News & Insights

Hospitals Must Alert Medicare Patients of Observation Status

March 29, 2017

Hospitals Must Alert Medicare Patients of Observation Status

Under new federal law, hospitals must now alert Medicare patients when they are under observation care  - not admitted to the hospital - in order to get paid. The difference between observation care and hospital admittance is very important for patients to understand because observation patients may be responsible for a larger portion of the bill than they expected.

Under the Notice Act, hospitals must give individuals receiving more than 24 hours of outpatient observation services adequate oral and written notification within 36 hours after beginning to receive those services. In our December 2015 article, “How to Comply with NOTICE Act Requirements”, LAMMICO cautioned administrators to be aware that the NOTICE Act states that notification must:

  • Explain the individual's status as an outpatient and not as an inpatient and the reasons why
  • Explain the implications of that status on services furnished (including those furnished as an inpatient), in particular the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility
  • Include appropriate additional information
  • Be written and formatted using “plain language” and made available in appropriate language
  • Be signed by the individual or a person acting on the individual's behalf (representative) to acknowledge receipt of the notification, or if the individual or representative refuses to sign, the written notification is signed by the hospital staff who presented it

LAMMICO also offers three action items to ease the transition in your facility. To access these resources included in our previously published article, please click here.

If you have questions, please contact your LAMMICO Risk Manager to learn more.

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