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Observation status is getting a lot of attention from Congress, the media, and researchers. 

The bipartisan federal legislation, the Improving Access to Medicare Coverage Act of 2013, has gotten more cosponsors daily.  As of August 6, the House bill, H.R. 1179, introduced by Congressman Joseph Courtney (D, CT), had 93 cosponsors (an increase from 18 cosponsors in April); the Senate bill, S.569, introduced by Senator Sherrod Brown (D, OH), had 16 cosponsors (an increase from one cosponsor in April). 

See CMA, "Observation Status: 'Morphed into Madness'" (Weekly Alert, Aug. 1, 2013),

There are many reports about observation, including one by the Inspector General, Hospitals' Use of Observation Stays and Short Inpatient Stays for Medicare Beneficiaries, OEI-02-12-00040 (July 29, 2013),, and final rules from CMS on inpatient hospital reimbursement.  See, CMA, "Observation Status: OIG Report Provides Analysis and CMS Issues Final Regulations" (Weekly Alert, August 8, 2013),  The rules make final the two sets of proposed rules that CMS published in the Spring 2013.  The A-B rebilling rules allow hospitals to rebill Part B if a Medicare contractor, or the hospital itself, decides that an inpatient admission was not medically necessary.  78 Fed. Reg. 16,632 (March 18, 2013).  See CMA, "CMS' Proposed Rules on Observation Status Would Not Help Beneficiaries" (Weekly Alert, March 28, 2013),  The second set of rules creates time-based presumptions of inpatient status, using two midnights as the benchmark for inpatient admission.  78 Fed. Reg., at 27,486, at 17,645-27,649 (May 10, 2013).  See CMA, "CMS Addresses Observation Status Again . . . And Again, No Help for Beneficiaries" (Weekly Alert, May 16, 2013),

The final inpatient hospital reimbursement rules, which include final versions of the A-B rebilling and time-based definition of inpatient care, went on display on August 2,,  (2225 pages) and will be published in the Federal Register on August 19.  The time-based definitions of inpatient and outpatient care are contradictory and confusing and do not seem to help beneficiaries.


On June 26, 2013, the Supreme Court, in U.S. v. Windsor, Executor of the Estate of Spyer, et al, ( No. 12–307), found unconstitutional section three of the Defense of Marriage Act (DOMA). In its ruling, the Court stated that Section three of DOMA is a "deprivation of the equal liberty of persons that is protected by the Fifth Amendment of the U.S Constitution."  DOMA defines the terms "marriage and spouse" as follows:  

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word 'marriage' means only a legal union between one man and one woman as husband and wife, and the word 'spouse' refers only to a person of the opposite sex who is a husband or a wife.

The DOMA legislation is codified at 110 Stat. 2419, Pub. L. 104-199 (Sept. 21, 1996).  See

The Court went on to note that:

DOMA's principal effect is to identify and make unequal a subset of state-sanctioned marriages. It contrives to deprive some couples married under the laws of their State, but not others, of both rights and responsibilities, creating two contradictory marriage regimes within the same State. It also forces same-sex couples to live as married for the purpose of state law but unmarried for the purpose of federal law, thus diminishing the stability and predictability of basic personal relations the State has found it proper to acknowledge and protect…

Advocacy and Resources:


As outreach concerning implementation of the Affordable Care Act (ACA) and the marketplaces (exchanges) ramps up toward an October 1, 2013 start of enrollment, most of the focus has been on how the marketplaces will work for individuals without Medicare.  Many Medicare beneficiaries, though, are concerned about how the marketplaces might affect them and whether they must interact with the marketplaces in order to maintain their Medicare coverage.   Information about these issues and responses to such questions have not yet been consistent.

What questions are you hearing from Medicare beneficiaries, and what responses are you getting, if any, from CMS, HHS, etc?


Medicare Physician Payment Activities (Sustainable Growth Rate, aka SGR)

  • Current "fix" expires Dec. 31, 2013 (Leading to approx. 25% cut in payment in 2014 if no Congressional action)
  • Projected price to fix is approx. $138 billion over 10 years (not including payment updates or "extenders" traditionally passed along with temporary SGR fixes)
  • Energy and Commerce Committee unanimously passed SGR bill on July 31, 2013
  • For information about the bill, see:
  • Does not address "pay-fors"
  • Does not include "extenders" such as Qualified Individual (QI) program and therapy cap exception process extensions
  • As previously noted, many advocates would like to see a "fix" but are concerned about how it might be paid for (e.g. by shifting costs onto beneficiaries); also concern about "Extenders" that have typically been addressed along with SGR on an annual basis, including extension of the Qualified Individual (QI) program and exceptions to the therapy caps
  • See, e.g., Leadership Council of Aging Organizations (LCAO) Issue Brief on Medicare Physician Payment Reform Principles (May 2013):


The over seven million people dually eligible for both Medicare and Medicaid represent some of the poorest and most vulnerable health care consumers in the nation. In an effort to improve care coordination and reduce unnecessary costs, CMS and states are moving forward with demonstrations to integrate care for dual eligible beneficiaries.   Six states- Massachusetts, Ohio, Washington, Illinois, California and Virginia have entered into Memorandum of Understanding (MOU) with CMS. All but one of these states (Washington) will be moving large numbers of their dually eligible residents into capitated managed care. The first waves of enrollment in several states will begin in late 2013.

State and national advocates have continually stressed the importance of consumer protections in these demonstrations. In particular, advocates recommended that an independent ombudsman office be created in states implementing capitated managed care demonstrations.[1]On June 27, 2013 the Medicare Medicaid Coordination Office at CMS released a funding opportunity for states to create this ombudsman office. We encourage all advocates in states pursing a demonstration to work with state officials to capitalize on this opportunity. More information about the ombudsman funding opportunity can be found here:

Please contact Andrea Callow at with any questions about the dual eligible demonstrations

For more information about the dual eligible demonstrations see:


  • Jimmo v. Sebelius (Improvement Standard) No. 11-cv-17 (D.Vt. filed 1/18/11).  As reported during the last Alliance call, the Settlement in this case was approved on January 24, 2013 during a scheduled fairness hearing.  With the settlement now officially approved, the Centers for Medicare & Medicaid Services (CMS) is tasked with revising its Medicare Benefit Policy Manual and numerous other policies, guidelines and instructions to ensure that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS must also develop and implement a nationwide education campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve. A new CMS Factsheet on Jimmo was recently made available online and will be discussed on the call.

The Factsheet is available at:

For more information, see the Center's website at:

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