On Monday two U.S. Congressmen introduced the NOTICE Act (for Notice of Observation Treatment & Implication for Care Eligibility and reminding us how hard it can be to come up with a catchy acronym).
The bill would require hospitals to give meaningful notice to patients who have been assigned “observation” status for over 24 hours. Observation status is different from inpatient status under the rules of Medicare and other insurers, and the difference can have real financial implications for a patient. For one thing, the patient’s personal responsibility through copayments or deductibles is usually much greater with observation status. And Medicare covers follow-up nursing home care after an inpatient visit but not an observation visit.
The sponsors note that many patients, having been in the hospital overnight, assume they’re inpatients and are surprised—even shocked—when they get their bills. That’s certainly true.
The sponsors go on to say the bill will give patients an opportunity to argue for a change to inpatient status before discharge. That’s true, too—as far as it goes. Patients would have a chance to argue for inpatient status. But is that really meaningful? Hospitals don’t have discretion in assigning inpatient or observation status. If they did, they’d choose inpatient every time, because it’s financially advantageous to them.
Hospitals also know all about the patient’s financial stake in the decision, and they don’t want an unhappy patient on their hands. They also know that collecting from Medicare or other insurers is a lot easier than collecting from a patient. So they’d love to help. Trouble is, they can’t.
So the practical effect of the bill may be limited to making sure that the patient gets the bad news sooner rather than later.