Healthcare providers are expressing support for legislation overwhelmingly approved by Congress requiring hospitals to notify Medicare patients when they are receiving observation care but have not been admitted.
The bill is a partial response to the problem of beneficiaries facing sticker shock when they go to a skilled nursing or rehab facility after leaving the hospital and finding that Medicare won't cover the tab. That's because to qualify for skilled-nursing facility coverage, beneficiaries must first spend three consecutive midnights as an admitted patient in a hospital; observation days don't count. Another common issue is beneficiaries facing unexpected Medicare Part B co-pays for drugs received during hospital care, since they were never actually admitted into the hospital and the drugs therefore are not covered under Part A.
The Notice of Observation Treatment and Implication for Care Eligibility Act would require hospitals to notify beneficiaries receiving observation services for more than 24 hours of their status as an outpatient under observation. The written notification would have to explain that because the beneficiary is receiving outpatient rather than inpatient services, they will be subject to cost-sharing requirements that apply to outpatient services. The notice also must say that the beneficiary's outpatient stay will not count toward the three-day inpatient stay required for a beneficiary to be eligible for Medicare coverage of subsequent skilled-nursing facility services.
There is some uncertainty about whether President Barack Obama will sign the bill in time for it to become law. He has to affirmatively sign it rather than let it become law without his signature because Congress will be in recess. But a spokeswoman for Rep. Lloyd Doggett (D-Texas), one of the sponsors, said Doggett is optimistic Obama will sign it. As of Thursday, the president had nine days to sign the bill.
A White House representative did not respond to a request for comment.
Providers were mostly positive about the bill. The American Hospital Association is generally supportive of transparency for patients so that they know what their costs will be, and it looks forward to working with the CMS on the rulemaking for the legislation, said Tom Nickels, the AHA's senior vice president for federal relations.
“When it comes to their care, patients can't afford not to know if they are ineligible for Medicare's hospitalization coverage or nursing home benefits,” said Dr. Robert Wergin, president of the American Academy of Family Physicians. “This legislation will provide a much needed layer of transparency for many patients who find themselves under medical care within the walls of a hospital, but haven't officially been admitted.”
The legislation “means millions of individuals who leave a hospital, preparing for a short stay in a skilled-nursing center, will now know what their hospital status is, which could save them thousands of dollars in out-of-pocket costs,” said Clifton Porter II, senior vice president of government relations at the American Health Care Association, in a written statement. His organization represents more than 12,000 skilled-nursing centers.
But Medicare beneficiary advocates are lukewarm to the Notice Act. While a good first step, the bill gives the patient no formal recourse to have their status changed, said Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy.
Her group and the Medicare Rights Center prefer another bill called Improving Access to Medicare Coverage Act of 2015, which would count a patient's time in observation toward the three-day hospital inpatient stay requirement for Medicare coverage of SNF care. But little action has been taken on that bill since it was introduced in the House and Senate in March. Part of the issue is that it has yet to be scored by the Congressional Budget Office. The CBO has said the Notice Act would pose limited costs to the government.
The National Rural Health Association said the Notice Act doesn't address the fundamental problem, which it said was created by CMS rules.
“While transparency and good patient communication about their hospital bill is important, the problem was created by CMS in the first place through the ambiguous two-midnight rule and the real risk for inappropriate inpatient admissions, disproportionately impacting rural safety net providers,” said Lindsey Corey, a spokeswoman for the association. “Fix the regulatory problems, and there would be no need for this legislation.”