9 things for hospitals to know about the NOTICE Act

Following CMS' proposed changes to the two-midnight rule in July, a new piece of legislation intended to give patients more warning about observation care is on its way to President Barack Obama.

The NOTICE Act, or Notice of Observation Treatment and Implication for Care Eligibility Act, would require hospitals nationwide to inform Medicare patients when they are receiving care under observation status.

Here are nine things to know about the NOTICE Act.

1. The legislation calls for hospitals to provide written notice to patients who are in the hospital under observation status for more than 24 hours. Hospitals would need to provide notification no later than 36 hours after the time observation status begins.

2. The written notice must include why the patient was not admitted to the hospital and the financial implications of observation status, including subsequent eligibility for coverage for a skilled nursing facility.

3. Medicare does not cover skilled nursing facility stays unless the patient was admitted as an inpatient for a minimum of three nights. In some cases, physicians reclassify people as inpatients when more than observation is needed. Medicare patients who are not reclassified have to either forgo SNF care or pay for it themselves, regardless of the length of their hospitalization.

4. Medicare Part A pays for inpatient stays. If you are hospitalized on observation status, payment by Medicare is under Part B, which covers physician and outpatient services. Patients without Part B coverage are often left with the bill for observation status, even though there was not a perceptible difference in the type or level of care they received in the hospital.

5. If the NOTICE Act is signed into law by President Obama, hospitals across the nation will have to comply within 12 months.

6. A number of states, including Connecticut, Maryland, New York, Pennsylvania and Virginia, already require hospitals to give patients notice about observation care.

7. There were an estimated 1.5 million observation stays among Medicare beneficiaries in 2012. The number of observation stays increased 100 percent from 2001 to 2009, likely because of financial pressure on hospitals to reduce potentially preventable readmissions of inpatients within 30 days.

8. Under the NOTICE Act, hospitals would be required to notify patients about observation status, but patients can only change that status by swaying a physician or the hospital to do so. Yale-New Haven (Conn.) Hospital CEO Marna Borgstrom noticed that after learning they were under observation care, many patients left the hospital against medical advice.

9. The NOTICE Act is separate from CMS' two-midnight rule, for which it recently proposed updates as part of the 2016 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System proposed payment rule.

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