Policy & Regulation News

NOTICE Act Helps Beneficiaries Understand Healthcare Costs

By Sara Heath

In a unanimous vote, the Senate passed the Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) on July 27, according to the American Hospital Association (AHA). On July 29, the bill was presented to the President for his approval. The primary beneficiaries of the act are Medicare patients.

The act, which amends title XVIII of the Social Security Act, requires hospitals to provide adequate oral or written notice to beneficiaries receiving outpatient observational care for more than 24 hours. This notice must be given within 36 hours of the outpatient services or by the time of patient discharge, whichever comes first.

The NOTICE Act also requires hospitals to explain to the beneficiary the reasons for the outpatient care, the implications for the outpatient care – specifically the financial implications – and any and all additional information. Notifications must be written plainly and clearly, be offered in the appropriate language for the beneficiary, and be signed by either the recipient of the care or an individual acting on the beneficiary’s behalf. In the case that neither the beneficiary nor their representative choose to sign, the hospital staff member who administered the outpatient care may sign the notification.

According to the US Senate Finance Committee, the NOTICE Act will improve the way patients will be charged for Medicare services. Prior to the passing of the act, patients had to stay in the hospital for three consecutive days in order to quality for inpatient skilled nursing facility (SNF) care. Therefore, patients were considered “hospital outpatients” and had to pay outpatient fees, even if they had been in the hospital for 24 hours. The NOTICE Act would notify patients of this, and allow them to understand the costs of their care.

Most of hospital outpatients – patients who are staying in the hospital but are treated as outpatients – not yet admitted as inpatient are under what is called “observation.” When beneficiaries are under observation, they are triaged and beneficiaries are sent to the department of the hospital that corresponds to their illness.

“Under observation, the hospital provides assessment, ongoing short-term treatment, and reassessment before determining whether or not the patient should be admitted as an inpatient for additional treatment or the patient is well enough to be discharged from the outpatient department,” the Finance Committee says.

The NOTICE Act’s financial benefits

Although the NOTICE Act would not stop this practice of observation from happening, it will require healthcare facilities to notify patients that they are being observed and are being charged as outpatients.

Because of the out-of-pocket costs of outpatient care, this act has substantial financial benefits for patients. Now, instead of the burden of outpatient care costs being presented to them with no adequate warning or explanation, patients will be able to understand the nature of their conditions, the care they will be receiving, and the potential out-of-pocket costs for that care.

This new act regarding Medicare come right around Medicare and Medicaid’s 50th birthday on July 30, one day after the NOTICE Act was presented to the President for approval. This shows that Medicare and Medicaid are still being improved even 50 years later.