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 NOTICE Act Sails Through Senate, Awaits Presidential Signature

Hospitalized Medicare beneficiaries who require post-acute care in a skilled nursing center may soon be able to keep more of their pocket change: The U.S. Senate unanimously passed the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act (S 1349), which would require hospitals to notify Medicare beneficiaries of their outpatient status within 36 hours of admission. The legislation, previously passed unanimously by the U.S. House of Representatives (HR 876), is now awaiting President Obama’s signature.


“The NOTICE Act is a no-cost, commonsense approach that will help ensure our seniors are fully informed about their hospital status and the financial implications. I thank Sen. Michael Enzi (R-Wyo.) and Reps. Lloyd Doggett (D-Texas) and Todd Young (R-Ind.) for joining with me to support this important legislation,” said Sen. Ben Cardin (D-Md.) in a joint news release.


Added Doggett: “Hospitals may act in the best interest of a patient’s health but not always in the best interest of a patient’s wallet. This new law arms patients with the knowledge they need to be their own best advocate.”


Currently, Medicare covers post-acute care in a skilled nursing facility (SNF) if the beneficiary had three consecutive days of hospitalization as an inpatient.  In a workaround purported to save Medicare dollars, hospitals are not admitting beneficiaries as inpatients. Instead, hospitals classify these beneficiaries as being under “outpatient observation,” even though these patients may spend multiple nights in the hospital and receive the same type and level of care as inpatients.


Because of this maneuver, Medicare will not cover post-acute SNF care for these “outpatient observation” patients after they are discharged from the hospital, which can result in sticker shock for those Medicare beneficiaries. An Officer of Inspector General report found that the average out-of-pocket cost for SNF services not covered by Medicare was more than $10,000 per beneficiary. A study published in Health Affairs found that between 2007 and 2009, the ratio of hospital observation stays to inpatient admissions increased by 34 percent; it also reported that the number of observation stays exceeding 72 hours increased by 88 percent during that time frame.


The American Health Care Association and National Center for Assisted Living (AHCA/NCAL), the leading long term and post-acute care advocate, has followed this legislation from its inception and applauded its bipartisan passage.


“This is an important step forward,” said AHCA/NCAL Senior Vice President of Government Relations Clifton Porter II, who elaborated that “millions of individuals who leave a hospital, preparing for a short stay in a skilled nursing center, will now know what their hospital status is.”

Jackie Oberst is Provider’s managing editor. Email her at or follow her on Twitter, @ProviderMag.

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