Knowledge Base Article

Hospitals are at T-7 days for the March 8, 2017 compliance date with the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act). In the spirit of last minute preparations, this article is meant to reinforce key definitions, provide CMS responses to comments found in the 2017 IPPS Final Rule in the form of questions and answers and links to MOON resources.

Definitions

The MOON is intended to inform beneficiaries who receive observation services for more than 24 hours that they are outpatients receiving observation services and not inpatients, and the reasons for such status.

• Outpatient Defined
  The Medicare Claims Processing Manual (Pub. 100-04), Chapter 1, Section 50.3.1, defines an Outpatient as “a person who has not been admitted as an inpatient but who is registered on the hospital or critical access hospital (CAH) records as an outpatient and receives services (rather than supplies alone) directly from the hospital or CAH.”

• Observation Services
  Observation services are “services that are reasonable and necessary, specifically ordered by a physician or other nonphysician practitioner authorized by State licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient services, and meet other published Medicare criteria for payment.”
  
  “Individuals receiving observation services will always be registered as outpatients; however, not all outpatients receive observation services.”

• Decision to order Observation Services
  “By definition… the reason for ordering observation services will always be the result of a physician’s decision that the individual does not currently require inpatient services and observation services are needed for the physician to make a decision regarding whether the individual needs further treatment as a hospital inpatient or if the individual is able to be discharged from the hospital.” (Source: 2017 IPPS Final Rule referencing the Medicare Benefits Policy Manual (Pub. 100-02), Chapter 6, Section 20.6.)

Questions and Answers

Again, CMS’ responses to comments from the 2017 IPPS Final Rule have been formatted as Questions and Answers.

Question: Several commenters requested clarification as to whether the timeframe starts:

1. After services begin following the written order for observation services;
2. When related services commence if such services commence before the written order was executed and the patient occupies an outpatient bed count; or
3. Based on the documentation of when nursing care began.

Answer: CMS indicated “there may be times when an individual is subject to an order for observation services, but is not actually receiving observation services. For example, following an order for observation services in an emergency department, a hospital may need to wait to begin furnishing observation services until a bed is available for the patient. In this situation, services are considered initiated when observation services commence.”

They went on to clarify “that the start of observation services, for the purposes of determining when more than 24 hours of observation services have been received, is the clock time as documented in the patient’s medical record at which observation services are initiated (furnished to the patient) in accordance with a physician’s order.”

Question: Will time be counted as Billable or Elapsed Time?

Answer: CMS believes using elapsed time is most consistent with language in the NOTICE Act. “Therefore, for purposes of identifying the 24-hour timeframe for which an individual has received observation services, and thus is required by the NOTICE Act to receive notice by the hospital or CAH, observation time will be measured as the elapsed time in hours beginning at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order.”

Question: What if the Inpatient Admission occurs prior to delivery of the MOON?

Answer: As recommended by a commenter, CMS agrees that when “an inpatient admission occurs prior to delivery of the MOON, the MOON should be annotated with date and time of the inpatient admission. Therefore, we are requiring that, in the event that a patient is subsequently admitted as a hospital inpatient directly after receiving observation services for more than 24 hours, and the inpatient admission occurs prior to delivery of the MOON, the MOON be annotated with the date and time of the inpatient admission. Additional guidance regarding elements for the free text field of the MOON will be provided in the CMS Internet Only Manual.”

Question: How will the MOON work with the 2-Midnight Policy?

Answer: “The NOTICE Act requires hospitals to inform patients who have remained outpatients of the hospital and received observation services for more than 24 hours that they are not hospital inpatients and are subject to potentially different cost-sharing requirements and postacute care benefits than someone who has been admitted as an inpatient. We note that a scenario could arise whereby a patient is admitted to the hospital immediately after being a hospital outpatient receiving observation services for greater than 24 hours. In such a scenario, the inpatient admission may be payable under Medicare Part A under the 2-midnight policy and, as stated earlier, the hospital or CAH would still be required to furnish the MOON to the patient within 36 hours after the time the individual begins receiving observation services.”

Question: Can a Hospital or CAH deliver the MOON before an individual has received more than 24 hours of observation services as an inpatient?

Answer: Yes.

• This affords hospitals flexibility to deliver the MOON consistent with any applicable state law requiring notice within 24hrs.
  
  Note: “Hospitals and CAHs subject to State law notice requirements may also attach an additional page to the MOON to supplement the “Additional Information” section in order to communicate additional content required under State law, or may attach the notice required under State law to the MOON.”

• This allows hospitals and CAHs to spread out the delivery of the MOON and other hospital paperwork in an effort to avoid overwhelming and confusing beneficiaries.
  
  Note: CMS does not encourage delivery of the MOON at the initiation of outpatient observation services.

Question: Can the MOON form be altered?

Answer: No, because the MOON is a standard form approved by the Office of Management and Budget (OMB), Hospitals and CAHs are not permitted to alter the included language, only the information to be included in the free text fields.

The MOON must remain two pages, except as needed for the additional information field. The pages of the notice can be two sides of one page or one side of separate pages, but must not be condensed to one page.

Hospitals may include their business log and contact information on the top of the MOON. Text may not be shifted from page 1 to page 2 to accommodate large logos, address headers, or any other information.

Question: Can you use “drop down” boxes in the free text field for telling the patient why they are not an inpatient?

Answer: CMS indicates in the 2017 IPPS Final Rule, “We may consider, in the future, the other suggestions commenters made to improve the MOON, such as checkboxes with common reasons for the patient’s outpatient status or suggested narratives for insertion in this section.”

Question: If more space is needed for “Additional Information”, may a Hospital attach additional pages to the MOON?

Answer: Yes

Question: Can you (CMS) clarify the effect of a resident’s order for services on the counting of hours of observation care?

Answer: “To the extent that a resident is authorized by State licensure law and hospital staff bylaws to order outpatient services, once observation services are initiated in accordance with the resident’s order, the 24 hour time period will commence.”

Question: What do you do if the individual receiving the notice is unable to read its written contents and/or comprehend the required oral explanation?

Answer: As discussed in the proposed rule (81 FR 25134), an English language version of the proposed MOON was submitted to OMB for approval. We stated in the proposed rule that once we receive OMB approval, a Spanish language version of the MOON will be made available. If the individual receiving the notice is unable to read its written contents and/or comprehend the required oral explanation, we expect hospitals and CAHs to employ their usual procedures to ensure notice comprehension. (We refer readers, for example, to the Medicare Claims Processing Manual (Pub. 100–4), Chapter 30, Section 40.3.4.3., for similar existing procedures related to notice comprehension for the Advance Beneficiary Notice of Noncoverage (ABN).) Usual procedures may include, but are not limited to, the use of translators, interpreters, and assistive technologies. Hospitals and CAHs are reminded that recipients of Federal financial assistance have an independent obligation to provide language assistance services to individuals with limited English proficiency (LEP) consistent with section 1557 of the Affordable Care Act and Title VI of the Civil Rights Act of 1964. In addition, recipients of Federal financial assistance have an independent obligation to provide auxiliary aids and services to individuals with disabilities free of charge, consistent with section 1557 of the Affordable Care Act and section 504 of the Rehabilitation Act of 1973.”

Question: Does the beneficiary have appeal rights under the NOTICE Act?

Answer: No, “The MOON is a required informational/educational notice regarding patient status provided by a hospital or CAH when the beneficiary is still in the hospital or CAH and receives observation services as an outpatient for more than 24 hours. The MOON explains the current status of the patient as an outpatient and not an inpatient, in addition to the implications of being an outpatient receiving observation services. As we explained in the proposed rule, delivery of the MOON does not constitute an initial determination issued in response to a claim for benefits, and the MOON itself is not a notice of an initial determination (81 FR 25134). Furthermore, delivery of the MOON by a hospital or CAH does not constitute a denial of coverage of any services, and does not constitute a noncoverage decision with respect to post-hospital SNF care as asserted by the commenter. In fact, generally beneficiaries will still be receiving care when the MOON is delivered and will sometimes be formally admitted as inpatients after delivery of the MOON.

The NOTICE Act does not provide for appeal rights regarding the notice itself, which makes sense given the nature of the document, as explained above. The NOTICE Act also does not afford any new appeal rights beyond those already available (under section 1869 of the Social Security Act), nor does the NOTICE Act limit or restrict currently available appeal rights. Consistent with the legislation, the proposed rule did not propose to expand or limit appeal rights. For the reasons discussed above, we are not adopting the various recommendations with respect to amending the MOON to include appeal rights or an explanation of the lack of appeal rights.”

MOON and Condition Code 44

“In rare circumstances where a physician initially orders inpatient services, but following internal utilization review (UR) performed while the patient is hospitalized, the hospital determines that the services do not meet its inpatient criteria and the physician concurs with UR and orders the discontinuation of inpatient services and initiation of outpatient observation services (that is, a Condition Code 44 situation), we stated in the proposed rule that the MOON would be delivered as required by the NOTICE Act (when outpatient observation services have been ordered and furnished for more than 24 hours). If observation services are ordered when Condition Code 44 applies, the 24-hour time period for observation notification commences at the same time that observation services are initiated under a physician’s order, consistent with existing policy for observation services furnished to outpatients. (We refer readers to the Medicare Claims Processing Manual (Pub. 100–04), Chapter 1, Section 50.3.)

As discussed in the proposed rule and as stated in the notice announcing CMS Ruling CMS–1455–R (78 FR 16614), the Part B Inpatient Billing Ruling, in cases where reviewers find that an inpatient admission was not medically reasonable and necessary after the beneficiary is discharged, and thus, not appropriate for payment under Medicare Part A, the beneficiary’s patient status remains ‘‘inpatient’’ as of the time of the inpatient admission. The patient’s status is not changed to outpatient because the beneficiary was formally admitted as an inpatient, and there is no provision to change a beneficiary’s status after he or she is discharged from the hospital. Where CMS denies a claim after the beneficiary has been discharged because the inpatient admission was not medically reasonable and necessary, there would be no need to issue the MOON because the individual’s status remains inpatient, despite the fact that the inpatient admission was improper. Similarly, where a hospital determines through UR after a beneficiary is discharged that his or her inpatient admission was not reasonable and necessary and the hospital bills the services that were provided on a Medicare Part B claim, the NOTICE Act notification requirements would not apply for these individuals because their status would also remain inpatient.” (Excerpt from page 281-282 2017 IPPS Final Rule pdf document)

MOON Resources

• CMS 2017 IPPS Final Rule web page: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page.html
• See section III. L. Hospital and CAH Notification Procedures for Outpatients Receiving Observation Services (pages 277 – 292 Final Rule pdf document)

• CMS Transmittal 3695, Date: January 20, 2017
  Subject: medicate Outpatient Observation Notice (MOON) Instructions: https://www.cms.gov/Medicare/Medicare-General-Information/BNI/Downloads/CR9935-MOON-Instructions.pdf

• CMS MLN Matters® Number: MM9935: Medicare Outpatient Observation Notice (MOON) Instructions: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9935.pdf

• CMS Beneficiary Notices Initiative web page: https://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html?redirect=/BNI/

• CMS Product No. 11435: Are You a Hospital Inpatient or Outpatient? If You Have Medicare – Ask! at: https://www.medicare.gov/Pubs/pdf/11435.pdf