New Medicare Observation Care Notice Raises Controversy

New Medicare Observation Care Notice Raises Controversy

In August, a new federal law will go into effect requiring hospitals to notify their Medicare patients if they have not been formally admitted to the hospital. The NOTICE Act requires that, starting Aug. 6, Medicare patients receive a form written in “plain language” after 24 hours of observation care, but no later than 36 hours. Under the new law, it must explain the reason they have not been admitted and how that decision will affect Medicare’s payment for services and patients’ share of the costs. This information must also be provided verbally, and hospital staff or the doctor must be available to answer questions.

The law comes in response to complaints from Medicare patients who were surprised to learn that although they had spent a few days in the hospital, they had not been formally admitted, but were instead there for “observation”. Patients under observation are those considered too sick to go home, yet not sick enough to be admitted. Because they have not been formally admitted they may face higher charges for their care, and do not qualify for Medicare’s nursing home coverage.

Concerns Over Content and Wording of Observation Care Notice

However, many heath care professionals have concern over how the notice, drafted by Medicare, is written. Brenda Cude, a National Association of Insurance Commissioners consumer representative and professor of consumer economics at the University of Georgia, says that the notice “assumes some health insurance knowledge that we are fairly certain most people don’t have,” which could lead patients with many questions. Additionally, Cude states, the notice is written for a 12th-grade reading level, even though most consumer materials aim for no more than an 8th-grade level.

Additionally, the notice does not yet meet the expectations of Rep. Lloyd Doggett, D-Texas, who co-sponsored the law.

“I am concerned that the proposed notice fulfills neither the spirit nor the letter of the law,” Doggett said in an interview.

It doesn’t require the hospital to explain exactly why the patient is getting observation care instead of being admitted, he said, and does not sufficiently explain why observation patients are ineligible for Medicare’s nursing home coverage, which under law requires at least three consecutive days as an admitted patient. The notice, he said, also does not clearly explain the difference between Medicare’s Part A inpatient hospitalization and nursing home benefit and Part B, which covers outpatient services, such as doctor’s visits, lab tests and hospital observation care.

Support and Criticism from Doctors and Hospitals

The draft notice also has raised some concerns among doctors. It says that observation care is provided in order to help the doctor decide whether the patient is sick enough to be admitted, however the doctor’s decision is not always final, or the decision to admit may not be up to the doctor at all. Hospital officials may decide that patients don’t meet the admission criteria and should get observation care. Additionally, if Medicare auditors find that hospitals erred by admitting patients who should have been in observation, Medicare will pay nothing for their care.

Despite controversy over the way the notice is written, many hospitals do support the effort. “It’s important for patients to understand their status in the hospital,” said Katie Tenoever, senior vice president and general counsel for the Federation of American Hospitals.

Joanna Hiatt Kim, the American Hospital Association’s vice president for payment policy, said, “A number of hospitals already voluntarily distribute their own notices.” However, the AHA has raised questions about how to carry out the federal requirement.

For example, although the new federal law will require hospitals to notify observation patients after 24 hours and before 36 hours, several states already require hospitals to provide a notice when observation care begins and it may include different details. In these instances, should patients get two notices? Receiving multiple notices with varying details may cause more confusion than clarity, at a time when patients should be focusing on getting better.

Lastly, there’s the matter of timing. The final draft of the notice is expected to be released shortly before hospitals must start giving it to patients. The AHA is asking for an additional six months to review and prepare.

Medicare is currently soliciting feedback on the draft notice through June 17.

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