New MOON: How hospitals must inform patients of observation status

The difference between outpatient observation and inpatient admission has typically been confusing to older hospitalized patients – especially since Medicare only covers portions of outpatient observation stays. In the past, facilities may have given patients quick explanations of the differences, but soon, they’ll be required to do much more. 

177731780Last year, President Obama signed the Notice of Observation Treatment and Implication for Care Eligibility Act (or the NOTICE Act). The new law, which goes into effect Aug. 6, requires hospitals to give patients specific details about their observation status and educate them about what services are usually covered by Medicare.

Under the NOTICE Act, every patient who receives observation services as an outpatient for more than 24 hours must receive an official Medicare Outpatient Observation Notice (MOON). The MOON is a standardized form created by the Centers for Medicare & Medicaid Services (CMS).

According to an article in Patient Safety & Quality Healthcare (PSQH), the MOON will let patients know about crucial details such as:

Medicare Part A doesn’t cover outpatient services

Medicare Part B may require copays for certain outpatient hospital and physician services after the deductible

Patients will likely be charged extra for any self-administered drugs they’ve been taking for chronic conditions, and

Outpatient observation services don’t count toward the three-day inpatient stay requirement for Part A coverage of post-discharge care in a skilled nursing facility.

The form has blank areas where providers must fill in the name of the patient’s attending physician for the hospital stay, and both the date and time when observation services first began for the patient.

Distribution & discussion

Patients must get a MOON no later than 36 hours after observation services begin. Either the patient or the patient’s representative must acknowledge receiving the form with a signature. The form can either be printed out or sent electronically, but patients must receive a physical copy of the signed acknowledgement form.

And it’s not enough to just hand patients the form and have them sign it. Hospital staff must also verbally inform patients about how Medicare may handle their observation status.

Ideally, CMS wants the discussion about the MOON to only take a few minutes, as stated in the PSQH article. But hospitals should anticipate the explanation taking a bit longer in the beginning, since patients may have additional questions about the form or the services they may receive while on observation status.

Because the MOON is designed to let patients know about their potential out-of-pocket costs, they may also ask about other costs related to their observation stay. So, according to the PSQH article, it could be helpful to have pricing information available for patients to review as they read over the MOON.

Here’s another potential outcome for hospitals to think about: After receiving an explanation of the MOON and the costs they’ll incur, some patients may opt out of observation services entirely, leaving the hospital against medical advice.

Because the outcome of their treatment (including potential readmissions) will likely still count against your facility for value-based payment purposes, it’s a good idea to establish a follow-up process for these patients, making sure they at least understand their discharge instructions and visit their primary care provider after leaving the hospital.