Legislation that will require hospitals to notify patients of their status as outpatients has passed Congress and should be signed into law by the President.  Outpatient status limits the patient’s ability to receive Medicare coverage for care in a skilled nursing facility after discharge from the hospital.

The law will apply in situations where a patient is receiving services as an outpatient for more than 24 hours. It will require hospitals to notify those patients of their outpatient status within 36 hours, or, upon discharge if that occurs sooner. The law will become effective one year after it is signed by the President. During that time regulations will be developed to implement the law.

The law will require a hospital to provide an adequate oral and written notification to the patient within 36 hours which:

  • explains the individual’s status as an outpatient and not as an inpatient and the reasons why;
  • explains the implications of that status on services furnished (including those furnished as an inpatient), in particular the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility;
  • includes appropriate additional information;
  • is written and formatted using plain language and made available in appropriate languages; and
  • is signed by the individual or a person acting on the individual’s behalf (representative) to acknowledge receipt of the notification, or if the individual or representative refuses to sign, the written notification is signed by the hospital staff who presented it.

The new law does not cure the problems related to Observation Status.  However, it will help adequately inform some patients that their medical bills may not be covered.

The link below is to the Observation Status bill passed by both the House and Senate.

Observation Status Bill

For a background on the issue related to Observation Status, click here.