Medicare observation status notices, set to begin August 7, causing concern

Hospital patients on observation status are considered too sick to go home, but not sick enough to be formally admitted. Beginning August 7, Medicare beneficiaries in the hospital on observation status must be notified of that status within 24 hours, both in writing in "plain language," and verbally. Hospital staff must also be available to answer questions. 

The purpose of the NOTICE Act (short for Notice of Observation Treatment and Implication for Care Eligibility) is to inform Medicare patients of the costs they may incur when not formally admitted to the hospital. From the perspective of someone in a hospital bed, observation and formal admission may be indistinguishable, but there could be a huge difference when it comes to Medicare coverage. Patients under observation may not be covered for certain hospital services and doctors' fees, and their stay in the hospital does not count toward the three-day minimum required for Medicare to cover 20 days of subsequent skilled nursing care. 

June 17 was the last day for comments on the draft notice hospitals are required to give observation patients. Critics claim that because the notice is written on a twelfth-grade level, not the eight grade level that is standard for consumer materials, some patients may not understand it. And Rep. Lloyd Dogett of Texas, bill co-sponsor, finds the draft notice inadequate for several reasons: it does not document the actual reasons a patient is on observation status; it fails to clearly distinguish between Medicare Part A and Part B; and it does not address the fact that observation days do not count toward the three-day minimum stay required for Medicare to pick up a portion of any subsequent skilled nursing home costs. Others have expressed concern about the wording regarding drug coverage. "Self-administered drugs" - for example, blood pressure and cholesterol medications that patients usually take at home - are not covered by Medicare when administered in-hospital to an observation status patient. 

These concerns are prompting the American Hospital Association to ask for an extension of six months before they begin notifying patients. But YOU need not wait for Medicare and the hospitals to get their act together. As I noted in my prior post on this topic, Medicare patients and their loved ones must be proactive whenever a patient goes to the hospital. Find out - do not wait to be told - if you or your loved one are on observation status. If you are, you may be able to persuade your physician to reclassify your stay.That could make a huge difference in your ultimate financial responsibility.