NOTICE Act Entitles Hospital Patients to Admission Status Information
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Special update as of August 18, 2016: The NOTICE Act implementation will not become effective until October 1, 2016, because of delayed promulgation of the Medicare Outpatient Observation Notice (“MOON”) form by the Centers for Medicare and Medicaid Services (CMS).
We have reported the problems and pitfalls that result from doctors admitting Medicare patients to hospitals on “observation” status twice over the past 18 months (see, https://hawkinselderlaw.com/dont-let-observation-kill-your-medicare-coverage/ and https://hawkinselderlaw.com/myths-and-misconceptions-about-medicare-and-indiana-medicaid/). A new federal law promises to begin protecting Medicare patients from those problems and pitfalls in August 2016.
Last year, President Obama signed the Notice of Observation Treatment and Implication for Care Eligibility Act (also known as the “NOTICE Act”). The NOTICE Act becomes effective on August 6, 2016. The NOTICE Act will require hospitals to inform patients whether the patients have been admitted to the hospital on “inpatient” status versus “observation” status.
When a doctor admits a patient a patient to a hospital, the patient and patient’s family members may assume that the patient has been “admitted” to the hospital as an inpatient. The patient is probably being taken care of by doctors and nurses, may be receiving medication, and even staying overnight for one or more nights. However, the doctor may have ordered the hospital to keep the patient in the hospital for observation instead of ordering full inpatient status for the patient.
The difference between observation and inpatient admission status affects patients that receive Medicare benefits. Observation status does not trigger Medicare’s comprehensive hospitalization coverage, so the patient may be required to pay physician and drug co-pays that Medicare would otherwise cover for a hospital inpatient.
The most troublesome result of being on observation status is that it interferes with Medicare’s payment of physical rehabilitation costs after observation hospitalization. Medicare will pay for the hospital expenses and up to 100 days in an inpatient physical rehabilitation facility if a doctor admits the patient to the hospital as an inpatient through two consecutive midnights and the hospital discharges the payment sent directly to the physical rehabilitation facility. Medicare and the patient’s Medicare supplemental insurance will pay the physical rehabilitation costs for up to 100 days as long as the physical rehabilitation treatment is beneficial to the patient. However, if the hospital transfers patient to the physical rehabilitation facility after an observation admission to the hospital, Medicare will not pay the full hospitalization cost or any of the room and board charges for the inpatient physical rehabilitation services.
Several of our clients have sought our help about hospital and nursing home bills worth many thousands of dollars after they discovered that their doctors had hospitalized them on observation status, and then ordered them transferred them to physical rehabilitation facilities. In some cases, the shock of receiving bills for uninsured medical expenses created such emotional stress that patients’ health declined too much to continue living independently at home.
We continue recommending that patients and their families address hospital admission status vigilantly. As we wrote on February 15, 2015:
Patients and their families should be aware of the Medicare rule and make sure that any hospitalization follows the Medicare standards. Because healthcare is so expensive, it is critical that the patient or the patient’s family determine the hospitalization status immediately and challenge an observational placement very vocally and persistently if they think that the status is incorrect. If a patient or the patient’s family waits too long to object to the hospitalization status, the very small time windows for objections and appeals may close and the patient may be stuck with an expensive hospital bill or nursing home bill permanently.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
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Thank you for this valuable information. Over the past 1 yr and 3 months my husband has had several admits to the Hospital due to declining health issues.