Corporate Compliance

Note from the Instructor: New Law Puts Providers on NOTICE

Medicare Insider, August 11, 2015

Want to receive articles like this one in your inbox? Subscribe to Medicare Insider!

This week’s note from the instructor is written by Debbie Mackaman, RHIA, CPCO, CCDS, regulatory specialist for HCPro.

While many providers are still digesting the IPPS Final Rule, muddling through how the OPPS Proposed Rule might impact their bottom line, and kicking rocks because the 2-midnight rule was not chucked, President Obama signed a bill into law on August 6, 2015—and it’s one providers should note. Unanimously approved by both the House and Senate earlier this year, the Notice of Observation Treatment and Implication for Care Eligibility Act, otherwise called the NOTICE Act, will not take effect until August 2016, but will certainly add one more layer to the administrative burden associated with outpatient observation services when it does.

Public Law 114-42 will amend the Social Security Act and require a hospital or critical access hospital (CAH) to provide the beneficiary with a written notice when they receive outpatient observation services for more than 24 hours. The notice must be provided within 36 hours of the start of observation, which would coincide with the order for such service, or prior to discharge or transfer, whichever occurs first after the initial 24 hours has been reached.

Hospitals and CAHs currently provide many “notices” to the patient, including a financial consent, consent to treatment (procedure, anesthesia, blood transfusion, etc.), release of information, Important Message from Medicare (IM), Detailed Notice of Discharge (DND), Advance Beneficiary Notice (ABN), and the Hospital Issued Notice of Noncoverage (HINN)—just to name a few. The regulation clarifies that this notice will not be in “hit and run” form, as it requires hospital staff to provide an oral explanation of the implications of remaining in outpatient status.

As hospitals begin to draft the notice and develop a process for issuing it, they should also consider who will be responsible to eloquently explain the situation to the patient. Key elements of the notice must include a written and oral explanation stating:

  1. The patient is an outpatient and not an inpatient of the hospital and the reasons why;
  2. The implications of remaining in outpatient status, primarily the related financial issues including deductible, coinsurance, and items or services not covered by Medicare, such as self-administered drugs; and,
  3. All time spent as an outpatient, including observation services provided on the inpatient floor, will not count towards the 3-day acute care qualifying stay required for coverage of a subsequent skilled nursing facility (SNF) stay, if appropriate.

The notice must be written in easy-to-understand language and available in “appropriate languages.” This requirement is not further specified in the law, although the IM, DND and ABN notices can only be provided in English or Spanish versions, so more clarification will be needed. At this point in time, it is unclear if CMS will provide standardized language similar to that used to inform the beneficiary and the provider about the financial liability protections under the Fee-for-Service (FFS) Medicare and, in certain cases, the Medicare Advantage (MA) Programs.

The notice must also be signed by the patient or the person acting on behalf of the patient and the hospital staff member who presented the notice. If the patient or his or her authorized representative refuses to sign the notice acknowledging their outpatient status, the hospital must indicate on the refusal on the form and include the name, title, and signature of the staff member issuing the notice, as well as the date and time of the refusal. This procedure is similar to recommendations CMS has provided when a patient refuses to sign an ABN. However, refusing to sign the new notice does not release the beneficiary from any financial obligation.

As hospitals incorporate the new regulation into their current processes, they should also be acutely aware of the 2-midnight benchmark and the implications of keeping patients in outpatient status receiving observation services for more than 24 hours. CMS has stated that they do not expect a Medicare patient receiving medically necessary hospital care to pass a second midnight without an order for inpatient care. Providing the new notice to the patient should not only serve to inform them of their potential financial liability as an outpatient but also to put the hospital and the attending physician on notice regarding the correct application of the 2-midnight rule.

Want to receive articles like this one in your inbox? Subscribe to Medicare Insider!

Most Popular