The Minnesota Hospital Association (MHA) has sent its members a template notice they can use to inform Medicare patients of the difference between "observation status" and "inpatient status" during their hospital stay.

Many months ago the office of ombudsman for long-term care convened a group of stakeholders to determine if a hospital-based observation status notice would be helpful, and if so, to develop such a notice. Hospitals are not required to use an advance beneficiary notice (ABN) for observation stays, leaving many patients, family members, and others surprised by the lack of inpatient hospital day status. The workgroup included MHA, Care Providers of Minnesota, Stratis Health, the Minnesota Department of Human Services, Aging Services of Minnesota and the Minnesota Board on Aging. Stratis Health also convened a number of Medicare beneficiaries to review the notice language.

The notice is intended to help hospitals explain important information to Medicare beneficiaries that could impact what Medicare will and will not cover for subsequent nursing home care after being treated in the hospital, as well as their Part B status while in the hospital. Medicare will cover skilled nursing facility care only after a qualifying three-day inpatient hospitalization. The notice informs patients that "observation status" does not meet required guidelines for hospital inpatient status.

If a patient requires nursing home care after discharge from the hospital, it's important that both the patient and the receiving nursing facility understand that "observation days" will not count toward the three days in a row as a hospital inpatient needed for Medicare Part A coverage in a nursing home.

Some hospitals may already be using their own version of such a notice, but the group felt it was important to provide suggested language for easy use by any hospital. The use of the notice remains voluntary. Nursing facility providers are encouraged to contact hospitals who are a source of admissions and encourage them to use the new notice. Use of the notice should help minimize the surprise of denied Part A coverage in the nursing facility. “The observation status needs to be clearly communicated to patients in order to avoid unnecessary billing errors and unmet beneficiary expectations,” said Joe Schindler, vice president of finance for the Minnesota Hospital Association (MHA). “The special notice should be given to Medicare patients to help them understand their hospitalization status.”

View the notice on the MHA website.

The American Health Care Association (AHCA) has also been working to minimize the impact of hospital’s use of observation status. View the AHCA set of resources on observation status, including a background sheet, talking points, a white paper, and an opinion editorial.

Lastly, there is currently bipartisan legislation in both chambers of Congress to remedy the complex and confusing process surrounding observation status during a hospital stay. The Improving Access to Medicare Coverage Act of 2011 ensures that time spent under observation status in a hospital will count toward satisfying the three-day inpatient hospital requirement for coverage of skilled nursing facility services under Medicare. The Improving Access to Medicare Coverage Act of 2011 was introduced by Senators John Kerry (D-MA) and Olympia Snowe (R-ME), along with Representatives Joe Courtney (D-CT) and Tom Latham (R-IA). Members may wish to contact their representative and senators to ask them to support these bills.

Doug Beardsley
952.851.2489
dbeardsl@careproviders.org

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