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 Observation Stays Coalition Comments On Revised Medicare Outpatient Observation Notice

The Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act requires hospitals to notify Medicare beneficiaries of their outpatient status within 36 hours. Outpatient status affects a patient’s ability to receive Medicare coverage for post-acute care in a skilled nursing center.
On Aug. 2, 2016, the Centers for Medicare & Medicaid Services (CMS) released the final rule on the implementation of the NOTICE Act.
The NOTICE Act had technically required that Medicare-eligible patients receive a notice of their outpatient observation status starting on Aug. 6, 2016. However, the CMS final rule notes that the Medicare Outpatient Observation Notice (MOON) has not yet been approved for use, thus delaying official implementation of the law until fall 2016.
CMS says that the MOON is on a separate approval track from the regulation, and the agency is accepting public comments during a 30-day period.
One national group took advantage of the comment period to make its voice heard.
The Observation Stays Coalition is a group of about 30 national organizations—including the American Health Care Association/National Center for Assisted Living—representing a variety of health care professionals and advocates focused on addressing the issue of Medicare beneficiaries being denied access to skilled nursing center care due to observation stays.
In a Sept. 1 letter to the Office of Management and Budget, the Observation Stays Coalition focused on the importance of passing the Improving Access to Medicare Coverage Act of 2015 (HR 1571/S 843), which would help Medicare beneficiaries who are hospitalized in observation. The act would require that time spent in observation be counted toward meeting the three-day prior inpatient stay requirement.
“Medicare beneficiaries are being denied access to Medicare’s SNF [skilled nursing facility] benefit because acute care hospitals are increasingly classifying their patients as outpatients or as outpatients receiving observation services, rather than admitting them as inpatients,” the coalition says in the letter. “Patients are called outpatients despite the fact that they may stay for many days and nights in hospital beds and receive medical and nursing care, diagnostic tests, treatments, medications, and food, just as they would if they were inpatients.”
The coalition’s letter goes on to say that “Both the NOTICE Act and the two-midnight rule reflect recognition of the problem of observation status for Medicare patients, but they are not sufficient to address the impact on SNF eligibility for beneficiaries in observation. Critically, they do not afford the beneficiary placed under observation or outpatient status a mechanism by which to challenge that designation. We urge CMS to establish a way for beneficiaries placed on observation to argue that such placement is inappropriate given their medical needs.”
The coalition notes that CMS has authority under existing law to count all time spent by a patient in the hospital for purposes of qualifying for Part A coverage in a SNF. CMS policy created observation status, and CMS action could adjust or rescind it.
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