Starting in August 2016, a new federal law requires hospitals to notify Medicare patients in hospitals whether they’re considered inpatient status or observation status — a distinction that has serious financial consequences for your clients.
While details of how hospitals will notify patients remain somewhat uncertain, it’s important for your clients to understand the different status classifications, how they can impact their finances and when they are entitled to get the new notifications.
The NOTICE Act — which stands for Notice of Observation Treatment and Implication for Care Eligibility — was signed into law in 2015 and goes into effect in August 2016. Its intent was to address complaints of Medicare patients who, despite spending a few days in the hospital, were never considered as admitted patients and were later surprised with the resulting higher Medicare charges and denial of coverage in a nursing home.
Observation status is a classification by Medicare for when someone is not well enough to be released from the hospital, but not sick enough to be admitted as an inpatient. Observation status can hurt Medicare patients in two ways, according to Kaiser Health News: it keeps Medicare’s more comprehensive hospitalization coverage from kicking in, and it means they may not get Medicare’s limited nursing home benefit if they need care in a facility after being in a hospital. (Days spent as a hospital outpatient do not count towards the three-day inpatient hospital stay that is required before a Medicare patient is eligible for Medicare coverage of skilled nursing facility services.)
Hospital re-admissions within 30 days of discharge have been declining for several years. At the same time, however, the rate of observation status has increased. These trends have led some health policy observers to worry that pressure to avoid re-admission fines is leading to patients being held in observation.
The new law aims to at least take the surprise element out of the experience — instead of patients finding out when the bills arrive or when a skilled nursing facility informs them upon arrival that Medicare won’t pay.
Under the new law, hospitals must provide Medicare patients a form in “plain language” after 24 hours of observation care but no later than 36 hours explaining the reason they have not been admitted and how that decision will affect Medicare’s payment for services and patients’ share of the costs. This information also must be explained verbally with a physician or hospital staff member available to answer questions.
Clients have a right to know whether they’re considered inpatient or outpatient. You can encourage clients to ask this upfront, as a way of managing their health care costs. As the Medicare.gov website advises, “if you have Medicare, ask!”
No matter what type of Medicare coverage they have, they have certain guaranteed rights. As a person with Medicare, they have the right to all of these:
If clients have questions about their coverage and hospital status, refer them to Medicare BackOffice at 1-877-385-8083.
