Ruling allows some Medicare patients to appeal observation status; Dr. Ann Sheehy was expert witness in lawsuit

Dr. Ann Sheehy

A March 24, 2020, ruling by a federal judge has paved the way for Medicare patients who are initially admitted by a physician as hospital inpatients—but whose status is later changed to observation by their hospital—to appeal to Medicare for coverage as hospital inpatients, so that they may be eligible for Medicare coverage of skilled nursing facility care after discharge.

The ruling came after the Center for Medicare Advocacy filed a nationwide class-action lawsuit against the U.S. Department of Health and Human Services. The lawsuit, Alexander v. Azar, went to trial in August 2019. 

Ann Sheehy, MD, MS, associate professor and division head, Hospital Medicine (pictured above), was an expert witness in the lawsuit.

For several years, Sheehy has conducted research and advised policy-makers at the federal level about the implications of observation status policy changes for patients and health care systems.

The distinction between “inpatient” and “observation” status is important because Medicare only covers post-discharge care in a skilled nursing facility for patients who were hospitalized as inpatients for three or more consecutive days. Patients in observation status are considered outpatients and thus ineligible for coverage of skilled-nursing care.

In 2017, Sheehy and members of the Society of Hospital Medicine Public Policy Committee, co-authored a white paper highlighting the pitfalls of this policy and suggesting possible solutions.

In 2018, Sheehy, along with Amy Kind, MD, PhD, associate professor, Geriatrics and Gerontology, and analyst Fangfang Shi, MAS, developed and published the “University of Wisconsin Method" for reliably identifying observation stays in Medicare data—a crucial tool for health-services researchers who regularly work with these data.

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Andrea Schmick