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Observation Notice to Outpatients Now Required

February 27, 2017:

Effective for dates of service February 21, 2017, and later, hospitals and critical access hospitals (CAH) must provide a Medicare outpatient observation notice (MOON) to all Medicare patients receiving observation services as outpatients for more than 24 hours.

This requirement stems from the Notice of Observation Treatment and Implication for Care Eligibility Act, signed into law in August 2015. It addresses patients’ confusion over the payment of observation services. Many are under the impression that if they spend the night in a hospital bed, even as observation patients, they are inpatients and covered under Part A. Upon discharge, these patients are hit with a 20 percent copay for outpatient services (if they are covered under Part B), and they are fully responsible for the cost of any self-administered drugs. If they do not have Part B coverage, their financial obligation is much higher.

These patients also do not always understand that their stay while receiving observation services does not count toward Medicare’s three-day minimum inpatient stay requirement for coverage of skilled nursing services (SNF). If they are discharged to a SNF, these patients can expect to see large bills.

The notice must be given even to those patients without Part B coverage or who are later admitted as inpatients, whether Medicare is the primary or secondary payer. Patients must receive the notice within 36 hours of having observation services begin.

Hospitals and CAHs must use the Office of Management and Budget’s approved MOON (CMS-10611) and enter the patient’s name and patient number on the form as well as the reason the patient is an outpatient stay. The form must be delivered to the patient, along with an oral notification that explains it. This oral explanation can be in the form of a video as long as staff are available to answer any questions.

The beneficiary or representative must sign and date the MOON. If the beneficiary refuses to sign the form, staff can sign it after noting the date and time of refusal.

Facilities must retain a copy of the completed and signed MOON in the patient’s record, and the patient must receive a paper copy.


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