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CMS Final Rule Implementing the NOTICE Act and its Effect on Hospitals and Critical Access Hospitals

on Sunday, 25 December 2016 in Health Law Alert: Erin E. Busch, Editor

The Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) requires hospitals and critical access hospitals (CAHs) to provide written and oral notification and explanation of observation services to outpatients receiving observation services for more than 24 hours at a hospital or CAH. On August 22, 2016, CMS published the final rule, implementing the NOTICE Act; the NOTICE provisions went into effect on October 1, 2016. The final rule established that hospitals and CAHs should deploy a standardized notice: the Medicare Outpatient Observation Notice (MOON). The MOON satisfies all of the statutory informational elements and fulfills the written notice requirement of the NOTICE Act. A current version of the MOON may be found here. CMS will provide guidance regarding the content and delivery of NOTICE compliant oral notice in subsequent Medicare manual provisions.

Regarding the recipients of notice, the final rule clarified that all Medicare beneficiaries should receive the MOON, regardless of whether outpatient observation services are covered. For example, if a beneficiary only had Medicare Part A and receives observation services at a hospital or CAH as an outpatient, the hospital or CAH must provide the beneficiary with the MOON even though Part A will not cover the costs of this treatment. Regarding the timing of delivery of notice, hospitals and CAHs may deliver the MOON and oral notice to a beneficiary before that individual receives more than 24 hours of observation services as an outpatient. Additionally, the MOON and oral notice must be provided within 36 hours after the initiation of observation services or sooner if the individual is transferred, discharged, or admitted to the hospital or CAH. Finally, the MOON must be signed by the patient or the patient’s representative and a copy of the signed MOON must be retained by the hospital or CAH.

Hospitals and CAHs should review the MOON and add additional information to the contents of the form as appropriate. Additionally, because some states require additional notice or impose shorter timeframes for delivery of notice for observation services, hospitals and CAHs should partner with its compliance and legal departments to ensure that the MOON satisfies applicable state laws and regulations.

Sean T. Nakamoto

Julie A. Knutson

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500

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