Congress finally updated the rules hospitals must follow when they keep Medicare beneficiaries for observation.
The NOTICE Act, which is short for “Notice of Observation Treatment and Implication for Care Eligibility,” requires hospitals to provide written notification to patients within 36 hours of beginning observation care that lasts more than 24 hours. Hospitals must explain that patients under observation status have not been admitted and why, and they must also notify patients of the potential financial implications. Hospitals have 12 months to comply with the NOTICE Act, so it may be a while before it’s fully implemented.
According to a press release from the American Health Care Association, the House unanimously passed the bipartisan legislation on March 16, and the Senate unanimously passed it on June 24 without amendment. Policy wonks can read the full text of the reform here. President Obama signed the bill into law on August 6.
Prior to the reform, Medicare regulations allowed hospitals to observe patients for up to 72 hours without actually admitting them. Beneficiaries who thought they were admitted to the hospital subject to Medicare Part A billing would be shocked to find their entire stay under observation was actually billed subject to Medicare Part B deductibles and cost sharing.
As agents we have a responsibility to make sure our clients know how to use their benefits, especially as the incidence of claims that hospitals submit for observation care continues to skyrocket. According to a Kaiser Health News analysis using the most recently available data from CMS, total claims increased 91 percent between 2006 and 2013 to 1.9 million. Long observation stays, which last 48 hours or more, rose by 450 percent to 170,219 during the same period.
Most Medicare Advantage plans cover hospital observation stays as an outpatient surgery co-pay at an in-patient facility (also known as a hospital). Make sure you check with each individual plan you represent so you can inform your clients before unexpected observation status happens. If they call you in panic after being hopsitalized, you can reassure them of their coverage and how it works. It’s that kind of consideration that can get you friend and family member referrals.
Read more about advising clients on hospital observation status here.
Beneficiaries’ potential liability doesn’t end with hospital costs either. Medicare regulations require an individual be hospitalized for three midnights in order to qualify for Medicare Covered Skilled Nursing facility (SNF) care. With the high rate of observation stays, more beneficiaries face astronomical costs in a SNF without help from Medicare. Most simply cannot afford the $200+ per day cost of a SNF out of their own pocket.
Fortunately for some, most Medicare Advantage plans waive Medicare’s outdated three-midnight rule. Certain members can go directly to a SNF after 1 day in the hospital. I had a Medicare Advantage client who fell, broke her hip and went from the ER to surgery to recovery to SNF without ever spending the night in the hospital.
As always, you can call RB Insurance at (800) 997 3107 or email me to learn more about the NOTICE Act and other changes in Medicare policy.
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