If a patient isn’t admitted, Medicare won’t cover observation care, and won’t cover nursing home care after the patient leaves the hospital. The patient will incur all costs.

What is observation care?
When patients are not sick enough to be admitted to the hospital, but are sick enough to prevent them from going home, they receive observation care.

Under observation care, seniors often don’t know that they haven’t been admitted, because they are receiving care, medicine and treatments. Observation care is considered an outpatient service, though patients stay in the hospital, often overnight, sometimes for days.

What is the new law?
The U.S. Senate passed the NOTICE Act, (officially the Notice of Observation Treatment and Implication for Care Eligibility Act), which requires hospitals nationwide to inform Medicare patients if they are receiving observation care, but have not been admitted. This will allow patients to know up-front that they will have to pay for all of the costs.

President Obama signed the bill last week. The national law will become effective in August 2016.

What about Virginia?
Virginia was the fifth state to pass a version of this law on a state level. During the 2015 General Assembly session, the body passed a law requiring Virginia hospitals to inform patients of their status.

Senator Richard Black (R-Loudoun), the bill’s patron, said to the Richmond Times-Dispatch“The reason it was brought to my attention was because people are getting some nasty surprises when they discover that they’ve got a bill that’s not covered by insurance, or they think they are moving into a skilled nursing home and they discover that they have not met the requirements for that.”

The law became effective July 1, 2015.

Why is this issue getting so much attention?
Observation care is becoming an increasingly popular option for hospitals. Since 2006, observation care claims have risen 91%. Observation stays of 48 hours or longer are up 450% in the same time period, according to this study.

The reason? Medicare won’t pay for admitted patients that could have been in observation care. So hospitals have begun using observation care more frequently to ensure they are reimbursed.

Read this article to learn more about Observation Care.

See what Medicare says about being an inpatient or outpatient, and what each pays during their hospitalization.

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