By early March, all hospitals, including critical access hospitals, must provide Medicare beneficiaries who receive observation services as outpatients for more than 24 hours a written and oral explanation of the services. The Centers for Medicare and Medicaid Services (CMS) issued guidance to its claims contractors on January 20, 2017, explaining how to implement the provision. All hospitals must begin providing the notice by March 8, 2017. Referred to as the Medicare Outpatient Observation Notice (MOON), the standardized notice informs the beneficiary about observation services and the implications it can have for the beneficiary's cost sharing and the beneficiary's eligibility for Medicare coverage of post-hospital skilled nursing services. A three-day hospital stay is required for beneficiaries to be eligible for post-hospital nursing home care. The provision to require the notice was enacted in 2015 and implemented in CMS's final rule for its inpatient prospective payment policies for fiscal year 2017. The notice must be provided to beneficiaries or their representatives no later than 36 hours after observation services begin. The guidance describes various formats for providing the notice, states that it must remain at two pages unless state-specific provisions result in additional pages, and reminds providers that they must employ their usual procedures, such as providing translation services, to ensure the beneficiary's comprehension of the notice. Hospitals must keep the original notice, signed by the beneficiary, in the beneficiary's medical record. Electronic notice retention is permitted. If a beneficiary refuses to sign the notice or if there is no representative available to sign the notice on the beneficiary's behalf, the staff member who presented the notice must sign the notice, certifying that it was presented, along with the time and date when the notice was presented. CMS estimates that about one million beneficiaries will receive the notice annually.

HRC Recommends: Risk managers should review CMS's guidance about the required notice and ensure that the organization is prepared to comply with all the provisions to give notice to Medicare beneficiaries in outpatient observation by the March deadline.