Notice Act

The NOTICE Act, or Notice of Observation Treatment and Implication for Care Eligibility Act, requires hospitals nationwide to inform Medicare patients when they are receiving care under observation status. This federal law went into effect on August 6, 2016 and will help many seniors with a costly Medicare loophole that often results in their not being covered for a stay in a nursing home. It won’t make the stay covered, but it will at least put seniors on notice if a stay isn’t covered, so they can plan accordingly and won’t be hit with a surprise.

bivens1Here’s the problem: Medicare covers nursing home stays for the first 20 days, so long as the patient was first admitted to a hospital as an inpatient for at least three days. Unfortunately, many people who spend three days in a hospital later discover that they were never actually “admitted.” Rather, they were merely kept in the hospital “under observation.” As a result, the nursing home stay afterward isn’t covered by Medicare, leaving the patient personally responsible for the cost of the nursing home stay.
Hospitals have increasingly been choosing not to admit patients and to place them under observation instead due in part to pressure from Medicare to reduce costs. As of 2011, some 1.6 million seniors per year were being treated under observation, a dramatic increase from past years.

elder2Frequently, patients have no idea that they haven’t actually been admitted because they receive the same treatment as if they were. Patients who discover after the fact that they have been denied Medicare because of this problem usually have little recourse. As long as Medicare pays for the hospital stay – which it usually does on an outpatient basis – there’s no way to appeal because there has been no denial of coverage. Plus, the denial of coverage for the nursing home stay is technically proper if the patient wasn’t admitted to the hospital for three days.

The NOTICE Act requires 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 notification must explain that because the patient hasn’t been admitted, their hospital stay won’t count toward the three-day requirement, and so Medicare won’t pay for a subsequent nursing home stay.


If you’re further curious about Medicare or elder law, feel free to get in touch with an attorney here at Bivens & Associates. Our team of lawyers specializes in elder law practice.