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The facts are in: The ever-increasing use of observation status deprives many Medicare beneficiaries of care and coverage in skilled nursing facilities (SNFs).  In 2018, research by Avalere Health confirmed that the use of SNFs by beneficiaries in the traditional Medicare program declined each year between 2009 and 2016. Avalere identified the cause as “fewer … Read more

A group of physicians has challenged a recent audit report from the Inspector General for the Department of Health & Human Services[1] that concluded that between 2013 and 2015 Medicare incorrectly paid $84.2 million for skilled nursing facility (SNF) stays for beneficiaries who had not had a prior three-day qualifying inpatient hospital stay.[2] Like the … Read more

FOR IMMEDIATE RELEASE March 28, 2019 Contact: Matthew Shepard: 202-293-5760, MShepard@MedicareAdvocacy.org In a decision issued on March 27, 2019, a federal judge denied multiple attempts by the federal government to halt a lawsuit by Medicare patients seeking a right to appeal their placement on “outpatient observation status” in hospitals. Alexander v. Azar is a nationwide … Read more

Medicare requires a three-day inpatient hospital stay in order to qualify for care at a skilled nursing facility. Sadly, and all too often however, beneficiaries are classified as hospital outpatients on observation status. While outpatients on observation status and inpatients may receive the same care and services, for the same number of days or weeks, … Read more

Recently, the Center for Medicare Advocacy laid out our Medicare Platform for the New Congress. One of the core considerations to improve Medicare for all beneficiaries, now and in the future, is the need to end ongoing barriers to care. One of the most common barriers about which the Center receives inquiries is the continued overuse … Read more

Recently, the Center for Medicare Advocacy laid out our Medicare Platform for the New Congress. One of the core considerations to improve Medicare for all beneficiaries, now and in the future, is the need to reduce ongoing barriers to coverage and care. One of the key issues impeding access to Medicare coverage is the continued, and … Read more

In order to qualify for Medicare Part A coverage of a post-hospital stay in a skilled nursing facility, the traditional Medicare program requires that the beneficiary first be hospitalized as an inpatient for three consecutive days, not counting the day of discharge.  This requirement has been in place since the Medicare program was enacted more … Read more

As required by the Affordable Care Act, the Medicare Hospital Readmissions Reduction Program (HRRP) reduces Medicare payment rates, by up to 3%, to hospitals that readmit patients with certain specified conditions within 30 days.[1]  The financial penalty is applied only when the patient’s initial hospital stay and subsequent hospital stay are both identified as inpatient.  … Read more

On April 20, 2018, Alison Kodjak of NPR published the story of trying to navigate her own Mother’s “Outpatient” Observation Status and follow-up care.  After four nights in the hospital, all coded as observation, Alison’s Mother, Catherine Fitzgerald, was discharged, still unable to walk, and in need of follow-up care at a skilled nursing facility, … Read more

Patients in “outpatient” observation status often receive care in acute care hospitals that is indistinguishable from the care patients receive when they are formally admitted to hospitals as inpatients.[1]  Nevertheless, the financial consequences of outpatient status are considerable, particularly for patients who need post-acute care in a skilled nursing facility (SNF).  Medicare Part A does … Read more

Abbey, Duane. “Inpatient Versus Outpatient: The Real Issue.” RAC Monitor. 06 March 2014. http://www.racmonitor.com/rac-enews/1618-inpatient-versus-outpatient-the-real-issue.html (site visited September 21, 2016). The author writes that there aren’t any well-established guidelines for Recovery Audit Contractors (RACs) when they review observation-related Medicare appeals. When there are disagreements, RACs can be directed to specific criteria. Unfortunately, Medicare RACs lack such … Read more

Medicare Hospital Outpatient & Observation Status Toolkit

Supported by             The John A. Hartford Foundation   Patients may find themselves in the hospital, receiving medical services, tests, and treatment, sometimes for many days, but learn they are considered outpatients, in Observation Status, not admitted inpatients. This is understandably confusing for patients and families – and difficult for … Read more

CMA Alert – Critical Issue Roundup: MA Overpayment; HH Payment; Observation; More

Former CMS Administrator Comments on Medicare Advantage Overpayments Proposed Home Health Rules – Payments Drive Delivery of Care, Harming Beneficiaries Observation Status Harms Low-Income Medicare Beneficiaries Poll: Americans Favor Making the ACA Work Former CMS Administrator Comments on Medicare Advantage Overpayments In Austin Frakt’s August 7, 2017 The Upshot blog in the New York Times … Read more

Decision in Alexander v. Price Means Medicare Patients Could Gain Right to Appeal Placement on “Observation Status” and Avoid Large Medical Bills Eighty-four-year-old Nancy Niemi of North Carolina was hospitalized for 39 days earlier this year after her doctor sent her to the emergency room. It took weeks to stabilize her blood pressure and she … Read more

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 … Read more

Beginning no later than March 8, 2017, and as required by the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act),[1] hospitals and critical access hospitals (CAHs) are required to give patients both oral and written notice when they are outpatients and not admitted as inpatients.[2]  Hospitals must use the written notice … Read more

For Immediate Release Contact: Matthew Shepard mshepard@medicareadvocacy.org 860-456-7790 Feb. 9, 2017 – In a decision released on February 8, 2017, a federal judge allowed Medicare hospital patients seeking a right to appeal their placement on “outpatient observation status” to proceed with their lawsuit. The Barrows case, now called Alexander v. Cochran, is a proposed nationwide … Read more

HHS Inspector General: Observation Status is a Growing Problem for Patients In a new report, Vulnerabilities Remain Under Medicare’s 2-Midnight Hospital Policy,[1] the HHS Inspector General documents and confirms what Medicare beneficiaries and their advocates have seen: long outpatient stays in hospitals are increasing. How hospitals bill the Medicare program – Part A for inpatient … Read more

Effective August 6, 2016, the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act)[1] requires acute care hospitals to provide oral and written notification to patients who are classified as outpatients or observation status patients for more than 24 hours.  Notice of non-inpatient status must be provided within 36 hours.  On August … Read more

Mr. P. has been hospitalized after having a heart attack. He also has terminal cancer for which he wants to continue treatment. If Mr. P. is admitted as an inpatient for a total of three days while in the hospital, he can qualify for Medicare Part A coverage of subsequent Skilled Nursing Facility (SNF) stay … Read more

This summer, the New York Times article “New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage”* told the story of one of many people who contact the Center for Medicare Advocacy for help with hospital “outpatient” Observation Status. These patients stayed in the hospital for multiple days receiving skilled care, but were coded … Read more

 

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An August 7, 2016 New York Times article once again highlighted the problem of hospital Observation Status, including issues with the NOTICE Act, which is supposed to help Medicare beneficiaries understand their status. The article, New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage, featured a Center For Medicare Advocacy client's story. In the piece, Center Executive Director Judith … Read more

Beginning August 6, 2016, the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act)[1] requires hospitals to provide written and oral notice, within 36 hours, to patients who are in observation or other outpatient status for more than 24 hours.  The notice must explain the reason that the patient is an outpatient … Read more

In order for Medicare Part A to pay for a patient’s stay in a skilled nursing facility (SNF), the patient must first have spent at least three consecutive days as an inpatient in an acute care hospital.[1]  For many Medicare beneficiaries, Part A SNF coverage is denied because the hospital classifies the stay as Outpatient … Read more

June 16, 2016 Andrew M. Slavitt Acting Administrator Centers for Medicare & Medicaid Services Department of Health and Human Services Room 445-G, Hubert H. Humphrey Building 200 Independence Ave., S.W. Washington, D.C.  20201 Re: CMS-1655-P, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and … Read more

The controversial issue of Observation Status continues.[1]  The latest news is that the Centers for Medicare & Medicaid Services (CMS) told Quality Improvement Organizations (QIOs) on May 4 that they should temporarily pause their reviews of hospitals’ compliance with the two-midnight rule.  The pause was reported by Livanta, one of the two QIOs nationwide (the … Read more

In proposed rules updating Medicare reimbursement to acute care hospitals,[1] the Centers for Medicare & Medicaid Services (CMS) announces how it intends to implement the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act).[2]  Effective August 6, 2016, the NOTICE Act requires that hospitals provide written and oral notice, within 36 hours, … Read more

The Centers for Medicare & Medicaid Services (CMS) hosted a Tele Town Hall on December 21, 2015 to solicit comments on the Notice of Observation Treatment and Implications for Care Eligibility (NOTICE) Act, Public Law 114-42.  Beginning in August 2016, the NOTICE Act requires hospitals to inform patients who are hospitalized for more than 24 … Read more

The Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) released a statement on October 30, 2015 that advises hospitals that it will not administratively sanction them if they discount or waive charges for an outpatient’s self-administered drugs. Thus, hospitals now have the option, and a greater incentive, not … Read more

In 2013, the Centers for Medicare & Medicaid Services (CMS) promulgated the Two-Midnight Rule, which, for the first time in the Medicare program’s 50-year history, determined patient status in a hospital by reference to time.[1]  Specifically, CMS’s new rule provided that a patient would be considered an inpatient, and the hospital stay would be covered … Read more

If Congress and the Administration truly seek ways to limit Medicare premiums and deductibles, they ought to look at CMS's hospital Observation Status policy. A major cause of the Part B increase is likely the parallel increase in so-called "outpatient" Observation Status, the use of which has more than doubled since 1999. The result of this … Read more

Hospitals often classify hospitalized Medicare patients as outpatients, even though their hospital care may be indistinguishable from the care they would receive if they were formally admitted as inpatients.  This issue – called Observation Status – has been a serious problem for Medicare beneficiaries for many years,[1] chiefly because patients who do not have at … Read more

An increasing number of patients in hospitals are not formally admitted as inpatients, but as “outpatients” on “observation status.”  Although they receive whatever medical and nursing care, diagnostic tests, medications, and food they need, their status as “outpatients” means that they do not satisfy the three-day inpatient hospital prerequisite for Medicare coverage of post-acute care … Read more

In the annual update to Medicare reimbursement of acute care hospitals for outpatient care (July 8, 2015)[1] the Centers for Medicare & Medicaid Services (CMS) includes proposed revisions to the “Two-Midnight Rule” and its enforcement. If the proposed changes lead to an increased number of patients being formally admitted as inpatients (rather than, as now, … Read more

Effective July 1, 2015, Virginia has become the fifth state to enact legislation requiring hospitals to inform patients when they are in Observation or other outpatient status, and the consequences of not being admitted as inpatients.  Senate Bill 750[1] requires hospitals to provide oral and written notice to patients who are receiving “onsite services” (including … Read more

This CMA Alert highlights a recent individual ALJ decision that sets out an important but often unrecognized beneficiary right to a written notice when he or she is about to use hospital “Lifetime Reserve Days.”  A hospital’s failure to provide appropriate notice in this context can lead to the waiver of a beneficiary’s liability for … Read more

Observation Status – hospital patients’ classification as outpatients, which makes them ineligible for Medicare Part A coverage of their subsequent stay in a skilled nursing facility (SNF) when they do not have “inpatient” status for at least three consecutive midnights – is an ongoing issue that the Center for Medicare Advocacy has discussed many times.[1]  … Read more

At its January 16, 2015 public meeting, the Medicare Payment Advisory Commission (MedPAC), the government agency that advises Congress on Medicare payment policy, addressed observation status as part of its discussion of hospital short stay policy issues.[1]  MedPAC Commissioners preliminarily, but unanimously, voted to move forward on a recommendation to count time in observation status … Read more

Medicare patients considered hospital outpatients on Observation Status may be helped by a decision issued on January 22, 2015 by a federal appeals court.  A three-judge panel of the U.S. Court of Appeals for the Second Circuit decided that Medicare patients who are placed on “Observation Status” in hospitals may have an interest, protected by … Read more

Medicare patients need to be aware that if they were hospitalized after October 1, 2013, hospitals may be contacting them about their bills. Final rules that were published in August 2013 and became effective October 1, 2013 created a new regulatory provision, 42 C.F.R. 414.5, "Hospital services paid under Medicare Part B when a Part … Read more

The use of “Observation Status” – treating certain hospitalized Medicare patients as outpatients when their care is indistinguishable from that of formally admitted inpatients – continues to garner considerable public and Congressional attention. It remains an unresolved problem that has serious financial consequences for Medicare patients and their families.[1]   On July 30, 2014, the Senate … Read more

Under a 2008 decision of the Second Circuit Court of Appeals, the Secretary of HHS has authority under the Medicare statute to include a hospital patient’s time in observation as part of inpatient time in the hospital for purposes of determining whether the patient qualifies for Part A coverage of a subsequent stay in a … Read more

Connecticut Passes Observation Notice Law On June 12, 2014, Connecticut Governor Dannel P. Malloy signed into law a requirement that, starting October 1, 2014, Connecticut hospitals give oral and written notice to patients placed on observation status for 24 hours or more.  Similar laws already exist in New York and Maryland.  Specifically, Connecticut's law requires: … Read more

May 21, 2014 The May 20, 2014 hearing on "Current Hospital Issues in the Medicare Program," held by the Health Subcommittee of the House Committee on Ways and Means, was the first Congressional hearing to consider the impact of observation status on hospitalized Medicare patients.[1]  At the hearing, the Center for Medicare Advocacy's Senior Policy … Read more

Center for Medicare Advocacy Senior Policy Attorney Toby S. Edelman will testify before the House Ways and Means Health Subcommittee on Tuesday, May 20, 2014 at 9:30 AM regarding current hospital issues in the Medicare program, specifically the ongoing problem of observation status. The hearing, announced on May 13th, is the first Congressional hearing to … Read more

The use of Medicare observation status in hospitals has increased dramatically over the past several years.[1] The most notable adverse consequence of Observation Status on beneficiaries is financial liability for any post-hospitalization care at a Skilled Nursing Facility.[2] However, many of the beneficiaries the Center assists also find themselves facing large hospital bills for drugs … Read more

Final rules published in August 2013 by the Centers for Medicare & Medicaid Services (CMS) created time-based rules for determining inpatient status in an acute-care hospital.[1]  Under the rules' two-midnight presumption, a physician should order an inpatient admission if the physician expects that the patient's stay in the acute care hospital will be at least … Read more

As our client, Ms. Bricout states in this video, Observation Status is simply "illogical."  But there is a sound, viable solution! Congressman Joe Courtney has a bill pending in Congress that would fix the observation status problem for good: the Improving Access to Medicare Coverage Act of 2015 (H.R. 1571 and S. 843).