NOTICE Act takes effect

While a new law to help nursing home patients avoid being surprised by unexpected charges for hospital care in “observation status” has now gone into effect, advocates are still pushing Congress to approve legislation that would provide a permanent remedy.

The American Health Care Association (AHCA) thanked sponsors of the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act),which requires hospitals to notify patients they may incur out-of-pocket costs if they stay more than 24 hours without being formally admitted. Patients can expect to start receiving the warnings in January. Officials from the Centers for Medicare & Medicaid Services estimate hospitals will need to issue 1.4 million notices annually.

Sen. Benjamin L. Cardin (D-Md.), chief sponsor of the Senate version of the legislation, says the new law will “save seniors from the sticker shock that comes after they are discharged from the hospital and realize that Medicare will not cover the cost of care in a skilled nursing facility (SNF).”

The text of the Medicare outpatient observation notice (MOON) is pending approval by the White House Office of Management and Budget (OMB). It states: “You’re a hospital outpatient receiving observation services, also called an observation stay. You are not an inpatient.” It then explains Medicare will only cover care in SNF if the beneficiary has had an inpatient hospital stay of at least three days.

Patients who receive that notice may then ask their doctors to reclassify them as inpatients if an SNF stay appears likely.

In its reasoning regarding the legislation, the Senate Finance Committee pointed out the number of Medicare beneficiaries receiving outpatient observation care in recent years has increased steadily: “Some beneficiaries are surprised to learn that although having received treatment overnight in a hospital bed, the beneficiary was never formally admitted as an inpatient but was instead a hospital outpatient.”

AHCA and other advocacy groups are urging Congress to pass legislation allowing time under observation to count toward the three-day inpatient stay. That bill has been sponsored by 24 senators and more than 120 members of the House of Representatives.

“Patients often have no idea what their status is in a hospital,” says Mark Parkinson, AHCA’s president and CEO, noting observation stays impose a financial burden on patients and increase the likelihood they will need to turn to Medicaid for help.

Arbitration Clauses

Meanwhile, OMB is reviewing a new proposed rule with requirements involving arbitration clauses in patient admission contracts, a practice defended by the industry but contended by patients’ rights advocates as unfair to patients and their families.

The proposal would require a nursing facility, if it includes binding or pre-dispute arbitration agreements in its contracts, to explain the agreements to patients, who must acknowledge they understand them.

Under such agreements, individuals agree to have any potential case heard by a private arbitration firm, generally hired by the company, rather than by a judge and jury.

The provision is included in a broader regulation on which OMB launched a review August 16. That overall rule governs conditions of participation providers must meet to qualify for Medicare. The proposed regulation was issued July 16, 2015, as part of the Affordable Care Act and covers such areas as visitation rights, protections against abuse, neglect and exploitation and transitions of care,

Sarah Rooney, director of regulatory affairs at the American Association for Justice, told Bloomberg BNA Aug. 17 that while CMS was correct in recognizing “how problematic forced arbitration is,” the proposed rule “would simply green-light the nursing home industry to continue using forced arbitration as long as certain disclosures are made.

AHCA’s Parkinson, however, contended CMS lacks the authority to regulate the use of arbitration agreements by SNF operators. He told Bloomberg BNA his organization “doesn’t believe further agency directive” regarding arbitration “is necessary or possible.” AHCA urged CMS to withdraw any arbitration-related proposes in the rule, which it says should be implemented over a five-year period because of its overall complexity and impact on SNFs’ ability to focus on patient care.

Robert Gatty has more than 40 years of experience in journalism, politics and business communications and is the founder and president of G-Net Strategic Communications based in Myrtle Beach, South Carolina. He can be reached at bob@gattyedits.com.

Robert Gatty

Robert Gatty has more than 40 years of experience in journalism, politics and business communications and is the founder and president of G-Net Strategic Communications based in Myrtle Beach, South Carolina. He can be reached at bob@gattyedits.com.