MOON Medicare Outpatient Observation Notification

MOON is the catchy acronym for the Medicare Outpatient Observation Notice which goes into effect tomorrow (August 6, 2016)*. This was created to fulfill the requirements of the Notice Act passed one year ago, requiring hospitals to provide written notification (the MOON) and a verbal explanation to individuals receiving observation services as outpatients for more than 24 hours.

What is “observation status”?

We have been educating clients and our readers on this issue for some time now as we have seen this become a growing problem for patients and families who have often been caught unaware of this sometimes confusing status when in the hospital. Observation status is typically used as a way for a physician to decide if a patient needs to be admitted to the hospital or discharged, but for many patients and families this has been unclear and has been happening for longer periods of time (it is usually done for 48 hours or less but even at 48 hours many patients would be surprised to know they haven’t been “admitted” to the hospital). You can read more in our article, Think You’ve Been Admitted to the Hospital? Beware of Observation Status.

Why does observation status matter?

Observation status can affect your costs (potentially drastically) and the covered services available to you for after-care.

Costs while in the hospital:

Medicare Part B covers outpatient hospital services (observation services are considered outpatient). Generally, if you have Medicare Part B, you pay:  a copay for each individual outpatient hospital service that you receive and 20% of the Medicare-approved amount for most doctor’s services, after the Part B deductible. Part B copayments may vary by type of service. In most cases, your copayment for a single outpatient hospital service won’t be more than your inpatient hospital deductible. However, your total copayment for all outpatient services may be more than the inpatient hospital deductible. In other words, the costs you incur during “observation status” in the hospital may be greater than if you received similar services as an inpatient. If you’re enrolled in a Medicare Advantage plan, your costs and coverage are determined by your plan.


If you need a skilled nursing facility (SNF) after you leave the hospital, Medicare Part A will only cover it if you have a prior qualifying inpatient hospital stay. A qualifying inpatient hospital stay means you’ve been a hospital inpatient for at least 3 days in a row (not counting the day of discharge). If you were in the hospital three days but under observations status some or all of that time, you could not get your SNF care covered. Rehabilitation and skilled nursing in a SNF costs hundreds of dollars/day so this difference could quickly cost you thousands of dollars.

How does MOON aim to help?

Effective August 6th, the NOTICE Act requires that hospitals provide written and oral notice, within 36 hours, to patients who are under observation/outpatient status for more than 24 hours.  The notice must explain the reason that the patient is an outpatient (though there has been some criticism that it does not require specific enough information and this is one of the few Medicare notices which cannot be appealed) and describe the implications both for cost-sharing in the hospital and for subsequent “eligibility for coverage” in a SNF.

How can we help when your loved one is hospitalized?

Our care managers provide hospital patient advocacy to help ensure you get your MOON and understand all the key components of your hospitalization. They coordinate and communicate with your family and providers and help you navigate through the ER, tests, procedures, departments, and options. Our team can provide caregivers to be at the hospital with you and help keep you safe after a hospitalization. We’re here to help keep you informed about important changes like this one, as well as to understand all the details so you don’t have to worry!

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*UPDATE: CMS Delays Implementation of NOTICE Act in Final Rule: the final rule will now be effective October 1, 2016. We will update you with more as the date approaches. Follow us on Facebook or sign up for our newsletter for the latest.