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New CMS Observation Disclosure Requirement for Hospitals Goes Into Effect

Posted in Hospitals and Institutions, Medicare and Medicaid, Pharmaceuticals, Reimbursement Matters

A new mandate under the Federal Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), passed on August 6, 2015, went into effect on March 8. Hospitals across the country are now required to inform Medicare patients: (i) that they are getting observation care, (ii) why they were not admitted, even if they stay in the hospital a few nights, (iii) that they may have additional financial responsibilities, and (iv) if they are transferred to a nursing home Medicare won’t pay, because they haven’t met the requirement of being an inpatient for three days. For years, seniors often received this information only when they received surprise bills for the services Medicare doesn’t cover for observation patients, including some drugs and expensive nursing home care.

The Medicare Outpatient Observation Notice (“MOON”) is a standardized notice to inform Medicare beneficiaries (including health plan enrollees) that they are outpatients receiving observation services and are not inpatients of a hospital or critical access hospital. Use of the MOON is now one of the conditions of participation for hospitals in order to receive payment for treating Medicare beneficiaries. The MOON must be provided after a patient has received observation care for 24 hours and for no more than 36 hours.

Hospitals are not permitted to make changes to the MOON except in the free text box. Although the form has a space for patients or their representatives to sign it “to show you received and understand this notice,” the instructions for providers say that signing is optional. CMS published FAQs on March 8 along with the new MOON form and description of the requirements.

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