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The Notice Act, which just became law, stands for “Notice of Observations Treatment and Implication for Care Eligibility.”  When you go to the hospital, and are wheeled to a hospital bed, do you think you are being “admitted?”  Do you think someone would tell you if you are only there for “observation care?”

Observation care (“OC”) is a classification used when patients are not well enough to go home but not sick enough to be admitted. It is provided on an outpatient basis, so patients have co-pays for doctors’ fees and hospital services, and must pay for hospital charges for routine drugs the hospital provides to take home for chronic illnesses, like diabetes.

According to Kaiser Health News, hospital claims for OC have increased 91% since 2006, to 1.9 million in 2013. Extended observation stays – 48 hours or more – have risen by 450%.  OC keeps Medicare’s more comprehensive coverage from applying, meaning a senior may not get Medicare’s limited nursing home benefit (20 days complete coverage with up to 80 days with a co-pay).  If the patient needs care in a facility after being in a hospital for OC, Medicare pays nothing! If the patient had been admitted, Medicare applies.

The Act – not effective until August, 2016 – requires hospitals to inform Medicare patients when they receive OC, but have not been admitted. The hospital must: (1) provide written notification to patients who have received OC for more than 24 hours; (2) explain that they have not been admitted to the hospital; (3) the reasons why; and (4) the potential financial implications: cost-sharing requirements and subsequent coverage ineligibility for services furnished by a nursing home. The notice must be given within 36 hours after the individual began to receive the care.

Without Medicare coverage, seniors could pay thousands for nursing home care their doctor ordered, or try to recover on their own. Since there is no set process to challenge OC, the patient must persuade a physician or hospital to change its mind. It does not apply to the time the individual has already spent on OC.

When you enter the hospital, ask what your status is and keep asking!