All hospitals must now give Medicare recipients notice when they are in the hospital under observation status. The notice requirement is part of a law enacted in 2015 but that just took effect.
Signed by President Obama in August 2015- the law was intended to prevent surprises after a Medicare beneficiary spends days in a hospital under “observation” and is then admitted to a nursing home. This is important because Medicare covers nursing home stays entirely for the first 20 days- but only if the patient was first admitted to a hospital as an inpatient for at least three days. Many beneficiaries are being transferred to nursing homes only to find that because they were hospital outpatients all along- they must pick up the tab for the subsequent nursing home stay — Medicare will pay none of it.
The law- the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act– did not eliminate the practice of placing patients under “observation” for extended periods- but it did require hospitals to notify patients who are under observation for more than 24 hours of their outpatient status within 36 hours- or upon discharge if that occurs sooner. The Act required hospitals to begin giving patients this notice as of March 8- 2017. Some states- including California and New York- already require such notice.
To avoid violating the law- hospitals that accept Medicare patients will now have to explain to patients under observation that because they are receiving outpatient- not inpatient- care- their hospital stay will not count toward the three-day inpatient stay requirement and that they will be subject to Medicare’s outpatient cost-sharing requirements. The law does not make hospital observation stays count towards Medicare’s three-day requirement.
For more information, see this article from USA Today about the new requirement and additional text on the NOTICE Act.
