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New Law Requires Notification of Observation Status

President Obama last week signed a bill that requires hospitals to give Medicare patients written notice when they are being held in outpatient observation status for more than 24 hours rather than being admitted to the hospital.

The Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act does not give patients recourse to challenge their status – it seeks only to educate patients as they make treatment decisions with their providers. Remaining in outpatient observation causes patients to pay different cost-sharing amounts for drugs administered under Medicare Part B and can impact a patient’s eligibility for Medicare coverage of treatment in a skilled nursing facility (SNF). Medicare currently only covers costs for treatment in an SNF after a patient has an inpatient stay of three or more days.

The Centers for Medicare & Medicaid Services has not yet provided a timeline for a proposed rule and public comment process to implement the new law.

If you have questions or concerns, please contact Beth Feldpush, DrPH, senior vice president of policy and advocacy, at or 202.585.0111.


About the Author

Matt Buechner is the policy and advocacy associate for America's Essential Hospitals.

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