Federal Medicare Observation Status Notice Law Takes Effect August 6th

A new federal law passed last July requires that Medicare patients be given a notice,  a “MOON,”  Medicare Outpatient Observation Notice , between 24 and 36 hours after entering a hospital indicating whether they have been admitted or in “observation status.”  The law is set to take effect on August 6th.  The comment period ended on June 17.  New York State has already enacted a notification law like the federal law so we will be reviewing whether the new federal notice requirements will impact or supersede the state law.

The decision whether a patient is admitted to a hospital has a major impact on the beneficiaries’ finances since Medicare Part B rather than Part A would be covering observation or outpatient service.   A person not admitted for three days would have to pay out of pocket for any nursing home rehabilitation for example.  There have been cases  here in New York State which have received media attention of persons who suffered broken bones and needed rehab and who were in the hospital for more than three nights but not admitted before going to a nursing home for rehab.  These persons had to pay thousands of dollars for their nursing home visit.

The Center for Medicare Advocacy (CMA)  is critical of Medicare (CMS – Center for Medicare and Medicaid Services) saying that the notification is not required for some hospitals if they did not bill Medicare for observation status.   CMA says that the result is still the same for a patient who must pay out of pocket costs in a nursing home.   CMA also criticizes Medicare’s proposed MOON notice  because it only requires a determination of status to be given to the patient but it does not require hospitals to explain why a beneficiary has not been admitted but assigned to observation status.


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I have been a senior advocate for most of my career. I was Executive Director of the New York StateWide Senior Action Council and the New York State Alliance for Retired Americans. In 2007-2010 I was the Director of the New York State Office for the Aging

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