Observation Stays Coalition Pushes the Improving Access To Medicare Coverage Act Of 2015 in Recent Letter to OMB

September 9, 2016
Policy Snapshot

In a recent letter to the Office of Management and Budget (OMB), which had solicited public comments on Medicare Outpatient Observation Notice, the Observation Stays Coalition focused on the importance of passing the Improving Access to Medicare Coverage Act of 2015 (HR 1571/S 843), which would count all time (inpatient or observation) spent in the hospital towards the required three day stay.

The Observation Stays Coalition is a group of over 20 national organizations including the Society which represents a wide range of health care professionals and advocates focused on addressing the issue of observation status.

“Medicare beneficiaries are being denied access to Medicare’s SNF [skilled nursing facility] benefit because acute care hospitals are increasingly classifying their patients as outpatients or as outpatients receiving observation services, rather than admitting them as inpatients,” the letter stated. “Patients are called outpatients despite the fact that they may stay for many days and nights in hospital beds and receive medical and nursing care, diagnostic tests, treatments, medications, and food, just as they would if they were inpatients.”

In August 2016, the Centers for Medicare & Medicaid Services (CMS) released the final rule on the implementation of the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act which requires hospitals to notify Medicare beneficiaries of their observation status within 36 hours in order to help reduce the number of people that are unknowingly in observation and not inpatient status.

The NOTICE Act required that Medicare-eligible patients receive a notice of their outpatient observation status starting on Aug. 6, 2016. However, the CMS final rule notes that the Medicare Outpatient Observation Notice (MOON) has not yet been approved for use, thus delaying official implementation of the law until fall 2016. CMS says that the MOON is on a separate approval track from the regulation, and the agency is accepting public comments during a 30-day period.

The coalition’s letter also stated “Both the NOTICE Act and the two-midnight rule reflect recognition of the problem of observation status for Medicare patients, but they are not sufficient to address the impact on SNF eligibility for beneficiaries in observation. Critically, they do not afford the beneficiary placed under observation or outpatient status a mechanism by which to challenge that designation. We urge CMS to establish a way for beneficiaries placed on observation to argue that such placement is inappropriate given their medical needs.”

The coalition notes that CMS has authority under existing law to count all time spent by a patient in the hospital for purposes of qualifying for Part A coverage in a SNF. CMS policy created observation status, and CMS action could adjust or rescind it.