For Medicare to cover skilled nursing facility costs, beneficiaries must first spend three consecutive nights as an admitted patient in a hospital; observation days don't count. This has resulted in surprise nursing home bills for thousands of beneficiaries. In order to address this problem, in March 2015 Congress amended the Medicare law and enacted the Notice of Observation Treatment and Implication for Care Eligibility Act (the "NOTICE Act"). [Public Law No: 114-42 (08/06/2015)]
The NOTICE Act requires hospitals to provide a comprehensive notice to patients that:
- explains the individual's status as an outpatient and not as an inpatient and the reasons why;
- explains the implications of that status on services furnished (including those furnished as an inpatient), in particular the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility;
- is written and formatted using plain language and made available in appropriate languages; and
- is signed by the individual or a person acting on the individual's behalf (representative) to acknowledge receipt of the notification or, if the individual or representative refuses to sign, the written notification is signed by the hospital staff member who presented it.
Initially, the effective date of the NOTICE Act was supposed to be August 6, 2016. After the hospital industry raised concerns, the effective date was moved to October 1, and the notice form is subject to public comment until September 1. Hospitals will have 90 calendar days after the effective date (i.e., until December 30) to implement the notice.
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