New Federal and California Notice Protections Take Effect for Patients in Observation Status

April 4, 2017
March 2017

Hospitals must now use a standardized notice, the Medicare Outpatient Observation Notice (MOON), to alert Medicare patients held in “observation status” for more than 24 hours that they have not been officially admitted, the reasons they are classified as outpatients and the coverage implications. Notice of non-inpatient status must be provided within 36 hours. Under the federal Notice of Observation Treatment and Implications for Care Eligibility Act (NOTICE Act) and implementing regulations, hospitals had to start using the MOON at least by March 8, 2017. CMS anticipates that more than one million patients will receive the MOON annually. Yet, the Center for Medicare Advocacy reports that many outpatients will not receive notice of their non-inpatient status due to CMS’s misinterpretation of the NOTICE Act. 

Effective January 1, 2017, similar California notification requirements took effect under SB 1076 (Hernandez), legislation sponsored by the California Nurses Association. SB 1076 requires hospitals to give written notice as soon as practicable to patients in inpatient or observation units that he or she is on observation status. The notice shall state that while on observation status, the patient’s care is being provided on an outpatient basis, which may affect his or her health care coverage reimbursement.

SB 1076 also includes additional safeguards. Safer nurse staffing requirements that have long applied to other hospital patients now also apply to patients placed in “observation” beds.

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