New Rule: Medicare Outpatient Observation Notice (MOON)

No, Medicare Outpatient Observation Notice (MOON) isn’t the moon above the earth we are observing, it’s a new acronym for the new rule.

Medicare OutPatient Observation NoticeWhat is Outpatient Observation Status?

Observation Status is a term used by hospitals to bill Medicare. This status can hurt, in some instances, hospital patients covered under MedicareObservation Status is another word for the “outpatient” category.

While you are in the hospital you could be receiving observation services and you are not admitted as an inpatient. Observation status is covered under Medicare Part B. This can affect what your co-payment (aka 20% that Medicare doesn’t pay) might be.

You have costs associated for services covered under Part B and you may be responsible to pay a co-payment for each outpatient services you receive. Generally, it’s the 20% of the Medicare approved amount after you have paid your Part B deductible. Generally, this is paid by your Supplement/Medigap plan, if you have one. In the past, hospitals have kept patients in Observation status.

This can become costly as Observation services may affect coverage and payment of your care after you leave the hospital. If Medicare denies any coverage after Outpatient status, did you know that your Medigap plan will not pay for it. They only pay for the 20% of Medicare’s allowed charge.

You can also be denied payment for a Skilled Nursing Facility (SNF) while you are in Observation Status. This could become very costly.

The New Rule (from CMS)

Effective March 7, 2017, all hospitals and critical access hospitals must issue a standardized Medicare Outpatient Observation Notice (MOON) under certain circumstances.

The MOON notice was developed to inform beneficiaries (including Medicare health plan enrollees) that they are an outpatient receiving observation services and are not an inpatient. The notice must:

  • Provide written and oral notice within 36 hours, to patients who are in observation or other outpatient status for more than 24 hours
  • Must explain the reason the person is an outpatient and the implications of that status on cost-sharing and eligibility for SNF (skilled nursing facility) care
  • Requires a patient or caregiver signature
  • Explain that CMS offers no appeal rights

The MOON is mandated by the federal Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), passed in August, 2015.

If you have any questions about your observation services, ask the hospital staff member giving you this notice or the doctor providing your hospital care. You can also ask to speak with someone from the hospital’s utilization or discharge planning department.

You can also call 1-800-MEDICARE (1-800-633-4227).   TTY users should call 1-877-486-2048.

Other Medicare Enrollment

If you’re enrolled in a Medicare Advantage plan (like an HMO or PPO) or other Medicare health plan (Part C), your costs and coverage may be different. Check with your plan to find out about coverage for outpatient observation services.


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