Medicare releases draft of observation notice that will take effect Aug. 6

A federal law will go into effect August 6 that requires hospitals to notify Medicare patients in writing if they are receiving care under observation status instead of being admitted. However, some hospital, physician and consumer representatives say the notice is not an effective way to communicate the difference between being admitted and observed, according to Kaiser Health News.

The law, called the NOTICE Act (Notice of Observation Treatment and Implication for Care Eligibility Act), came in response to complaints from Medicare patients who were surprised to learn their hospitals stays were considered observations, not admissions. Observation patients are considered too sick to go home, but not sick enough to be admitted, according to the report, and they may have higher medical bills than patients who are admitted. They also do not qualify for Medicare coverage for care at a skilled nursing facility.

Under the NOTICE Act, Medicare patients must receive a written note informing them of their observation status between 24 and 36 hours in the hospital. The notice must inform the patient in "plain language" why they have not been admitted, as well as the financial implications. Additionally, the information must be explained to the patient verbally, with a physician or hospital staff member available to answer questions.

Medicare is soliciting feedback on the draft notice through Friday, according to the report.

According to Brenda Cude, a National Association of Insurance Commissioners consumer representative and a professor of consumer economics at Athens-based University of Georgia, the notice is written at a 12th grade reading level, even though most consumer materials aim to use language of an eight-grade reading level. She said the notice "assumes some health insurance knowledge that we are fairly certain most people don't have," according to the report.

While many hospitals support the law, the form falls short of expectations for some, including Rep. Lloyd Doggett (D-Texas), who co-sponsored the law. He said the notice doesn't clarify the difference between Medicare's Part A, which covers hospitalization and nursing home benefits, and Part B, which covers outpatient services, such as lab tests and hospital observation care. He also said the notice doesn't sufficiently explain why observation patients are not eligible for Medicare Part A's nursing home coverage, which requires at least three consecutive days as an admitted hospital patient, according to the report.  

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