The Bad News: CMS Delays Federal Implementation of NOTICE Act Until Fall 2016

The Good News: Virginia and Maryland already require notice!

Observation care is a hospital classification used when patients are not well enough to go home but not sick enough to be admitted to the hospital. In many situations, if patients are being wheeled into a hospital bed and getting treatment, then they assume that they have been admitted, but this is not always the case. It’s a distinction that’s easy to miss until patients are hit with big medical bills after a short stay. Also, a 3-day hospital admission is required for Medicare and private insurance to cover short-term rehab that might take place in a nursing home after discharge from the hospital.

The Senate approved legislation on Monday, July 27, 2015, requiring hospitals across the nation to tell Medicare patients when they receive observation care, but have not been admitted to the hospital. The law would require hospitals to provide written notification to patients 24 hours after receiving observation care, explaining that they have not been admitted to the hospital, the reasons why, and the potential financial implications.

Status Update

CMS originally projected that the NOTICE Act would be implemented on August 6, 2016. The following are the reasons why this won’t happen:

1. New later date announced: In final regulations for inpatient hospital reimbursement that were displayed at the Office of Federal Register on August 2, 2016, CMS announced that the rules to implement the NOTICE Act will become effective October 1, 2016.

2. Effective date 90 days following approval: The October 1, 2016 date is not realistic, because CMS also said that the required written notice to patients (called the Medicare Outpatient Observation Notice (MOON)) will not become effective until 90 days following approval the Office of Management and Budget (OMB). As of August 4, OMB had not approved the MOON.

3. The NOTICE Act will likely not be implemented until the late Fall of 2016, at the earliest. We will keep you updated on its progress.

Please read more on the CMS Website.

Please note that a handful of states already require observation care notices, including Virginia and Maryland.