part B 

claims are generally not submitted to 

Medicare. Nevertheless, we did attempt 

to obtain estimates from the data that 

was available and only a handful of 

such non-covered Part B claims existed 

per year. 

In the proposed rule, we estimated the 

time it would take a hospital registered 

nurse to complete the MCSN to be 10 

minutes as this is the longstanding 

estimate for delivery of the IM, a very 

similar notice. Throughout multiple 

public comment periods as part of the 

PRA renewal process, we have not 

received any comments or concerns 

regarding delivery of the IM or our 

estimated time to complete delivery of 

the notice. We also cannot account for 

all circumstances and our estimates 

only represent the average time we 

expect for notice preparation and 

delivery. We note that because this is a 

new appeals process, we must provide 

these estimates in the absence of 

historical data. However, we will update 

these estimates in each MCSN PRA 

renewal cycle. Finally, we acknowledge 

we did not provide burden estimates for 

hospital activities beyond delivering the 

new notice. We have not previously 

calculated the burden of activities 

ancillary to the appeals process, such as 

rebilling or submitting documentation 

to the QIO, for the IM or the Notice of 

Medicare Non-Coverage, which have 

similar notice and appeals processes for 

termination of coverage of sub-acute 

care. Therefore, we do not have data 

available to utilize for such an estimate. 

Even if we were to attempt such an 

estimate, we believe it would be 

impossible to provide an accurate 

estimate due to the variation in hospital 

size and workflow approaches. 

Nevertheless, we believe the financial 

impact and resource expenditure for 

hospitals delivering the MCSN to be 

minimal as hospitals already have 

processes and personnel in place that 

regularly deliver beneficiary notices 

with similar delivery requirements of 

the MCSN. We expect hospitals can 

incorporate this new notice into their 

well-established practices for prerelease paperwork delivery by 

caseworkers and other hospital staff. 

Comment: A commenter requested 

CMS provide guidance in the final rule 

on the expected impact to Medicare 

Supplement Insurance plans serving 

FFS beneficiaries, including impacts on 

cost-sharing, due to the proposed 

appeals processes. 

Response: We do not anticipate the 

proposed prospective appeals process 

will impact existing policies related to 

Medicare Supplement Insurance plans. 

We acknowledge that a beneficiary’s 

cost-sharing may at times increase or 

decrease due to a favorable QIO 

decision, which in turn may potentially 

affect the amounts covered by an 

enrolled Medicare Supplement 

Insurance plan. However, we do not 

have the historical data necessary to 

accurately estimate any potential change 

in total payments made by Medicare 

Supplement Insurance plans. 

V. Regulatory Impact Statement 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), Executive Order 14094 entitled 

‘‘Modernizing Regulatory Review’’ 

(April 6, 2023), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (March 

22, 1995; Pub. L. 104–4), Executive 

Order 13132 on Federalism (August 4, 

1999), and the Congressional Review 

Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 


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30 The data used in this report came from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the Integrated Data Repository 

(IDR). The IDR contains a subset of data transmitted 

by the Common Working File (CWF), a 

computerized database maintained by CMS in 

connection with its processing and payment of 

Medicare claims. 

31 The data used in this report come from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the CMS Chronic Condition Data 

Warehouse (www2.ccwdata.org/web/guest/home), 

accessed August 2023. 

equity). The Executive Order 14094 

entitled ‘‘Modernizing Regulatory 

Review’’ (hereinafter, the Modernizing 

E.O.) amended section 3(f) of Executive 

Order 12866 (Regulatory Planning and 

Review). The amended section 3(f)(1) of 

Executive Order 12866 defines a 

‘‘significant regulatory action’’ as an 

action that is likely to result in a rule: 

(1) having an annual effect on the 

economy of $200 million or more in any 

1 year. A regulatory impact analysis 

(RIA) must be prepared for the rules 

with significant regulatory action/s as 

per section 3(f)(1) ($200 million or more 

in any 1 year). This rule does not reach 

the economic threshold and thus is not 

considered a significant rule under 

section 3(f)(1). 

We are making the determination that 

the new appeals process will not have 

a significant financial impact on the 

Medicare program or interested parties 

based on our assumption about the 

overall number of projected appeals. 

While it is difficult to project how many 

beneficiaries will pursue appeals under 

this new process, overall, we anticipate 

a relatively low volume of retrospective 

appeals. We estimate that the total 

number of eligible beneficiaries for the 

retrospective process is 32,894.30 We are 

projecting approximately 6,600 appeals 

at the first level of appeal (MAC level); 

5,000 appeals at the second level of 

appeal (QIC Level); 2,800 appeals at the 

third level of appeal (ALJ level); and 150 

at the Medicare Appeals Council. There 

will be administrative costs associated 

with tasking a contractor to serve as a 

point of contact and clearinghouse for 

incoming retrospective appeals requests. 

We also anticipate a very low volume 

of prospective and standard appeals on 

an ongoing basis. We estimate that 

around 15,655 notices informing 

beneficiaries of their change in status 

and informing them of their right to 

appeal will be delivered annually.31 We 

are estimating an appeal rate of 50 

percent, which would result in about 

8,000 appeals per year. 

While our estimates reflect a 

relatively low number of appeals, we 

acknowledge that there will be 

administrative costs for hospitals to 

accommodate the new appeals process, 

as well as costs associated with 

modifying contracts for MACs, QICs, 

and the BFCC–QIOs to perform the 

retrospective, prospective and standard 

appeals. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of less than $9.0 million to $47.0 

million in any 1 year. Individuals and 

states are not included in the definition 

of a small entity. We are not preparing 

an analysis for the RFA because we have 

determined, and the Secretary certifies, 

that this would not have a significant 

economic impact on a substantial 

number of small entities. In addition, 

section 1102(b) of the Act requires us to 

prepare an RIA if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

at 42 CFR 412.108 as a hospital that is 

located outside of a Metropolitan 

Statistical Area for Medicare payment 

regulations and has fewer than 100 

beds. We are not preparing an analysis 

for section 1102(b) of the Act because 

we have determined, and the Secretary 

certifies, that this final regulation would 

not have a significant impact on the 

operations of a substantial number of 

small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2024, that threshold is approximately 

$183 million. This rule will have no 

consequential effect on state, local, or 

tribal governments or on the private 

sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on state and local 

governments, preempts state law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on state or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

was reviewed by the Office of 

Management and Budget. 

Chiquita Brooks-LaSure, 

Administrator of the Centers for 

Medicare & Medicaid Services, 

approved this document on September 

27, 2024. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Diseases, Health facilities, 

Health professions, Medical devices, 

Medicare, Reporting and recordkeeping 

requirements, Rural areas, X-rays. 

42 CFR Part 476 

Grant programs—health, Health care, 

Health facilities, Health professions, 

Health records, Peer Review 

Organization (PRO), Penalties, Privacy, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 489 

Health facilities, Medicare, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority citation for part 405 

continues to read as follows: 

Authority: 42 U.S.C. 263a, 405(a), 1302, 

1320b–12, 1395x, 1395y(a), 1395ff, 1395hh, 

1395kk, 1395rr, and 1395ww(k). 

■ 2. Subpart I is amended by adding an 

undesignated center heading after 

§ 405.930 and §§ 405.931, 405.932, 

405.934, 405.936, and 405.938 to read as 

follows: 

Retrospective Appeals for Changes in 

Patient Status That Resulted in Denial 

of Part A Coverage for Hospital 

Services 

Sec. 

405.931 Scope, basis, and definitions. 

405.932 Right to appeal a denial of Part A 

coverage resulting from a change in 

patient status. 

405.934 Reconsideration. 

405.936 Hearings before an ALJ and 

decisions by an ALJ or Attorney 

Adjudicator. 

405.938 Review by the Medicare Appeals 

Council and judicial review. 

§ 405.931 Scope, basis, and definitions. 

(a) Scope and basis. The provisions in 

§§ 405.931 through 405.938— 

(1) Implement a federal district court 

order requiring appeal rights for 


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hospital stays on or after January 1, 

2009, for a specified class of 

beneficiaries under certain conditions 

(defined in § 405.931(b)) who were 

admitted to a hospital as inpatients, but 

were subsequently reclassified by the 

hospital as outpatients receiving 

observation services; and 

(2) Apply to retrospective appeals, 

that is, appeals for hospital outpatient 

services, and as applicable, posthospital extended care services in a 

skilled nursing facility (SNF services), 

furnished to eligible parties as defined 

in paragraph (b) of this section before 

the implementation of the prospective 

appeal process set forth in §§ 405.1210 

through 405.1212. 

(b) Definitions. For the purposes of 

the appeals conducted under §§ 405.931 

through 405.938, the following 

definitions apply: 

Eligible party means a beneficiary 

who, on or after January 1, 2009, meets 

the following criteria, and is, thus, 

eligible to request an appeal under 

§§ 405.931 through 405.938: 

(i) Was formally admitted as a 

hospital inpatient. 

(ii) While in the hospital was 

subsequently reclassified as an 

outpatient receiving observation 

services (as defined in § 405.931(h)). 

(iii) Has received an initial 

determination (as defined in § 405.920) 

or a Medicare Outpatient Observation 

Notice (MOON) (as described in 

§ 489.20(y)) indicating that the 

observation services are not covered 

under Medicare Part A. 

(iv)(A) Was not enrolled in the 

Supplementary Medical Insurance 

program (that is, Medicare Part B 

coverage) at the time of beneficiary’s 

hospitalization; or 

(B) Stayed at the hospital for 3 or 

more consecutive days but was 

designated as an inpatient for fewer 

than 3 days, unless more than 30 

calendar days has passed after the 

hospital stay without the beneficiary’s 

having been admitted to a SNF. 

(v) Medicare beneficiaries who meet 

the requirements of the paragraph 

(iv)(A) or (B) of this definition but who 

pursued an administrative appeal and 

received a final decision of the Secretary 

before September 4, 2011, are excluded 

from the definition of an eligible party. 

Eligibility contractor means the 

contractor who meets all of the 

following: 

(i) Is identified on the Medicare.gov 

website for accepting appeal requests. 

(ii) Receives appeal requests and 

makes determinations regarding 

eligibility for the appeal under 

§§ 405.931 through 405.938. 

(iii) Issues notices of eligibility. 

(iv) Refers valid appeal requests to the 

processing contractor for a decision on 

the merits of the appeal. 

Processing contractor means the 

contractor responsible for conducting 

the first-level appeal and issuing a 

decision on the merits of the appeal. 

Appeals under § 405.932 are conducted 

by the MAC who, at the time of the 

referral of the request for appeal under 

§ 405.932(d)(2), has jurisdiction over 

claims submitted by the hospital where 

the eligible party received the services 

at issue. 

(c) Party to an appeal. For the 

purposes of the appeals conducted 

under §§ 405.931 through 405.938, an 

eligible party is the only party to the 

appeal. The provisions of § 405.906 do 

not apply to appeals processed under 

these provisions, and the provider that 

furnished services to an eligible party 

may not file a request for an appeal and 

is not considered a party to any appeal 

decision or determination. 

(d) Authorized representatives, 

appointed representatives, or 

representatives of a deceased eligible 

party. For the purposes of appeals 

conducted under §§ 405.931 through 

405.938: 

(1) The provisions of § 405.910 apply 

to an eligible party appointing a 

representative to assist in such appeal, 

as appropriate, except as follows: 

(i) A provider of services who 

furnished items or services to a 

beneficiary whose claims are the subject 

of an appeal under the provisions of 

§§ 405.931 through 405.938 is 

prohibited from representing the 

beneficiary or eligible party in such 

appeal. 

(ii) [Reserved.] 

(2) An authorized representative (as 

defined in § 405.902) may act on behalf 

of an eligible party and has all of the 

same rights and responsibilities of an 

eligible party throughout the appeals 

process. 

(3) The provisions of § 405.906(a)(1) 

apply to a deceased eligible party in the 

same manner in which such provisions 

apply to a deceased beneficiary. 

(4) The provisions of § 405.906(c) do 

not apply. 

(5) A beneficiary who is an eligible 

party is considered unrepresented if the 

beneficiary meets any of the following: 

(i) Has not appointed a representative 

under § 405.910. 

(ii) Has an authorized representative 

as defined in § 405.902. 

(iii) Has appointed as its 

representative a member of the 

beneficiary’s family, a legal guardian, or 

an individual who routinely acts on 

behalf of the beneficiary, such as a 

family member or friend who has a 

power of attorney. 

(iv) Is deceased but met the 

conditions for an eligible party in 

paragraph (b)(1) of this section and the 

appeal is filed by an individual who 

meets the conditions set forth in 

§ 405.906(a)(1). 

(e) Prohibition on assignment of 

appeal rights. For the purposes of the 

appeals conducted under §§ 405.931 

through 405.938, an eligible party may 

not assign appeal rights to a provider 

under the provisions of § 405.912. 

(f) Date of receipt of a notice or 

decision. For the purposes of the 

appeals conducted under §§ 405.931 

through 405.938, the date of receipt of 

a notice or decision sent by the 

eligibility contractor, processing 

contractor or other appeals adjudicator 

is presumed to be 5 calendar days 

following the date on the notice unless 

there is evidence to the contrary. 

(g) Three or more consecutive days. 

For the purposes of the appeals 

conducted under §§ 405.931 through 

405.938, when determining if a 

beneficiary is an eligible party and for 

the purposes of determining coverage of 

SNF services under section 1861 of the 

Act, inpatient hospital days are counted 

in accordance with § 409.30, that is, a 

patient must have a qualifying inpatient 

stay of at least 3 consecutive calendar 

days starting with the admission day but 

not counting the discharge day. 

(h) Outpatient receiving observation 

services. For the purposes of appeals 

conducted under §§ 405.931 through 

405.938 when determining if a 

beneficiary is an eligible party, a 

beneficiary is considered an outpatient 

receiving observation services when the 

hospital changes beneficiary’s status 

from inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services. 

(i) Conclusive effect of a Part A 

coverage determination. For the 

purposes of appeals under §§ 405.931 

through 405.938, the determination with 

respect to coverage under Part A is 

conclusive and binding with respect to 

the services furnished and must be 

applied to any existing appeals with 

respect to coverage and payment for 

hospital services under Part B and SNF 

services (as applicable). 

§ 405.932 Right to appeal a denial of Part 

A coverage resulting from a change in 

patient status. 

(a) Filing an appeal request related to 

a change in patient status which 

resulted in the denial of Part A 

coverage. (1) Only an eligible party, the 


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party’s appointed representative, or an 

authorized representative of an eligible 

party may request an appeal at any level 

of the appeals process under §§ 405.931 

through 405.938. 

(2) To initiate an appeal under 

§§ 405.931 through 405.938, an eligible 

party, the party’s appointed 

representative, or an authorized 

representative of an eligible party must 

meet the following requirements: 

(i) Submit a request for an appeal in 

writing to the eligibility contractor. 

(ii) The request must be received by 

the eligibility contractor no later than 

365 calendar days after the 

implementation date of the final rule. 

The eligibility contractor denies the 

written request if it is not received by 

the applicable filing timeframe under 

paragraph (d)(3) of this section, unless 

the eligible party established good cause 

for late submission as specified in 

§ 405.942(b)(2) and (3). 

(3) If an eligible party (or the party’s 

representative) misfiles a request for 

appeal with a contractor or government 

entity other than the eligibility 

contractor, then for the purpose of 

determining timeliness of the request for 

appeal, the date the misfiled request 

was received by the contractor or 

government agency is considered the 

date of receipt. The misfiled request and 

all documentation must be forwarded to 

the eligibility contractor within 30 

calendar days of receipt, or as soon as 

practicable. 

(b) Content of the appeal request. (1) 

The written request filed by an eligible 

party, the party’s appointed 

representative, or an authorized 

representative of an eligible party may 

be made on a model CMS form. If the 

model form is not used, to be valid, the 

written request must include all of the 

following identifying information: 

(i) Beneficiary name. 

(ii) Beneficiary Medicare number (the 

number on the beneficiary’s Medicare 

card). 

(iii) Name of the hospital and dates of 

hospitalization. 

(iv) Name of the SNF and the dates of 

stay (as applicable). 

(2) If the appeal includes SNF services 

not covered by Medicare, the written 

request must also include an attestation 

to the out-of-pocket payment(s) made by 

the beneficiary for such SNF services 

and must include documentation of 

payments made to the SNF for such 

services. 

(i) Payments for an eligible party’s 

SNF services made by a third-party 

payer do not constitute out-of-pocket 

expenses or payment for an eligible 

party. If a third-party payer made 

payment for the eligible party’s SNF 

services, then the services are excluded 

from consideration in the appeal. 

(ii) Payments made for cost sharing 

(including, but not limited to, 

coinsurance and deductible) for SNF 

services covered by a third-party payer 

are not considered an out-of-pocket 

payment for the purposes of this 

provision. 

(iii) Payments made by a family 

member (including payments made by 

an individual not biologically related to 

the beneficiary) for an eligible party’s 

SNF services are considered an out-ofpocket payment for the eligible party. 

(3) In the written request for an 

appeal, an eligible party (or their 

representative) may include an 

explanation of why the hospital 

admission satisfied the relevant criteria 

for Part A coverage and should have 

been covered under the Part A hospital 

insurance benefit instead of under the 

Part B supplementary medical insurance 

benefit. 

(c) Evidence and other information to 

be submitted with the appeal request. 

(1) Eligible parties (or their 

representatives) are encouraged to 

submit all available information and 

documentation, including medical 

records related to the hospital stay and 

SNF services, as applicable, at issue in 

the appeal with the written request for 

an appeal. 

(2) If the eligibility contractor 

determines there is information missing 

from the request that is needed to 

establish the beneficiary’s eligibility as 

a party under § 405.931(b) or satisfy 

other conditions for eligibility for an 

appeal, the eligibility contractor works 

with the appropriate MAC and attempts 

to obtain the information from the 

provider or the eligible party (or the 

party’s representative) or both, as 

applicable. The eligibility contractor 

allows up to 120 calendar days for 

submission of missing information. 

(3) If the necessary information 

cannot be obtained from either the 

provider or the eligible party (or the 

party’s representative), the eligibility 

contractor makes an eligibility 

determination based on the information 

available. 

(d) Determining eligibility for an 

appeal. (1)(i) The eligibility contractor 

reviews the information submitted with 

the appeal request and any additional 

information it obtains to determine if 

the individual submitting the appeal 

request is an eligible party and that the 

services previously furnished are 

eligible for an appeal under § 405.931. 

(ii) The eligibility contractor mails or 

otherwise transmits the notice of its 

determination to the eligible party (or 

the party’s representative) within 60 

calendar days of receipt of the appeal 

request. 

(iii) The time between the eligibility 

contractor’s request for missing 

information and receipt of such 

information (or in the case of 

information that is requested but is not 

received, the time allowed by the 

contractor to submit the information) 

does not count toward the timeframe for 

issuing a notice to the eligible party (or 

the party’s representative). 

(2) If the eligibility contractor 

determines that the individual is an 

eligible party and the services 

previously furnished are eligible for an 

appeal, the eligibility contractor— 

(i) Issues a notice of acceptance to the 

eligible party (or the party’s 

representative), explaining that the 

appeal has been accepted for processing; 

and 

(ii) Refers the appeal to the processing 

contractor for adjudication under 

paragraph (f) of this section. 

(3)(i) If the eligibility contractor 

determines that the request for appeal is 

untimely or incomplete, the individual 

does not satisfy the requirements for an 

eligible party, or the services previously 

furnished are not eligible for an appeal, 

the eligibility contractor issues a denial 

notice to the individual (or the party’s 

representative) in writing. 

(ii) The denial notice explains that the 

request is not eligible for an appeal, the 

reason(s) for the denial of the appeal 

request, the information needed to cure 

the denial, and the process for 

requesting a review of the eligibility 

denial under paragraph (e) of this 

section. 

(4) Notices regarding eligibility for an 

appeal issued by the eligibility 

contractor are written in a manner to be 

understood by the eligible party or the 

party’s representative. 

(e) Review of an eligibility contractor’s 

denial of a request for an appeal. (1)(i) 

An individual (or their representative) 

may request a review of the eligibility 

contractor’s denial of a request for an 

appeal by filing a request in writing 

with the eligibility contractor. 

(ii) The request for review should 

explain the reason(s) the denial of the 

request for an appeal was incorrect, and 

should include additional information, 

as applicable, to support the validity of 

the original appeal request. 

(2) The request for review, with any 

additional information, must be 

received by the eligibility contractor no 

later than 60 calendar days from the 

date of receipt of the denial notice. If the 

request for review is received after this 

deadline, the individual (or the 

individual’s representative) must 

establish good cause for untimely filing. 


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In determining whether good cause for 

untimely filing exists, the eligibility 

contractor applies the provisions in 

§ 405.942(b)(2) and (3). 

(3) The review by the eligibility 

contractor must be conducted by 

individuals not involved in the initial 

denial of the request for an appeal. 

(4) The eligibility contractor may 

issue a decision that affirms or reverses 

the denial of the request for an appeal 

or may dismiss the request for review. 

The notice of the eligibility contractor’s 

decision must meet both of the 

following requirements: 

(i) Be written in a manner to be 

understood by the individual or the 

individual’s representative. 

(ii) Be mailed or otherwise 

transmitted in writing within 60 

calendar days of the date of receipt of 

the request for review. 

(5) If the decision is to affirm the 

denial, or dismiss the request, the 

eligibility contractor must explain the 

rationale for the decision. 

(6) A denial notice under paragraph 

(d)(3) of this section issued due to 

receipt of an untimely appeal request 

must be reversed if the eligible party (or 

the party’s representative) establishes 

good cause for late filing under 

§ 405.942(b)(2) and (3). 

(7) If the eligibility contractor reverses 

the initial denial of the request for 

appeal, the eligibility contractor 

forwards the request for appeal to the 

processing contractor under paragraph 

(f) of this section. 

(8) The eligibility contractor’s 

decision that affirms the initial denial of 

a request for an appeal is binding and 

not subject to further review. 

(9) If the eligibility contractor 

determines that the request for review of 

the eligibility denial under paragraph 

(e)(2) of this section was not submitted 

timely, and the eligibility contractor did 

not find good cause for the untimely 

submission, then the eligibility 

contractor dismisses the request for 

review, and such dismissal is binding 

and not subject to further review. 

(f) Processing eligible requests for 

appeal. (1) If the processing contractor 

determines there is necessary 

information missing from the appeal 

case file, the processing contractor 

attempts to obtain the information from 

the provider or the eligible party (or the 

party’s representative), as applicable. 

(i) The processing contractor allows 

the provider or eligible party (or the 

party’s representative), or both, up to 60 

calendar days to submit missing 

information. 

(ii) If the provider or eligible party (or 

the party’s representative) does not 

submit the missing information within 

the allotted time, the processing 

contractor makes a decision on the 

request for appeal based on the 

information available. 

(iii) The time between the processing 

contractor’s request for information and 

receipt of such information (or in the 

case of information that is requested but 

is not received, the time allowed by the 

contractor to submit the information) 

does not count toward the timeframe for 

issuing the processing contractor’s 

decision. 

(2) The processing contractor reviews 

the information submitted with the 

appeal request and any additional 

information it obtains to determine if 

the inpatient admission satisfied the 

relevant criteria for Part A coverage at 

the time services were furnished. If the 

appeal request also includes a request to 

review denied SNF services that are 

eligible for an appeal, the processing 

contractor also determines if such 

eligible SNF services satisfied relevant 

criteria for Part A coverage at the time 

the services were furnished. 

(3) Subject to the provisions in 

paragraph (f)(1) of this section, the 

processing contractor mails or otherwise 

transmits its written decision on the 

request for appeal within 60 calendar 

days of receipt of the request. 

(g) Notice and content of the decision. 

(1) If the processing contractor 

determines that the inpatient admission, 

and as applicable, SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the processing 

contractor issues notice of the favorable 

decision to the eligible party (or the 

party’s representative). The processing 

contractor also notifies the hospital and 

SNF, as applicable, in the case of a 

favorable determination for Part A 

coverage. 

(2)(i) If the processing contractor 

determines that the inpatient admission, 

or as applicable, SNF services, did not 

satisfy the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the processing 

contractor issues notice of the 

unfavorable or partially favorable 

decision to the eligible party (or the 

party’s representative). 

(ii) The processing contractor issues a 

notice of a partially favorable decision 

to the SNF if the inpatient admission 

satisfied the relevant criteria for Part A 

coverage, but the SNF services did not 

satisfy the relevant criteria for Part A 

coverage. 

(3) The notice issued to the eligible 

party (or the party’s representative) 

must be written in a manner calculated 

to be understood by the eligible party 

(or the party’s representative) and 

include all of the following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the hospital admission, 

and as applicable, the SNF services, 

satisfied or did not satisfy the relevant 

criteria for Part A coverage at the time 

the services were furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) If a favorable decision, the effect 

of such decision, including, as 

applicable, a statement about the 

obligation of the SNF to refund any 

amounts collected for the covered SNF 

services, and that the SNF may then 

submit a new claim(s) for services 

covered under Part A in order to 

determine the amounts of benefits due. 

(vi) If an unfavorable or partially 

favorable decision, a statement of any 

specific missing documentation that 

should be submitted with a request for 

reconsideration, if applicable. 

(vii) The procedures for obtaining 

additional information concerning the 

decision, such as specific provisions of 

the policy, manual, regulations, or other 

rules used in making the decision. 

(viii) If an unfavorable or partially 

favorable decision, information about 

the procedures for filing a request for 

reconsideration under § 405.934. 

(ix) Any other requirements specified 

by CMS. 

(4) As applicable, a notice of a 

favorable decision issued to the SNF 

(including a decision for a beneficiary 

not enrolled in the Supplementary 

Medical Insurance program (Medicare 

Part B) at the time of beneficiary’s 

hospitalization), includes all of the 

following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the SNF services 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 


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may then submit a new claim(s) to 

determine the amount of benefits due 

for covered services. 

(vi) Any other requirements specified 

by CMS. 

(5) In the case of a favorable decision 

for a beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization, notice 

is issued to the hospital that includes all 

of the following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(vi) Any other requirements specified 

by CMS. 

(6) In the case of a partially favorable 

decision issued to a SNF, the notice 

includes the following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, and the reason the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the decision is being sent for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to a QIC under § 405.934. 

(vi) Any other requirements specified 

by CMS. 

(h) Effect of a favorable appeal 

decision. (1)(i) If the processing 

contractor issues a decision that the 

beneficiary’s inpatient admission 

satisfied the relevant criteria for Part A 

coverage and the hospital’s decision to 

change the inpatient admission to 

outpatient receiving observation 

services was therefore erroneous, the 

beneficiary’s reclassification as an 

outpatient is disregarded for the 

purposes of determining Part A benefits, 

including Part A SNF coverage, if 

applicable. 

(ii) For the purposes of effectuating a 

favorable decision by the processing 

contractor, unless a Part A claim is 

submitted by a hospital, any claims 

previously submitted for outpatient 

hospital services and payments made 

for such services (including any 

applicable deductible and coinsurance 

amounts) are not reopened or revised by 

the MAC, and payment, as applicable, 

for covered SNF services may be made 

by the MAC to the SNF without regard 

to the hospital claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable: 

(i) The SNF that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 365 calendar days 

of receipt of the notice of a favorable 

decision. 

(ii) In the case of a beneficiary not 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services. After the refund is 

issued, the hospital may then submit a 

Part A inpatient claim for such services 

within 365 calendar days of receipt of 

the notice of a favorable decision. 

(iii) In the case of a beneficiary 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services. The deadline for 

submitting a Part A claim for such 

services is 365 calendar days after 

receipt of the notice of a favorable 

decision, and the hospital must refund 

any payments collected for the 

outpatient services before submitting 

the Part A inpatient claim. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(i) A favorable appeal decision is 

considered binding unless it is reopened 

and revised under the provisions of 

§§ 405.980 through 405.986. 

(ii) The provisions regarding 

reopening of a redetermination in 

§ 405.980(b) and (c) apply in the same 

manner to favorable decisions issued 

under this section. 

(4) The notice of a favorable decision 

issued to a hospital and, as applicable, 

a SNF does not convey party status to 

such provider. 

(i) Effect of an unfavorable or partially 

favorable decision. (1) An unfavorable 

or partially favorable appeal decision is 

considered binding unless— 

(A) It is reopened and revised under 

the provisions of §§ 405.980 through 

405.986; or 

(B) An eligible party (or the party’s 

representative) files a request for 

reconsideration under § 405.934. 

(2) The provisions regarding 

reopening of a redetermination in 

§ 405.980(b) and (c) apply in the same 

manner to unfavorable or partially 

favorable decisions issued under this 

section. 

§ 405.934 Reconsideration. 

(a) Filing a request for 

reconsideration. An eligible party, the 

party’s appointed representative, or an 

authorized representative who is 

dissatisfied with the decision rendered 

by a processing contractor in 

§ 405.932(g)(2) may request a 

reconsideration with a QIC within 180 

calendar days of receipt of the 

processing contractor’s notice. The 

request for reconsideration must include 

the elements specified in the processing 

contractor’s notice. 

(b) Applicability of other provisions. 

The provisions in §§ 405.960 through 

405.978 that apply to reconsiderations 

of initial determinations apply to the 

extent they are appropriate/in the same 

manner to reconsiderations performed 

by a QIC under this section unless 

otherwise specified. 

(c) Notice and content of a 

reconsideration. (1) If the QIC 

determines that the inpatient admission, 

and as applicable, eligible SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the QIC issues notice of 

the favorable reconsideration to the 

eligible party (or the party’s 

representative). The QIC also notifies 

the hospital and SNF, as applicable, in 

the case of a favorable determination for 

Part A coverage. 

(2)(i) If the QIC determines that the 

inpatient admission, or as applicable, 

SNF services, did not satisfy the 

relevant criteria for Part A coverage at 


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the time the services were furnished, 

then the QIC issues notice of the 

unfavorable or partially favorable 

reconsideration to the eligible party (or 

the party’s representative). 

(ii) The QIC issues a notice of a 

partially favorable reconsideration to 

the SNF if the inpatient admission 

satisfied the relevant criteria for Part A 

coverage, but the SNF services did not 

satisfy the relevant criteria for Part A 

coverage. 

(3) The notice of reconsideration must 

be mailed or otherwise transmitted 

within 60 calendar days of the QIC’s 

receipt of the request for 

reconsideration, subject to the 

exceptions specified in § 405.970. 

(4) The notice of reconsideration 

issued to the eligible party (or the 

party’s representative) must be written 

in a manner calculated to be understood 

by the eligible party (or the party’s 

representative) and include all of the 

following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the hospital admission, 

and as applicable, the SNF services, 

satisfied or did not satisfy the relevant 

criteria for Part A coverage at the time 

the services were furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) If a favorable decision, the effect 

of such decision, including a statement 

about the obligation of the SNF to 

refund any amounts collected for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) for 

services covered under Part A in order 

to determine the amounts of benefits 

due. 

(vi) If the decision in § 405.932(f) 

indicated that specific documentation 

should be submitted with the 

reconsideration request, and the 

documentation was not submitted with 

the request for reconsideration, the 

summary must indicate how the missing 

documentation affected the 

reconsideration. 

(vii) The procedures for obtaining 

additional information concerning the 

decision, such as specific provisions of 

the policy, manual, regulations, or other 

rules used in making the decision. 

(viii) If an unfavorable or partially 

favorable decision, information 

concerning an eligible parties’ right to 

an ALJ hearing, including the applicable 

amount in controversy requirement and 

aggregation provisions and other 

procedures for filing a request for an 

ALJ hearing under § 405.936. 

(ix) Any other requirements specified 

by CMS. 

(5) As applicable, a notice of a 

favorable reconsideration issued to the 

SNF (including a decision for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization), 

includes all of the following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining the 

SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for the covered services. 

(vi) Any other requirements specified 

by CMS. 

(6) In the case of a favorable 

reconsideration for a beneficiary not 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, notice is issued to the 

hospital that includes all the following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(vi) Any other requirements specified 

by CMS. 

(7) In the case of a partially favorable 

reconsideration issued to a SNF the 

notice includes the following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, and the reason the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the decision is being sent for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to an ALJ under § 405.936. 

(vi) Any other requirements specified 

by CMS. 

(d) Effect of a favorable 

reconsideration. (1)(i) If the QIC issues 

a reconsideration decision that the 

beneficiary’s inpatient admission 

satisfied the relevant criteria for Part A 

coverage and the hospital’s decision to 

change the inpatient admission to 

outpatient receiving observation 

services was therefore erroneous, the 

beneficiary’s reclassification as an 

outpatient is disregarded for the 

purposes of determining Part A benefits, 

including both Part A hospital coverage 

and Part A SNF coverage, if applicable. 

(ii) For the purposes of effectuating a 

favorable reconsideration, unless a Part 

A claim is submitted by a hospital, any 

claims previously submitted for 

outpatient hospital services and 

payments made for such services 

(including any applicable deductible 

and coinsurance amounts) are not 

reopened or revised by the MAC, and 

payment, as applicable, for covered SNF 

services may be made by the MAC to the 

SNF without regard to the hospital 

claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable— 

(i) The SNF that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 365 calendar days 

of receipt of the notice of a favorable 

decision; 

(ii) In the case of a beneficiary not 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 


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payments collected for the outpatient 

hospital services. After the refund is 

issued, the hospital may then submit a 

Part A inpatient claim for such services 

within 365 calendar days of receipt of 

the notice of a favorable decision; 

(iii) In the case of a beneficiary 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services. The deadline for 

submitting a Part A claim for such 

services is 365 calendar days after 

receipt of the notice of a favorable 

decision, and the hospital must refund 

any payments collected for the 

outpatient services before submitting 

the Part A inpatient claim. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 subparts B 

through D of this chapter. 

(4) A favorable reconsideration is 

considered binding unless it is reopened 

and revised under the provisions of 

§§ 405.980 through 405.986. The 

provisions regarding reopening of a 

reconsideration in § 405.980(d) and (e) 

apply in the same manner to favorable 

reconsiderations issued under this 

section. 

(5) The notice of a favorable 

reconsideration sent to a hospital and, 

as applicable, a favorable or partially 

favorable reconsideration sent to a SNF 

does not convey party status. 

(e) Effect of an unfavorable or 

partially favorable reconsideration. (1) 

An unfavorable or partially favorable 

reconsideration is considered binding 

unless— 

(i) It is reopened and revised under 

the provisions of § 405.980(d) or (e); or 

(ii) An eligible party (or the party’s 

representative) files a request for a 

hearing by an ALJ under § 405.936. 

(2) The provisions regarding 

reopening of a reconsideration in 

§ 405.980(d) and (e) apply in the same 

manner to unfavorable and partially 

favorable decisions issued under this 

section. 

§ 405.936 Hearings before an ALJ and 

decisions by an ALJ or Attorney 

Adjudicator. 

(a) Filing a request for hearing. An 

eligible party, the party’s appointed 

representative, or an authorized 

representative who is dissatisfied with 

the reconsideration rendered by a QIC 

in § 405.934(c)(2), or a dismissal of a 

request for reconsideration, may request 

a hearing before an ALJ within 60 

calendar days of receipt of the 

reconsideration. The request for hearing 

must include the elements specified in 

the QIC’s reconsideration. 

(b) Applicability of other provisions. 

The provisions in §§ 405.1000 through 

405.1064 that apply to ALJ hearings and 

decisions by an ALJ or an attorney 

adjudicator apply to the extent they are 

appropriate/in the same manner to ALJ 

hearings and decisions by an ALJ or an 

attorney adjudicator under this section 

unless otherwise specified. 

(c) Calculating the amount remaining 

in controversy for an ALJ hearing or 

judicial review. (1)(i) A request for ALJ 

hearing for an appeal under the 

provisions of §§ 405.931 through 

405.938 must meet the amount in 

controversy requirement in 

§ 405.1006(b). 

(ii) A request for judicial review in 

federal district court for an appeal under 

the provisions of §§ 405.931 through 

405.938 must meet the amount in 

controversy requirement in 

§ 405.1006(c), subject to the calculation 

methodology set forth in this paragraph. 

(2) For appeals under the provisions 

of §§ 405.931 through 405.938, the 

amount remaining in controversy for an 

ALJ hearing or for judicial review in 

federal district court under § 405.1136 is 

determined by the sum of the billed 

charges on the Part B outpatient hospital 

claim and, as applicable, any billed 

charges for the SNF claim at issue, if 

such claims were submitted to 

Medicare. If no SNF claim was 

submitted for services furnished to the 

beneficiary, then the billed charges to 

the beneficiary as indicated on an 

itemized statement or evidence of 

payment made by the beneficiary for 

such services are used in calculating the 

amount remaining in controversy. 

(3) In the case of an appeal under the 

provisions of §§ 405.931 through 

405.938 filed by an eligible party who 

was not enrolled in Part B at the time 

of hospitalization, and no Part B 

outpatient hospital claim was billed to 

Medicare, the amount remaining in 

controversy is determined by the 

charges billed to the beneficiary by the 

hospital for the outpatient hospital stay 

and billed charges for SNF services, if 

applicable. An itemized statement from 

the provider such services, or evidence 

of the payment made by the beneficiary 

to the provider is acceptable for the 

purpose of calculating the amount 

remaining in controversy. 

(4) Any payments made, including 

coinsurance and deductible, for the Part 

B outpatient hospital claim, and as 

applicable, the SNF claim must not 

reduce the calculation of the amount in 

controversy for the purposes of a 

hearing or judicial review under this 

paragraph. 

(d) Notice and content of an ALJ or 

attorney adjudicator decision. (1) If the 

ALJ or attorney adjudicator determines 

that the inpatient admission, and as 

applicable, eligible SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the ALJ or attorney 

adjudicator issues notice of the 

favorable decision to the eligible party 

(or the party’s representative). 

(ii) The ALJ or attorney adjudicator 

also notifies the hospital and SNF, as 

applicable, in the case of a favorable 

determination for Part A coverage. 

(2)(i) If the ALJ or attorney adjudicator 

determines that the inpatient admission, 

or as applicable, SNF services, did not 

satisfy the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the ALJ or attorney 

adjudicator issues notice of the 

unfavorable or partially favorable 

decision to the eligible party (or the 

party’s representative). 

(ii) The ALJ or attorney adjudicator 

issues a notice of a partially favorable 

decision to the SNF if the inpatient 

admission satisfied the relevant criteria 

for Part A coverage, but the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. 

(3) The ALJ or attorney adjudicator 

decision issued to the eligible party (or 

the party’s representative) must be 

written in a manner calculated to be 

understood by the eligible party (or the 

party’s representative) and include all of 

the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the hospital admission, and as 

applicable SNF services, satisfied or did 

not satisfy the relevant criteria for Part 

A coverage at the time the services were 

furnished, and, to the extent 

appropriate, a summary of any clinical 

or scientific evidence used in making 

the determination. 

(v) The procedures for obtaining 

additional information concerning the 

decision, such as specific provisions of 

the policy, manual, regulations, or other 

rules used in making the decision. 

(vi) If a favorable decision, the effect 

of such decision, including, as 

applicable, a statement about the 

obligation of the SNF to refund any 

amounts collected for the covered SNF 

services, and that the SNF may then 

submit a new claim(s) for services 


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covered under Part A in order to 

determine the amount of benefits due. 

(vii) If an unfavorable decision or a 

partially favorable decision, information 

about the procedures for filing a request 

for review by the Appeals Council 

under § 405.938. 

(4) As applicable, a notice of a 

favorable ALJ or attorney adjudicator 

decision (including a decision for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization) issued 

to the SNF, includes the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the SNF services, satisfied the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

and to the extent appropriate, a 

summary of any clinical or scientific 

evidence used in making the 

determination. 

(v) The effect of such decision, 

including a statement explaining that 

the SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for the covered services. 

(5) In the case of a favorable ALJ or 

attorney adjudicator decision for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

beneficiary’s hospitalization, notice is 

issued to the hospital that includes all 

of the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the hospital admission satisfied the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

and to the extent appropriate, a 

summary of any clinical or scientific 

evidence used in making the 

determination. 

(v) The effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(6) In the case of a partially favorable 

decision issued to a SNF, the notice 

includes the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the hospital admission satisfied the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

and the reason the SNF services did not 

satisfy the relevant criteria for Part A 

coverage, and to the extent appropriate, 

a summary of any clinical or scientific 

evidence used in making the 

determination. 

(v) The effect of such decision, 

including a statement explaining that 

the decision is being sent for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to the Medicare Appeals 

Council under § 405.938. 

(7) The timeframe within which 

notices must be issued under this 

paragraph are determined under the 

provisions in § 405.1016. 

(e) Effect of a favorable ALJ or 

attorney adjudicator decision. (1)(i) If 

the ALJ or attorney adjudicator issues a 

decision that the beneficiary’s inpatient 

admission satisfied the relevant criteria 

for Part A coverage and the hospital’s 

decision to change the inpatient 

admission to outpatient receiving 

observation services was therefore 

erroneous, the beneficiary’s 

reclassification as an outpatient is 

disregarded for the purposes of 

determining Part A benefits, including 

Part A SNF coverage, if applicable. 

(ii) For the purposes of effectuating a 

favorable decision by an ALJ or attorney 

adjudicator, unless a Part A claim is 

submitted by a hospital, any claims 

previously submitted for outpatient 

hospital services and payments made 

for such services (including any 

applicable deductible and coinsurance 

amounts) are not reopened or revised by 

the MAC, and payment, as applicable, 

for covered SNF services may be made 

by the MAC to the SNF without regard 

to the hospital claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable— 

(i) The SNF that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 365 calendar days 

of receipt of the notice of a favorable 

decision; 

(ii) In the case of a beneficiary not 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services. After the refund is 

issued, the hospital may then submit a 

Part A inpatient claim for such services 

within 365 calendar days of receipt of 

the notice of a favorable decision; 

(iii) In the case of a beneficiary 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services. The deadline for 

submitting a Part A claim for such 

services is 365 calendar days after 

receipt of the notice of a favorable 

decision, and the hospital must refund 

any payments collected for the 

outpatient services before submitting 

the Part A inpatient claim. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(4) A favorable ALJ or attorney 

adjudicator decision is considered 

binding unless it is reopened and 

revised under the provisions of 

§§ 405.980 through 405.986. The 

provisions regarding reopening of an 

ALJ or attorney adjudicator decision in 

§ 405.980(d) and (e) apply in the same 

manner to favorable ALJ or attorney 

adjudicator decisions issued under this 

section. 

(5) The notice of a favorable decision 

issued to a hospital and, as applicable, 

notice of a favorable or partially 

favorable decision sent to a SNF does 

not convey party status to such 

provider. 

(f) Effect of an unfavorable or partially 

favorable ALJ or attorney adjudicator 

decision. (1) An unfavorable or partially 

favorable ALJ or attorney adjudicator 

decision is considered binding unless— 

(i) It is reopened and revised under 

the provisions of § 405.980(d) or (e); or 

(ii) An eligible party (or the party’s 

representative) files a request for 

Medicare Appeals Council review under 

§ 405.938. 

(2) The provisions regarding 

reopening of an ALJ or attorney 

adjudicator decision in § 405.980(d) and 

(e) apply in the same manner to 

unfavorable and partially favorable 

decisions issued under this section. 

§ 405.938 Review by the Medicare Appeals 

Council and judicial review. 

(a) Filing a request for Council review. 

An eligible party, the party’s appointed 

representative, or an authorized 

representative who is dissatisfied with 


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the unfavorable decision of an ALJ or an 

attorney adjudicator in § 405.936(d)(2) 

may request the Council review the 

decision within 60 calendar days of 

receipt of the decision. The request for 

review must contain the elements 

specified in the ALJ or attorney 

adjudicator’s decision notice. 

(b) Applicability of other provisions. 

The provisions in §§ 405.1100 through 

405.1130 that apply to Council review 

apply to the extent they are appropriate/ 

in the same manner to Council review 

under this section unless otherwise 

specified. 

(c) Notice of the Council’s action. (1) 

After it has reviewed all the evidence in 

the administrative record and any 

additional evidence received, subject to 

the limitations on consideration of 

additional evidence in § 405.1122, the 

Council makes a decision or remands 

the case to an ALJ or attorney 

adjudicator. 

(2) The Council may adopt, modify, or 

reverse the ALJ’s or attorney 

adjudicator’s decision or recommended 

decision. 

(3) Notice of the Council’s decision or 

remand order is issued to the eligible 

party (or the party’s representative). 

(i) In the case of a modification or 

reversal of the ALJ’s or attorney 

adjudicator’s decision that is favorable 

to the eligible party, the Council’s 

decision includes information regarding 

the effect of such decision, including, as 

applicable, a statement about the 

obligation of the SNF to refund any 

amounts collected from the beneficiary 

for the covered SNF services, and that 

the SNF may then submit a new claim(s) 

for services covered under Part A in 

order to determine the amount of 

benefits due. 

(ii) If the appeal involves a beneficiary 

not enrolled in the Supplementary 

Medical Insurance program (Medicare 

Part B) at the time of the beneficiary’s 

hospitalization, a modification or 

reversal of the ALJ’s or attorney 

adjudicator’s decision that is favorable 

to the eligible party with respect to 

hospital services also includes a 

statement about the obligation of the 

hospital to refund any amounts 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new claim for covered 

inpatient hospital services in order to 

determine the amount of benefits due. 

(iii)(A) If the Council adopts or 

modifies an ALJ or attorney adjudicator 

decision that is unfavorable or partially 

favorable to the eligible party, the 

decision includes information about the 

procedures for filing a request for 

judicial review under § 405.1136, 

including information regarding the 

amount in controversy requirement in 

§ 405.936(c). 

(B) A partially favorable decision 

issued by the Council refers to a 

determination that the inpatient 

admission satisfied the relevant criteria 

for Part A coverage but the SNF services 

did not satisfy the relevant criteria for 

Part A coverage. 

(4) Notice of a Council decision, 

favorable or partially favorable to the 

eligible party, that modifies or reverses 

the decision or recommended decision 

by an ALJ or attorney adjudicator, or a 

remand order that is favorable to the 

eligible party, is issued to the SNF, as 

applicable, and to the hospital in the 

case of an appeal filed by, or on behalf 

of, a beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

hospitalization. 

(i)(A) Notice issued to the SNF 

includes information regarding the 

effect of such decision, including, as 

applicable, a statement explaining that 

the SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for the covered services. 

(B) A decision that is partially 

favorable to the eligible party is sent to 

the SNF and explains the reason the 

hospital admission satisfied the relevant 

criteria for Part A coverage at the time 

the services were furnished, the reason 

the SNF services did not satisfy the 

relevant criteria for Part A coverage and 

explains that the decision is being sent 

for informational purposes only. 

(ii) Notice issued to a hospital (in the 

case of an appeal filed by, or on behalf 

of, a beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

hospitalization) includes information 

regarding the effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(5) The timeframe within which 

notices must be sent under this 

paragraph are determined under the 

provisions in § 405.1100. 

(d) Effect of a favorable Council 

decision. (1)(i) If the Council issues a 

decision that the beneficiary’s inpatient 

admission satisfied the relevant criteria 

for Part A coverage and the hospital’s 

decision to change the inpatient 

admission to outpatient receiving 

observation services was therefore 

erroneous, the beneficiary’s 

reclassification as an outpatient is 

disregarded for the purposes of 

determining Part A benefits, including 

both Part A hospital coverage and Part 

A SNF coverage, if applicable. 

(ii) For the purposes of effectuating a 

favorable decision by the Council, 

unless a Part A claim is submitted by a 

hospital, any claims previously 

submitted for outpatient hospital 

services and payments made for such 

services (including any applicable 

deductible and coinsurance amounts) 

are not reopened or revised by the MAC, 

and payment, as applicable, for covered 

SNF services may be made by the MAC 

to the SNF without regard to the 

hospital claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable— 

(i) The SNF, that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 365 calendar days 

of receipt of the notice of a favorable 

decision; 

(ii) In the case of a beneficiary not 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services. After the refund is 

issued, the hospital may then submit a 

Part A inpatient claim for such services 

within 365 calendar days of receipt of 

the notice of a favorable decision; 

(iii) In the case of a beneficiary 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, the hospital that 

furnished services must refund any 

payments collected for the outpatient 

hospital services only if the hospital 

chooses to submit a Part A inpatient 

claim for such services. The deadline for 

submitting a Part A claim for such 

services is 365 calendar days after 

receipt of the notice of a favorable 

decision, and the hospital must refund 

any payments collected for the 

outpatient services before submitting 

the Part A inpatient claim. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(4) A favorable Council decision is 

considered final and binding unless it is 

reopened and revised under the 


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provisions of §§ 405.980 through 

405.986. The provisions regarding 

reopening of a Council decision in 

§ 405.980(d) and (e) apply in the same 

manner to favorable Council decisions 

issued under this section. 

(5) The notice of a favorable decision 

issued to a hospital and, as applicable, 

notice of a favorable or partially 

favorable decision issued to SNF does 

not convey party status to such 

provider. 

(e) Effect of an unfavorable or 

partially favorable Appeals Council 

decision. (1) An unfavorable or partially 

favorable Appeals Council decision is 

considered final and binding unless it is 

reopened and revised under the 

provisions of § 405.980(d) or (e), or a 

Federal district court issues a decision 

modifying the Council’s decision. 

(2) The provisions regarding 

reopening of an Appeals Council 

decision in § 405.980(d) and (e) apply in 

the same manner to unfavorable and 

partially favorable decisions issued 

under this section. 

(f) Judicial review. (1) An eligible 

party (or the party’s representative) 

dissatisfied with a final and binding 

decision under paragraph (e) of this 

section who satisfies the amount in 

controversy requirement in § 405.936(c) 

may request judicial review in Federal 

district court under the procedures set 

forth in § 405.1136. 

(2) An eligible party (or the party’s 

representative) who satisfies the amount 

in controversy requirement in 

§ 405.936(c) and the requirements to 

escalate a case from the Council in 

§ 405.1132 may request judicial review 

in Federal district court under the 

procedures set forth in § 405.1136. 

■ 3. The heading of subpart J is revised 

to read as follows: 

Subpart J—Procedures and 

Beneficiary Rights for Expedited 

Determinations and Reconsiderations 

When Coverage Is Changed or 

Terminated 

■ 4. Add §§ 405.1210, 405.1211, and 

405.1212 to read as follows: 

§ 405.1210 Notifying eligible beneficiaries 

of appeal rights when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation services. 

(a) Applicability and scope. (1) For 

purposes of this section and §§ 405.1211 

and 405.1212, the term ‘‘hospital’’ is 

defined as any facility providing care at 

the inpatient hospital level, whether 

that care is short term or long term, 

acute or non-acute, paid through a 

prospective payment system or other 

reimbursement basis, limited to 

specialty care or providing a broader 

spectrum of services. This definition 

includes critical access hospitals 

(CAHs). 

(2) For purposes of this section and 

§§ 405.1211 and 405.1212, the change in 

status occurs when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation 

services (as defined in § 405.931(h)). 

(3) For purposes of this section and 

§§ 405.1211 and 405.1212, a beneficiary 

is eligible to pursue an appeal regarding 

a change in status when the beneficiary 

meets all the following: 

(i) Was formally admitted as a 

hospital inpatient in accordance with an 

order for inpatient admission by a 

physician or other qualified 

practitioner. 

(ii) Was subsequently reclassified by 

the hospital as an outpatient receiving 

observation services after the admission. 

(iii)(A) Was not enrolled in Part B 

coverage at the time of the beneficiary’s 

hospitalization; or 

(B) Stayed at the hospital for 3 or 

more consecutive days but was 

classified as an inpatient for fewer than 

3 days. 

(iv) The period ‘‘3 or more 

consecutive days’’ is counted using the 

rules for determining coverage of SNF 

services under section 1861 of the Act 

and § 409.30 of this chapter (that is, a 

beneficiary must have a qualifying 

inpatient stay of at least 3 consecutive 

calendar days starting with the 

admission day but not counting the 

discharge day). 

(b) Advance written notice of appeal 

rights. For all eligible beneficiaries, 

hospitals must deliver valid, written 

notice of an eligible beneficiary’s right 

to pursue an appeal regarding the 

decision to reclassify the beneficiary 

from an inpatient to an outpatient 

receiving observation services. The 

hospital must use a standardized notice 

specified by CMS in accordance with 

the following procedures: 

(1) Timing of notice. The hospital 

must provide the notice not later than 

4 hours before release from the hospital 

and as soon as possible after the earliest 

of either of the following: 

(i) The hospital reclassifies the 

beneficiary from an inpatient to an 

outpatient receiving observation 

services and the beneficiary is not 

enrolled in Part B. 

(ii) The hospital reclassifies the 

beneficiary from an inpatient to an 

outpatient receiving observation 

services and the beneficiary has stayed 

in the hospital for 3 or more consecutive 

days but was an inpatient for fewer than 

3 days. 

(2) Content of the notice. The notice 

must include the following information: 

(i) The eligible beneficiary’s change in 

status and the appeal rights under 

§ 405.1211 if the beneficiary wishes to 

pursue an appeal regarding that change. 

(ii) An explanation of the implications 

of the change in status, including the 

potential change in beneficiary hospital 

charges resulting from a favorable 

decision, and subsequent eligibility for 

Medicare coverage for SNF services. 

(iii) Any other information required 

by CMS. 

(3) When delivery of the notice is 

valid. Delivery of the written notice of 

appeal rights described in this section is 

valid if— 

(A) The eligible beneficiary (or the 

eligible beneficiary’s representative) has 

signed and dated the notice to indicate 

that he or she has received the notice 

and can comprehend its contents, 

except as provided in paragraph (b)(4) of 

this section; and 

(B) The notice is delivered in 

accordance with paragraph (b)(1) of this 

section and contains all the elements 

described in paragraph (b)(2) of this 

section. 

(4) If an eligible beneficiary refuses to 

sign the notice. The hospital may 

annotate its notice to indicate the 

refusal, and the date of refusal is 

considered the date of receipt of the 

notice. 

§ 405.1211 Expedited determination 

procedures when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation services. 

(a) Beneficiary’s right to an expedited 

determination by the QIO. An eligible 

beneficiary has a right to request an 

expedited determination by the QIO 

when— 

(1) A hospital changes a beneficiary’s 

status from an inpatient to an outpatient 

receiving observation services; and 

(2) The beneficiary meets other 

eligibility criteria as specified in 

§ 405.1210(a)(3). 

(b) Requesting an expedited 

determination. (1) An eligible 

beneficiary who wishes to exercise the 

right to an expedited determination 

must submit a request to the QIO that 

has an agreement with the hospital as 

specified in § 476.78 of this chapter. The 

request must be made in writing or by 

telephone before release from the 

hospital. 

(2) The eligible beneficiary, or his or 

her representative, upon request by the 

QIO, must be available to discuss the 

case. 

(3) The eligible beneficiary may, but 

is not required to, submit written 

evidence to be considered by the QIO in 

making its decision. 


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(4) An eligible beneficiary who makes 

a timely request for an expedited QIO 

review in accordance with paragraph 

(b)(1) of this section is subject to the 

billing protection under paragraph (e) of 

this section, as applicable. 

(5) An eligible beneficiary who fails to 

make a timely request for an expedited 

determination by a QIO, as described in 

paragraph (b)(1) of this section, may still 

request an untimely expedited QIO 

determination at any time. The QIO 

issues a decision in accordance with 

paragraph (c)(6)(ii) of this section, but 

the billing protection under paragraph 

(e) of this section does not apply. 

(c) Procedures the QIO must follow. 

(1) When the QIO receives the request 

for an expedited determination under 

paragraph (b)(1) of this section, it must 

immediately notify the hospital that a 

request for an expedited determination 

has been made. 

(2) The QIO determines whether the 

hospital delivered valid notice 

consistent with § 405.1210(b)(3). 

(3) The QIO examines the medical 

and other records that pertain to the 

change in status. 

(4) The QIO must solicit the views of 

the eligible beneficiary (or the eligible 

beneficiary’s representative) who 

requested the expedited determination. 

(5) The QIO must provide an 

opportunity for the hospital to explain 

why the reclassification of the 

beneficiary from an inpatient to an 

outpatient receiving observation 

services is appropriate. 

(6) The following timeframes apply 

for the QIO’s decision when an eligible 

beneficiary requests— 

(i) A timely expedited determination 

in accordance with paragraph (b)(1) of 

this section, the QIO must make a 

determination within 1 calendar day of 

receiving all requested pertinent 

information specified in paragraph 

(d)(1)(i) of this section; or 

(ii) An untimely request for a QIO 

expedited determination, the QIO must 

make a determination within 2 calendar 

days after the QIO receives all requested 

information specified in paragraph 

(d)(1)(i) of this section. 

(7) If the QIO does not receive the 

information specified in paragraph 

(d)(1)(i) of this section, it may make its 

determination based on the evidence at 

hand, or it may defer a decision until it 

receives the requested information. 

(8) When the QIO issues an expedited 

determination, the QIO must notify the 

eligible beneficiary, the hospital, and 

SNF (if applicable) of its decision by 

telephone, followed by a written notice 

that must include the following 

information: 

(i) The basis for the determination. 

(ii) A detailed rationale for the 

determination. 

(iii) An explanation of the Medicare 

payment consequences of the 

determination. 

(iv) Information about the eligible 

beneficiary’s right to an expedited 

reconsideration of the QIO’s 

determination as set forth in § 405.1212, 

including how to request a 

reconsideration and the time period for 

doing so. 

(d) Responsibilities of hospitals. (1)(i) 

Upon notification by the QIO of the 

request for an expedited determination, 

the hospital must supply all information 

that the QIO needs to make its 

expedited determination, including a 

copy of the notice as required in 

§ 405.1210(b) of this section. 

(ii) The hospital must furnish this 

information as soon as possible, but no 

later than by noon of the calendar day 

after the QIO notifies the hospital of the 

request for an expedited determination. 

(iii) At the discretion of the QIO, the 

hospital must make the information 

available by phone or in writing (with 

a written record of any information not 

transmitted initially in writing). 

(2)(i) At an eligible beneficiary’s (or 

representative’s) request, the hospital 

must furnish the beneficiary with a copy 

of, or access to, any documentation that 

it sends to the QIO, including written 

records of any information provided by 

telephone. 

(ii) The hospital may charge the 

beneficiary a reasonable amount to 

cover the costs of duplicating the 

documentation and, if applicable, 

delivering it to the beneficiary. 

(iii) The hospital must accommodate 

such a request by no later than close of 

business of the first calendar day after 

the material is requested. 

(e) Billing during QIO expedited 

review. When an eligible beneficiary 

requests an expedited determination in 

accordance with paragraphs (b)(1) 

through (b)(4) of this section, the 

hospital may not bill the beneficiary for 

any disputed services until the 

expedited determination process (and 

reconsideration process, if applicable) 

has been completed. 

(f) Effect of an expedited QIO 

determination. The QIO determination 

is binding for payment purposes upon 

the eligible beneficiary, hospital, and 

MAC, except if the eligible beneficiary 

is dissatisfied with the determination, 

he or she may request a reconsideration 

according to the procedures described 

in § 405.1212. 

§ 405.1212 Expedited reconsideration 

procedures regarding Part A coverage 

when a beneficiary is reclassified from an 

inpatient to an outpatient receiving 

observation services. 

(a) Beneficiary’s right to an expedited 

reconsideration. An eligible beneficiary 

who is dissatisfied with a QIO’s 

expedited determination per 

§ 405.1211(c)(6) may request an 

expedited reconsideration by the QIO 

identified in the written notice specified 

in § 405.1211(c)(8)(iv). 

(b) Requesting an expedited 

reconsideration. (1) An eligible 

beneficiary who wishes to obtain an 

expedited reconsideration must submit 

a request for the reconsideration to the 

appropriate QIO, in writing or by 

telephone, by no later than noon of the 

calendar day following initial 

notification (whether by telephone or in 

writing) after receipt of the QIO’s 

determination. 

(2) The eligible beneficiary, or his or 

her representative, must be available to 

answer questions or supply information 

that the QIO may request to conduct its 

reconsideration. 

(3) The eligible beneficiary may, but 

is not required to, submit evidence to be 

considered by the QIO in making the 

reconsideration. 

(4) An eligible beneficiary who makes 

a timely request for an expedited 

reconsideration in accordance with 

paragraph (b)(1) of this section is subject 

to the billing protection under 

paragraph (e) of this section, as 

applicable. 

(5) An eligible beneficiary who fails to 

make a timely request for an expedited 

reconsideration by a QIO, as described 

in paragraph (b)(1) of this section, may 

still request an expedited QIO 

reconsideration at any time. The QIO 

issues a reconsideration in accordance 

with paragraph (c)(3)(ii) of this section, 

but the billing protection under 

paragraph (e) of this section does not 

apply. 

(c) Procedures and responsibilities of 

the QIO. (1) On the day the QIO receives 

the request for an expedited 

reconsideration under paragraph (b) of 

this section, the QIO must immediately 

notify the hospital of the request for an 

expedited reconsideration. 

(2) The QIO must offer the eligible 

beneficiary and the hospital an 

opportunity to provide further 

information. 

(3) When the eligible beneficiary 

makes— 

(i) A timely request in accordance 

with paragraph (b)(1) of this section, the 

QIO must make a reconsideration 

determination within 2 calendar days of 


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83294 Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations 

receiving all requested pertinent 

information; or 

(ii) An untimely request, the QIO 

must make a reconsideration 

determination within 3 calendar days of 

receiving all requested pertinent 

information. 

(4) When the QIO issues a 

reconsideration determination, the QIO 

must notify the eligible beneficiary, the 

hospital, and SNF, if applicable, of its 

decision by telephone, followed by a 

written notice that must include the 

following information: 

(i) The basis for the determination. 

(ii) A detailed rationale for the 

determination. 

(iii) An explanation of the Medicare 

payment consequences of the 

determination. 

(iv) Information about the eligible 

beneficiary’s right to appeal the QIO’s 

reconsideration decision to OMHA for 

an ALJ hearing in accordance with 

subpart I of this part, including how to 

request an appeal and the time period 

for doing so. 

(d) Responsibilities of the hospital. A 

hospital may, but is not required to, 

submit evidence to be considered by a 

QIO in making its reconsideration 

decision. If a hospital fails to comply 

with a QIO’s request for additional 

information beyond that furnished to 

the QIO for purposes of the expedited 

determination, the QIO makes its 

reconsideration decision based on the 

information available. 

(e) Billing during QIO reconsideration. 

When an eligible beneficiary requests an 

expedited reconsideration in accordance 

with the deadline specified in paragraph 

(b)(1) of this section, the hospital may 

not bill the beneficiary for any disputed 

services until the QIO makes its 

reconsideration decision. 

(f) Effect of an expedited QIO 

reconsideration. The QIO expedited 

reconsideration is binding for payment 

purposes only, upon the eligible 

beneficiary, hospital, and MAC, except 

if a beneficiary elects to request a 

hearing by an ALJ in accordance with 42 

CFR part 478 subpart B if he or she is 

dissatisfied with the expedited 

reconsideration decision. 

PART 476—QUALITY IMPROVEMENT 

ORGANIZATION REVIEW 

■ 5. The authority citation for part 476 

continues to read as follows: 

Authority: 42 U.S.C. 1302 and 1395hh. 

■ 6. Section 476.71 is amended by 

adding paragraph (a)(9) to read as 

follows: 

§ 476.71 QIO review requirements. 

(a) * * * 

(9) Hospital reclassification of a 

beneficiary’s inpatient admission status 

to that of an outpatient receiving 

observation services when a beneficiary 

meets the eligibility criteria at 

§§ 405.1210 through 405.1212 of this 

chapter. Appeals of determinations are 

available as specified in § 405.1212 of 

this chapter. 

* * * * * 

PART 489—PROVIDER AGREEMENTS 

AND SUPPLIER APPROVAL 

■ 7. The authority citation for part 489 

continues to read as follows: 

Authority: 42 U.S.C. 1302, 1395i–3, 1395x, 

1395aa(m), 1395cc, 1395ff, and 1395hh. 

■ 8. Section 489.27 is amended by 

revising the section heading and 

paragraph (b) to read as follows: 

§ 489.27 Beneficiary notice of discharge or 

change in status rights. 

* * * * * 

(b) Notification by hospitals and other 

providers. Hospitals and other providers 

(as identified at § 489.2(b)) that 

participate in the Medicare program 

must furnish each Medicare beneficiary, 

or representative, applicable CMS 

notices in advance of discharge or 

termination of Medicare services, or of 

changes from inpatient to outpatient 

status, including the notices required 

under §§ 405.1200, 405.1202, 405.1206, 

405.1210, and 422.624 of this chapter. 

Xavier Becerra, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2024–23195 Filed 10–11–24; 4:15 pm] 

BILLING CODE 4120–01–P 


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