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Beginning no later than March 8, 2017, hospitals are required to give written and oral notice to Medicare patients when they are placed in “outpatient” observation status for 24 hours and are not formally admitted as inpatients.[1] The written notice is called the Medicare Outpatient Observation Notice (MOON).[2]

Although hospitals can provide all the care that patients need, regardless of whether they are inpatients or outpatients, hospital classifications determine the costs that patients have to pay for their hospital and post-hospital care.  Generally, the most significant cost to patients is care in a skilled nursing facility (SNF).  Traditional Medicare pays for SNF care only for patients who are first hospitalized as inpatients for at least three consecutive days; patients who are outpatients or in observation status do not qualify for Part A coverage of their SNF stay and must pay for their stay entirely out-of-pocket.

Many questions remain about the MOON, including: 

  • Who will be given the notice – all patients in outpatient status for 24 hours (as the NOTICE Act suggests) or just those labeled “observation” by the hospital (as the final rules from the Centers for Medicare & Medicaid Services (CMS) suggest)? 
  • How will hospitals explain the reason for the patient’s status?  Will hospitals explain the clinical reason or simply state that the patient does not meet the criteria for inpatient status?

The Center is interested in hearing your experiences with the MOON and with observation status in general.  Please send copies of the MOON and write to us at

March 1, 2017 – T. Edelman

[1] See the Center’s prior Alerts on the MOON and the federal law, the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), that requires hospitals to inform patients of their outpatient status.  “CMS Issues Instructions Regarding the Medicare Outpatient Observation Notice (MOON),” CMA Alert, Feb. 15, 2017),; “Hospitals Must Give Patients Notice of Their Observation Status, Beginning March 8, 2017, CMA Alert (Dec. 14, 2016); “Observation Status and the NOTICE Act: Advocates Not Over the MOON,” CMA Alert (Apr. 27, 2016),; “CMS Delays Implementation of NOTICE Act Until Fall 2016,” CMA Alert (Aug. 4, 2016),; “Observation Status: The NOTICE Act Will Soon Be Law,” CMA Alert (Aug. 6, 2015),
[2]  Click on the download for CMS—10611.

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