On December 8, 2016, the Centers for Medicare and Medicaid Services (CMS) published the Medicare Outpatient Observation Notice (MOON), which educates Medicare beneficiaries on the effect of outpatient status, particularly as it pertains to cost-sharing requirements and skilled nursing facility (SNF) eligibility. The MOON was published by CMS to implement the Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act), which was enacted on August 6, 2015. The NOTICE Act seeks to eliminate any surprises Medicare beneficiaries might experience after (1) receiving large out-of-pocket costs for a hospital stay in which they received outpatient observation services but were not admitted as inpatients, and (2) learning that time spent under observation does not count toward their eligibility for SNF coverage.

Beginning on March 8, 2017, hospitals and critical access hospitals must provide the MOON to Medicare beneficiaries receiving observation services as an outpatient for more than 24 hours. The MOON must be provided no later than 36 hours from the time the beneficiary begins receiving outpatient observation services (or, if sooner, upon release). The MOON must be accompanied by an oral explanation of the information in the form and must be signed by the beneficiary or the beneficiary’s representative. Failure to provide the MOON to applicable beneficiaries is considered a violation of the hospital’s Medicare provider agreement and could result in termination of the hospital’s Medicare provider agreement.

Hospitals should ensure they understand the NOTICE Act requirements and implement applicable policies and procedures for MOON compliance prior to March 8, 2017.

A copy of the MOON is available from CMS’s website.