Many Medicare hospital patients classified as observation status “outpatients” currently forego necessary skilled nursing facility (SNF) care and head home to continue care through Medicare’s home health care benefit. This is because they lack a 3-day inpatient hospital stay, which is required for Medicare coverage of most beneficiaries’ post-acute care in a SNF.[1] Beginning January … Read more

The Center for Medicare Advocacy frequently hears from Medicare beneficiaries and their families about patients who receive treatment, tests, and services for multiple days while they are in a hospital bed but who are called “outpatients.” If these patients need post-hospital care in a skilled nursing facility (SNF), Medicare Part A will not pay for … Read more

“Protecting Patients from Surprise Medical Bills” – a hearing held on May 21 by the House Ways and Means’ Subcommittee on Health – considered the bills for health care services that patients get after they received care from health care providers who were not in the patients’ health insurance network.[1] Typically, patients receive these bills … Read more

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, 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. (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 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