There may be no noticeable difference between a hospital patient occupying a bed as an inpatient or one in observation status. Yet, state and federal legislators have been concerned that the difference can have important consequences for the patient. “Observation care” is considered by Medicare to be an outpatient service. Patients classified as outpatients in the hospital may fail to achieve a three-day inpatient stay to qualify for subsequent Medicare coverage for skilled nursing facility care. Patients in observation status may also have higher co-payments and charges for doctors’ fees and hospital services, as well as drugs.
Federal Law. The Medicare Outpatient Observation Notice (“MOON”) was developed to inform all Medicare beneficiaries when they are receiving observation services and are not an inpatient of the hospital. The MOON is mandated by the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), enacted in 2015. All hospitals and critical access hospitals (CAHs) are required to provide the MOON beginning no later than March 8, 2017.