Medicare proposes new explanation of hospital admission status

In just two months, a federal law kicks in requiring hospitals to tell their Medicare patients if they have not been formally admitted and why. But some physician, hospital and consumer representatives say a notice drafted by Medicare for hospitals to use may not work.

The law was a response to complaints from Medicare patients who were surprised to learn that although they had spent a few days in the hospital, they were there for observation and were not admitted. Observation patients are considered too sick to go home yet not sick enough to be admitted. They may pay higher charges than admitted patients and do not qualify for Medicare's nursing home coverage.

The NOTICE Act requires that starting Aug. 6, Medicare patients receive a form written in "plain language" after 24 hours of observation care but no later than 36 hours. Under the law, it must explain the reason they have not been admitted and how that decision will affect Medicare's payment for services and patients' share of the costs. The information must also be provided verbally.

Brenda Cude, a National Association of Insurance Commissioners consumer representative and economics professor at the University of Georgia, said the notice assumes "insurance knowledge that we are fairly certain most people don't have."

Medicare officials have expressed support for efforts to explain observation care. "We are in complete agreement with the notion that the patient should certainly know their status and know it as early as possible," Sean Cavanaugh, Medicare's deputy administrator, told a Senate panel.

Many hospitals also support the effort. "It's important for patients to understand their status," said Katie Tenoever, senior vice president and general counsel for the Federation of American Hospitals.

But the form does not meet the expectations of Rep. Lloyd Doggett, D-Texas, who co-sponsored the law.

"I am concerned that the proposed notice fulfills neither the spirit nor the letter of the law," Doggett said.

It doesn't require the hospital to explain exactly why the patient is getting observation care instead of being admitted, he said, and doesn't clearly explain the difference between Medicare's benefits.

The notice, he said, also does not sufficiently explain why observation patients are ineligible for Medicare's nursing home coverage.