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Connecticut Passes Observation Notice Law

On June 12, 2014, Connecticut Governor Dannel P. Malloy signed into law a requirement that, starting October 1, 2014, Connecticut hospitals give oral and written notice to patients placed on observation status for 24 hours or more.  Similar laws already exist in New York and Maryland.  Specifically, Connecticut's law requires:

  1. A statement that the patient is not admitted to the hospital but is under observation status;
  2. A statement that observation status may affect the patient's Medicare, Medicaid or private insurance coverage for hospital services, including medications and pharmaceutical supplies, or home or community-based care, or care at a skilled nursing facility upon the patient's discharge; and
  3. A recommendation that the patient contact his or her health insurance provider or the Office of the Healthcare Advocate to better understand the implications of placement in observation status. 

Observation Status Remains a Problem

We hope that other states will follow the example of Connecticut, New York, and Maryland in requiring hospitals to give notice when patients are put on observation status.  However, even with state mandated notice, observation status will continue to be a vexing problem.  This is largely because for people on Medicare, placement on observation status usually means the loss of insurance coverage for medically necessary post-hospital rehabilitative care in a nursing home. 

A simple change is needed.  If Medicare counted time on observation status toward the three day qualifying hospital stay required for Medicare coverage of care in a nursing home, the observation status problem would largely go away.  To this end, Congressman Joe Courtney of Connecticut and Senator Sherrod Brown of Ohio have introduced H.R. 1179 and S. 569, the Improving Access to Medicare Coverage Act of 2013.  If passed, Medicare would count observation status time toward the three day qualifying hospital stay requirement. 

Alternatively, Medicare must recognize the due process rights of beneficiaries.  Whether the kind of medical care one is receiving while hospitalized is hospital care or care that could be provided in another setting is a factual question over which reasonable minds can disagree.  Thus it is absolutely necessary that Medicare create notice and expedited appeal rights for patients put on observation status.   These rights could prevent the inappropriate loss of insurance coverage for medically necessary post-hospital care in a nursing home. 

Conclusion

We applaud the initiative of Connecticut, New York and Maryland in legislating hospital responsibility for notifying patients that they have been put on observation status.  Going forward, we urge the passage of the Improving Access to Medicare Coverage Act and in the alternative, we ask Medicare to promulgate regulations creating notice and appeal rights for beneficiaries placed on observation status.  In the meantime, those affected by observation status are encouraged to access our self-help packet found at http://cma.benfredaconsulting.com/take-action/self-help-packets-for-medicare-appeals/

And, if you haven't already told your Senators and Representatives to support the Improving Access to Medicare Coverage Act of 2013, do so now!

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