Hospitals Now Must Provide Notice About Observation Status

MediCare Observation Status Hospital NoticeAll 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 status ” 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 nights. 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.

This will result in a very expensive surprise!

The law, the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, did not eliminate the practice of placing patients under “observation status” 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.

What is now required

To avoid violating the law, hospitals that accept Medicare patients will now have to explain to patients under observation status that because they are receiving outpatient, not inpatient, care, their hospital stay will not count toward the three-night 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.

If you or someone in your family on Medicare has a medical issue, it is important to know what to listen for and what to ask. Medicare coverage has changed for many people in our area. “Gap” coverage also changes each year. The differences in your coverage or whether you were admitted or under observation status may create a substantial financial burden. If you have questions, take advantage of a free consultation to talk about your situation. Call (219) 230-3600 or complete the form to the right. We look forward to meeting with you.

For an article from USA Today about the new requirement, click here.

For the text of the NOTICE Act, click here.

For more about Medicare, click here.

(This article is provided by Elder Law Answers)