Cardiovascular Rounds

New federal law requires patient disclosure of observation status

by Julie Bass

Last week, President Obama signed the "Notice of Observation Treatment and Implication for Care Eligibility Act," or the NOTICE Act, into law. This law alters both the manner and timeframe in which hospitals must notify patients of their observation status.

The Act requires hospitals to provide notification within 36 hours of discharge if a patient is under observation status for more than 24 hours. This notification must be in writing with a verbal explanation of the implications of outpatient status to patient eligibility for subsequent services, such as skilled nursing facility (SNF) coverage. The new law intends to reduce the confusion and unclear out-of-pocket costs for Medicare beneficiaries—particularly those who may not realize that spending the night in the hospital does not always constitute an inpatient stay.

The impetus for the Act is multifold. First, the law is meant to address the difficulty some Medicare beneficiaries face when they transition to a rehab or SNF from the hospital and learn that Medicare won’t cover the stay. As a reminder, to quality for SNF coverage, Medicare beneficiaries must spend three successive midnights as an inpatient in a hospital. Additionally, there is another recurring problem surrounding Part B copays for drugs patients receive during their care in the hospital, since patients under observation status do not quality for drug coverage under Part A.

Some states—including Connecticut, New York, Pennsylvania, Virginia, and Maryland—already passed similar laws requiring hospitals within the state to give oral and written notice to patients placed on observation status for 24 hours or more. With the enactment of the NOTICE Act, acute care hospitals and CAHs in all 50 states will now have to provide such disclosures.

Most Common Reasons for Observation Stays, 2012
Source: Office of Inspector General (OIG) analysis of CMS data, 2013

Most Common Reasons for Observation Stays Number of Observation Stays Percentage of Observation Stay
Chest pain 340,484 22.5%
Digestive disorders 93,091 6.2%
Fainting 81,349 5.4%
Signs and symptoms 47,439 3.1%
Nutritional disorders 39,277 2.6%
Dizziness 34,455 2.3%
Irregular heartbeat 31,390 2.1%
Circulatory disorders 31,163 2.1%
Respiratory signs and symptoms 24,715 1.6%
Medical back problems 23,846 1.6%

As over a quarter of observation stays are for CV-related issues, the NOTICE Act will have an impact on our observation patients and add yet another layer of scrutiny over how short-stay patients are triaged and managed.

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