A new requirement for hospitals to notify Medicare patients when they are receiving observation care but have not been admitted will cost the industry $23 million every year, according to the CMS.
The agency estimates that 1.4 million beneficiaries will receive annual notices.
The Notice of Observation Treatment and Implication for Care Eligibility Act requires hospitals to notify beneficiaries receiving observation services for more than 24 hours. The document must be provided no later than 36 hours after observation services are initiated.
The bill is meant to help curb the sticker shock some beneficiaries face after visiting the hospital. For Medicare to cover skilled-nursing facility costs, beneficiaries must first spend three consecutive nights as an admitted patient in a hospital; observation days don't count.
Beneficiaries also face unexpected Medicare Part B copays for drugs received during observation stays, since they were never actually admitted into the hospital and the drugs therefore are not covered under Part A.
Initially, the effective date of the NOTICE Act was supposed to be Aug. 6, but the date was moved to Oct.1. The actual enforcement date likely won't be enacted until next year since the notice form still is subject to public comment before the forms are due Sept. 1. Hospitals will have 90 calendar days to implement the final notice.
This past spring, hospitals sought various concessions in an attempt to reduce the administrative burden and costs associated with the document.
One common request was to exclude Medicare Advantage enrollees from having to receive the notification since Medicare does not pay pay hospitals for their care.
Medicare Advantage plans often take longer than 36 hours to make a coverage determination, making it impossible for hospitals to comply with the 36-hour limit established by the Notice Act, said Richard Morrison, vice president of government and public policy at Adventist Health System, in a letter. CMS denied the request.
Patient advocates, such as the AARP, wanted to make sure the documents would be easy to read. Others wanted a space on the form that outlined why the patient was receiving the form. The CMS said that was unnecessary since it would always be that a physician believed an individual didn't require inpatient services.
Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center, a not-for-profit advocacy and consumer rights group wrote in a comment that the information would help patients and family members advocate for a "change in status if the information is inconsistent with their experience of care.”
The CMS significantly revised the originally proposed notice, according to a legal analysis by the firm Hall Render. A field explaining why the patient is being notified has been added, and there have been formatting and language changes to enhance clarity and comprehension.
