(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.