Lawmaker Chides CMS for Not Fulfilling Coverage Eligibility Law

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Michael D. Williamson

Aug. 8 — The Medicare agency “is failing to fulfill its responsibilities” to notify beneficiaries in hospitals about their eligibility for nursing home coverage, a lawmaker said Aug. 8.

Beneficiaries “absolutely deserve to understand their status when they are hospitalized, and to know whether they are losing their eligibility for covered stays at skilled nursing facilities,” Rep. Lloyd Doggett (D-Texas) told Bloomberg BNA. Doggett in April 2015 sponsored the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act (Pub. L. No. 114-42), which requires hospitals to notify patients covered by Medicare if they are being classified as an outpatient for Centers for Medicare & Medicaid Services billing purposes. President Barack Obama signed the NOTICE Act in August 2015 (153 HCDR, 8/10/15).

The classification is important, because beneficiaries are only eligible for skilled nursing facility (SNF) coverage if they have first spent three days in a hospital under inpatient status. The law required hospitals to notify beneficiaries about their outpatient status with a CMS-approved form starting Aug. 6, 2016. The federal form the agency is requiring hospitals to use to fulfill NOTICE Act requirements is called the Medicare Outpatient Observation Notice (MOON).

However, the White House Office of Management and Budget is still reviewing the CMS's form and it may not be ready until December 2016 or January 2017, Toby Edelman, senior policy attorney at the Center for Medicare Advocacy, a beneficiary advocacy organization, told Bloomberg BNA Aug. 5.

The CMS disclosed that the MOON isn't ready in a final rule that updated Medicare inpatient payment rates for fiscal 2017. That rule (Docket Nos. CMS-1655-F; CMS-1664-F; CMS-1632-F2), which the CMS released Aug. 2, is slated for publication in the Aug. 22 Federal Register (149 HCDR, 8/3/16).

SNF Industry Response

A nursing home industry group, the American Health Care Association (AHCA), signaled understanding for the delay. “While we firmly support the beneficiary knowing as soon as possible of their status, we also understand the need for this implementation to be done correctly,” Clif Porter, the AHCA's senior vice president for government affairs told Bloomberg BNA Aug. 8.

The AHCA supports the aims of the NOTICE Act, which could save them thousands of dollars in out-of-pocket costs, but wants a more permanent solution to the problems caused by placing beneficiaries in outpatient status, Porter said.

Several national provider and patient advocacy organizations including the AHCA, “are advocating on something we consider to be the full fix to this issue — the Improving Access to Medicare Coverage Act (S. 843/H.R. 1571),” Porter told Bloomberg BNA. “This legislation would count a patient’s time in observation toward the three-day hospital inpatient stay requirement.”

Sen. Sherrod Brown (D-Ohio) introduced the Senate version of the Improving Access to Medicare Coverage Act in March 2015 and the bill has been referred to the Finance Committee. Rep. Joe Courtney (D-Conn.) sponsored the House version of the legislation in March 2015. The House bill has been referred to the Ways and Means and Energy and Commerce committees.

Hospitals Need Time

The American Hospital Association (AHA), an industry group, “believes that hospitals and practitioners should communicate clearly with patients and their families about their status in the hospital,” Joanna Hiatt Kim, the AHA's vice president for payment policy, told Bloomberg BNA Aug. 5. In fact, not only do some states, such as New Jersey, Illinois, Florida, Minnesota and Pennsylvania, already have laws and/or regulations that require notification similar to that in the NOTICE Act, but also many hospitals voluntarily provide such information to its outpatients receiving observation services, she said.

However, given the changes made to the specific NOTICE Act requirements in the final rule and the fact that CMS has proposed changes to the MOON, “hospitals and health systems will need adequate time to develop and operationalize policies and procedures to ensure compliance, Kim said.

The CMS posted a proposed MOON form, and instructions on how to comment on it, online Aug. 1. Comments on the proposed MOON form are due Sept. 21, the instructions said.

Doggett said the latest MOON proposal “represents some improvement” over earlier versions.

Medicare's Take

The CMS defended its timeline for implementing the NOTICE Act. An agency spokesperson told Bloomberg BNA Aug. 8 “We recognize that the effective date of this final rule will be at some date after the statutory implementation date of Aug. 6, 2016, has passed.”

As stated in the inpatient payment proposed rule, the CMS has been working toward implementation since the NOTICE Act was passed, the spokesperson said, adding: “Our implementation schedule takes into consideration the statutory requirements of the NOTICE Act, as well as our long-standing experience in developing implementation schedules for new beneficiary notices.”

Doggett, however, told Bloomberg BNA that because of the delay, the decision about whether and when to alert patients to their outpatient observation status is left to a patchwork of state regulation or no regulation at all. “Just as I did originally in getting the NOTICE Act passed, I will continue urging clarity and transparency to protect health care consumers,” he said.

To contact the reporter on this story: Michael D. Williamson in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

Full text of the NOTICE Act is at

Full text of the Improve Access to Medicare Coverage Act is at

The proposed MOON form is at

Instructions for commenting on the proposed MOON form are at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Health Care on Bloomberg Law