CMS delays observation status rule that will cost industry millions per year

Rule likely won't be enforced until 2017

The Obama administration last week issued a final rule that delays the implementation of a law that requires hospitals to notify Medicare beneficiaries when they are under observation status.

Background on the NOTICE Act

Congress in August 2015 passed the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, which will require hospitals tell Medicare and Medicare Advantage beneficiaries if they are placed under observation status for longer than 24 hours. Hospitals will need to provide notice no longer than 36 hours after observation services begin. They will be required to notify the patient in writing and provide a verbal explanation of the implications of outpatient status on patient eligibility for subsequent services, such as skilled nursing facility (SNF) coverage.

To be eligible for Medicare's SNF coverage, beneficiaries must spend three consecutive midnights admitted in a hospital, not counting observation days.

CMS estimates hospitals will issue 1.4 million notices annually. The agency projects the requirement will cost the industry about $23 million per year.

Final rule delays implementation

CMS last week released a final rule to implement the NOTICE ACT. The law's requirements were set to take effect, Aug. 6, but CMS in the rule pushed back the regulation's implementation until Oct. 1.

According to Modern Healthcare, CMS likely will not begin enforcing the NOTICE Act until 2017 because the federal government still is accepting public comments on an updated version of the Medicare Outpatient Observation Notice (MOON). The Office of Management and Budget is accepting public comments on the form and related instructions through Sept. 1. Under the final rule, hospitals will have 90 calendar days after OMB approves the updated MOON to implement the notification requirements (AHA News, 8/10; Fabus, Health Law News/Lexology, 8/3; Pear, New York Times, 8/8; Dickson, Modern Healthcare, 8/10).

Navigating the maze of ambulatory clinical quality reporting

 Navigating the maze of ambulatory clinical quality reporting

CMS has implemented multiple quality reporting programs to assess the quality of care provided in the ambulatory setting, which include various ACOs and regulatory requirements. While these programs vary in their specific requirements, their shared characteristic is the tie to financial incentives or penalties, and clinical quality measure (CQM) reporting requirements.

To help reduce the CQM reporting burden, CMS allows EPs to report once and meet the quality reporting requirements across these multiple programs. However, EPs and their practices must contemplate the multiple reporting options and decide whether they should and can take advantage of the CQM reporting alignment.

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