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From Health Law Daily, January 25, 2017

Hospitals receive instructions on preparing for MOON sighting in March

By Kayla R. Bryant, J.D.

By March 8, 2017, hospitals must provide the Medicare Outpatient Observation Notice (MOON) to Medicare beneficiaries receiving observation services on an outpatient basis for more than 24 hours by at least 36 hours after these services begin. The hospital must provide an oral explanation of the standardized written notice. The MOON is provided to clarify patient status, the reason the hospital chose not to admit the patient, and the possible financial consequences of remaining in observation status. CMS has issued an update to Chapter 30 of Pub. 100-04, the Medicare Claims Processing Manual, to prepare for required use of the MOON, effective February 21, 2017, although CMS guidance states that hospitals are required to provide the MOON no later than March 8 (CMS Transmittal, Transmittal 3695, January 20, 2017).

Observation. The way observation status is managed has evolved over the past few years. Patients are financially impacted by being placed on observation status, which is billed under Medicare Part B. Part B billing may result in greater out-of-pocket costs, even though the services provided may be very similar to services provided to inpatients and billed under Part A. CMS first set forth the Two-Midnight Rule, which provided that inpatient admission is reasonable if an inpatient stay spans two nights or if the admitting practitioner reasonably expects that the patient would need to receive care for two nights (see As observation regulation grows, ambiguity in application hinders NOTICE requirements, October 4, 2016). The Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) (P.L. 114-42) was passed in an effort to improve beneficiary understanding of their care.

MOON. CMS originally proposed the MOON as a way to standardize notice for all applicable hospitals and critical access hospitals (CAHs). According to the instructions, hospitals must only deliver the MOON to patients receiving outpatient observation services for over 24 hours, but a hospital may deliver the MOON before the 24 hour mark has passed. This flexibility was designed to allow for any state law that requires notice within a 24 hour period, and to allow a hospital to use discretion on when to provide hospital paperwork to beneficiaries to reduce confusion.

Delivery and format. The MOON must be two pages, unless inclusion of permitted additional information results in additional pages. A standardized, written MOON must be explained to the patient orally. Although the use of alternative formats, such as videos, are at a hospital’s discretion, a staff member must be available to answer questions. The standardized form is available in English and Spanish. If a beneficiary or representative is unable to understand the notice, the hospital must use procedures to ensure comprehension.

The beneficiary or representative must sign and date the MOON. A MOON may be delivered and signed electronically. If the beneficiary refuses to sign, and no representative is available, the staff member must annotate the form with the date and time of delivery and sign it. If a representative is not physically present to receive delivery, the hospital or CAH may provide the information over the phone, and annotate the form to reflect delivery. A hard copy must be mailed the same day via a method that can provide signed verification, or a copy may be faxed or emailed if the hospital systems meet privacy and security requirements.

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