Unanimous Senate sends NOTICE Act to President

On July 27, 2015, the Senate passed the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act by unanimous consent, without any amendment to the bill passed by the House on March 16, 2015. The bill has been sent to President Obama for signature. Effective one year from that date, hospitals will be required to explain to patients in observation status for more than 24 hours the effects and financial consequences of that status and the reason hospital has not admitted them.

Extended observation services. The legislation addresses a burden experienced by many Medicare patients who spent several days in the hospital in outpatient status, for “observation.” Although they were at the hospital for more than three days, they did not qualify for Medicare coverage of post-discharge services because did not have a three-day inpatient stay. Therefore, they were required to spend thousands of dollars more for the care they received at the hospital and, afterward, from home health agencies or nursing or rehabilitation facilities (See Whether two midnights or more, observation is costly for patients, Health Law Daily, September 9, 2014).

The legislation

The bill adds subparagraph (Y) to Soc. Sec. Act sec. 1866 to require that any hospital or critical access hospital at which a Medicare patient receives observation services for more than 24 hours must notify the patient in writing that: (1) he or she has is receiving observation services as an outpatient and has not been admitted to the hospital as an inpatient; (2) the reasons for the patient’s outpatient status; (3) the implications of outpatient status for the beneficiary’s cost sharing obligations for the hospital services; and (4) the implications for the patient’s eligibility for Medicare coverage of skilled nursing facility services after the hospital stay. The notice must be given to the patient or patient representative within 36 hours of the beginning of the outpatient status or at discharge, whichever occurs earlier.