Skip to main content

Hospitals Now Must Provide Notice About Observation Status

By April 25, 2017December 21st, 2017Uncategorized

Hospitals Now Must Provide Notice About Observation Status

All hospitals must now give Medicare recipients notice when they are in the hospital but only under observation status. The notice requirement is part of a law enacted in 2015 but that just took effect. Signed by President Obama in August 2015, the law
was intended to prevent surprises after a Medicare beneficiary spends days in a hospital under “observation” and is then admitted to a nursing home. Medicare covers nursing home stays entirely for the first 20 days, but only if the patient was first admitted to a hospital as an inpatient for at least three days. Many beneficiaries are being transferred to nursing homes only to find that because they were hospital outpatients all along, they must pick up the tab for the subsequent nursing home stay.

The law, the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, did not eliminate the practice of placing patients under “observation” for extended periods, but it does require hospitals to notify patients who are under observation for more than 24 hours of their outpatient status within 36 hours, or upon discharge if that occurs sooner. The Act required hospitals to begin giving patients this notice as of March 8, 2017. Some states, including California and New York, already require such notice.

To avoid violating the law, hospitals that accept Medicare patients will now have to explain to patients under observation that their hospital stay will not count toward the three-day inpatient stay requirement and that they will be subject to Medicare’s outpatient cost sharing requirements. The law does not make hospital observation stays count towards Medicare’s three-day requirement.

While these 100 days of skilled nursing care that is covered by Medicare is an important benefit to be aware of and to plan for, the more significant issue that people need to plan for is long term skilled nursing expenses that exceed the 100 days and planning to pay for those expenses. Married and single individuals are encouraged to plan for these expenses 5 years ahead of expected need to be in the best possible position to preserve the assets they have acquired during their lifetime. If the medical needs are unexpected, emergency planning steps can be taken as well. Meeting with a skilled elder law attorney who can review and explain qualifying for Medicaid after Medicare runs out is vitally important for the financial well being of you and your loved ones.


Matthew J. Leonard, Esq. has devoted his practice to handling the legal needs of individuals and their business interests through all stages of life. As an attorney with the law firm of Leonard Legal Group, P.C., he has been engaged to handle matters from basic to sophisticated involving Estate Planning, Elder Law, Medicaid Planning, Probate, Trust and Estate Administration, Real Estate, Business Transactions, Business Creation and related litigation.