Wills Eye Hospital's top East Coast rivals in Miami, Baltimore, and Boston operate as hospitals under Medicare, even though most of their patients are outpatients.

Wills, despite its name, is not a hospital under Medicare. The Center City institution gave up that designation in July 2006 when it sold its inpatient business to Jefferson, operating instead as an ambulatory surgery center at Eighth & Walnut Streets.

Now, Wills is fighting to get that hospital certification back, after completing a $6.5 million renovation three years ago that included a four-bed inpatient unit.

But Medicare officials have resisted since 2013, insisting that Wills is an ambulatory surgery center because it does not have enough inpatients.

Experts said it is rare for an ambulatory care center be certified as a hospital under Medicare, which generally pays hospitals more for the same services.

Such a  move faces severe resistance at a time when one of Medicare's top priorities is keeping people out of the expensive hospital beds. Even so, Medicare has certified at least 30 hospitals with 10 or fewer beds since 2013, including a one-bed hospital in Minnesota, according to agency data.

A decision by an appeal board is expected any day.

"It's a no-brainer that we should have exactly the same status as everyone else in Medicare's eyes," Julia Haller, Wills' ophthalmologist-in-chief, said Wednesday, referring to competitors in eye care.

Haller said she realized immediately when she arrived in November 2007 - just 15 months after the sale of the inpatient business - that Wills  would be handcuffed without a hospital license.

It's not about the money, Haller said.

"A procedure that takes over four hours has to be done in a hospital," Haller said. Those are the cases that take advantage of Wills' breadth of specialists, she said.

Wills' appeal of  the Medicare denial is now at the second level of appeal within the U.S. Department of Health and Human Services, which regulates Medicare. If Wills loses against regulators, it could appeal to U.S. District Court.

Meanwhile, Wills, which has a state hospital license, faces termination from Medicare on Nov. 1 because its treatment of inpatients violates its Medicare certification as an ambulatory surgery center.

"This Catch 22 that Wills has fallen into is emblematic of a greater problem, which is that the payment mechanisms that we have in health care that don't make any sense," said David Shapiro, an anesthesiologist in Florida and past president of the Ambulatory Surgery Center Association.

What happens if Wills loses Medicare?

"We'll figure out a solution," chief executive Joseph P. Bilson said.

That is not the case.

Regulations are vague, saying only that a hospital is "primarily engaged" in "inpatient diagnostic and therapeutic services or rehabilitation services." CMS has no official quantitative parameters and says it decides on a case-by-case basis.

Dan Grauman, CEO of Veralon, a Philadelphia health care consulting firm said he can see both sides. "It's a difficult situation they got themselves in," he said, referring to Wills.

"I am sure from a medical and clinical perspective it's completely necessary for them to do the fine work that they do to have access to inpatient capacity. It's probably not a lot," he said.