Legal and Regulatory Compliance

Over the MOON about the NOTICE Act

November 16, 2016 2:02 pm

CMS estimates an annual average cost of $3,800 per hospital to comply with new patient observation notice rules. Preparation will be key to accomplishing such a low compliance cost.

Editor’s note: An update to this article was published on Dec. 9, 2016. 
See article update: MOON Forum Approved

Congress passed the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) in August of last year to help educate Medicare patients about the financial implications of receiving care as an observation patient rather than as an inpatient.

As we know, observation is a type of outpatient status payable under Medicare Part B. As such, an observation patient will have different copayments and deductibles than the inpatient in the next bed, even though there may be no discernible differences in their care. In addition, outpatient days do not count toward the three-day hospital stay requirement for skilled nursing facility care after discharge.

Recognizing that this is confusing to many beneficiaries, the NOTICE Act requires hospitals to explain these Medicare provisions to observation patients and provide them with written notification using a form developed by the Department of Health and Human Services (HHS). That form, known as the Medicare Outpatient Observation Notice (MOON), is awaiting review by the Office of Management and Budget (OMB).

Once the MOON form has been approved, hospitals and critical access hospitals must begin using it within 90 calendar days. According to the statute, patients who receive observation services for more than 24 hours must be given the form and have it explained to them no later than 36 hours after observation care begins or “upon release.” The Centers for Medicare and Medicaid Services (CMS) explains that “upon release” means if the patient is transferred, discharged, or admitted. CMS also clarifies that the notice may be provided before 24 hours, if desired.

MOON Concerns Raised

As HFMA Senior Writer and Editor Rich Daley reported in August, hospital leaders were somewhat mixed in their reactions to how the FY17 inpatient prospective payment system (IPPS) final rule dealt with MOON. Although many applaud the fact that the rule gives hospitals plenty of time to prepare, there are a few lingering concerns. The patient form is written at a relatively high (11th grade) reading level, it has no links to CMS resources that would help patients understand out-of-pocket costs, and individual facilities are left with the task of translating the form into languages other than Spanish. (Even a Spanish-language version is not yet available, although CMS is apparently going to provide one.) Other concerns include the following.

Availability of alternative formats. In somewhat vague language, the form states that it is available “in alternative format” by calling 1-800-MEDICARE or sending an e-mail message to CMS. Attempts to call the number have been met with long wait times, and an e-mail message to CMS yielded a reply explaining that the form had not yet been approved but that additional information will be posted on the Beneficiary Notices Initiative webpage when OMB takes action.

State requirement conflicts. Another concern with MOON lies in the fact that there are similar notice requirements in effect in at least six states―New York, Maryland, Pennsylvania, Connecticut, Vermont, and Illinois―and their provisions may not align precisely with the requirements of the NOTICE Act. HHS has suggested that in such cases, the differences can be dealt with in the “Additional Information” section of the form or by attaching the state form to the MOON and giving both to the patient. In any event, this adds an additional layer of uncertainty that hospitals will need to deal with when educating staff on how to comply.

Inpatient explanation. Perhaps most confounding is the form’s free-text field in which hospitals are asked to complete this sentence, “You are not an inpatient because: _____.” One’s first inclination might be simply to write “because you’re an outpatient,” but a more fitting response is possible. The preamble to the IPPS Rule (81 Fed. Reg. at 57044, Aug. 22, 2016) includes this passage:

By definition (as specified in the Medicare Benefits Policy Manual (Pub. 100–02), Chapter 6, Section 20.6), the reason for ordering observation services will always be the result of a physician’s decision that the individual does not currently require inpatient services and observation services are needed for the physician to make a decision regarding whether the individual needs further treatment as a hospital inpatient or if the individual is able to be discharged from the hospital.

Based on this language, one could reasonably populate the free-text field on page one of the MOON form with simpler language like this: “[You are not an inpatient because:] Your physician needs more time to decide whether you need inpatient services or can be discharged from the hospital.” Following that sentence there would be room in the form to add patient-specific details, as necessary.

It has also been suggested that a check-box form could be developed by which the most common reasons could be explained. It could be referenced in the free-text field and attached to the MOON form. Hospitals should also consider adding a certification block to be used if the patient refused to sign the MOON.

See related tool: MOON Sample Check-Box Language

In any event, it should be noted that it is possible to make reasonable changes to the form such as adding contact information and the hospital logo. Any significant changes should be discussed with appropriate hospital staff such as case managers, compliance officers, and perhaps risk management and legal counsel.

Staff roles. Discussions on the HFMA Forum Listserv show that many hospitals are aware of and are gearing up for MOON implementation. They are addressing such questions as who will be assigned the responsibility to provide the form? Case managers are the likely candidates, because a clinical background is necessary to answer patients’ questions. However, who will do so on weekends or at times when case managers or utilization review personnel are not available?

Other concerns include how hospitals can ensure that inpatients who are converted back to observation status (condition code 44) are given the MOON document in a timely manner?  How will staff education be adapted to include this topic? And into what languages must the form be translated to meet the requirements for linguistically appropriate services?

Preparation is Key

In the supporting statement CMS sent to OMB for the MOON form, the agency estimated that U.S. hospitals will deliver approximately 1.4 million notices annually and that each occasion, including the oral explanation, will take approximately 15 minutes resulting in an annual average cost of $3,800 per hospital. For the process to be that simple and the cost to remain that low, a lot of preparation needs to take place now.

J. Stuart Showalter, JD, MFS, is a contributing editor for HFMA.


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