On August 6, 2016, a new
Medicare law went into effect that requires hospitals to notify patients, who receive observation services as an outpatient, that they may incur out-of-pocket costs if they stay more than twenty-four (24) hours in a hospital without being formally admitted. Most patients are unaware that any time spent in “observation status” will not count towards their three (3) day hospital requirement, even if it is spent in a hospital bed or they receive hospital services (tests, treatment and medications), and Medicare will not be obligated for their hospital bills and will not pay for subsequent nursing home care. Medicare benefits will only apply when the patient has spent three (3) consecutive days in the hospital as an inpatient.
The new notification requirement is part of the Notice Act passed by Congress in 2015. The notice requirement is designed to prevent hospitals from keeping patients in an “observation status” and avoiding an inappropriate admission under the Medicare rules. Under the new law, hospitals can still keep patients in observation status, and those patients who fail to meet the Medicare requirements will continue to be responsible for their nursing home costs. Medicare covers up to one hundred (100) days of skilled nursing home care at a time.
