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Patients must be notified of hospital 'observation status'

August 8, 2016
by Nicole Stempak, Senior Editor
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Hospitals must notify patients if they stay more than 24 hours without being formally admitted, according to a new Medicare law.

The new law, The Notice Act, went into effect Saturday and requires patients who receive observation services as an outpatient at a hospital for more than 24 must be notified. Patients could start receiving those warnings next January. The text of the Medicare outpatient observation notice is subject to approval by the White House Office of Management and Budget.

"The financial consequences of observation stays can be devastating for seniors," says Senator Susan Collins, R-Maine, chairwoman of the Senate Special Committee on Aging to The New York Times. A survey by Genworth Financial found the median cost for a private room in a nursing home is roughly $92,000 a year.

In the past, hospitals kept patients in "observation status" for fear of being penalized by Medicare for inappropriate admissions. Those observation days don't count toward the three consecutive days a patient must spend in the hospital as in inpatient for Medicare to cover nursing home stays.