Requires general hospitals to provide notice to patients placed in observation services and explain the implications thereof

Summary of provisions

Section one amends the Public Health Law by adding a new section, 2805-w. Subdivision one requires every general hospital to provide patients placed into observation services with oral and written notice within 24 hours of such placement explaining that the patient is under observation status and has not been admitted to the hospital. The signature of the patient or their legal representative must be obtained to acknowledge receipt. The notice must include a statement informing the patient that observation status may affect the patient's Medicare, Medicaid, and/or private insurance coverage and that the patient should contact their insurer. Subdivision two provides that the commissioner shall develop guidance on the notice.

Section two provides the effective date.

Justification

A little known change at the federal level is having a large impact on hospitals and, in turn, their patients. Patients who think they have been "admitted" to the hospital, are finding out after the fact that they were being "observed" instead. This difference in status comes despite the fact that they have likely been moved from the emergency room to a bed in the hospital just like an admitted patient. Unfortunately, the consequences for Medicare patients are particularly severe as Medicare reimburses differently for outpatient (i.e. hospital observation services). Additionally, the time a patient spends in a hospital under observation status does not qualify them for skilled nursing facility care they may require to rehabilitate. This bill requires that patients be notified verbally and in writing if they are placed in observation status and requires the Department of Health to establish a standard notification form.

The federal Centers for Medicare and Medicaid Services (CMS) has begun requiring hospitals to make a distinction between admitting a patient and observing a patient to further evaluate the patient's condition and need for an admission. Hospitals are being audited to enforce these provisions and where CMS decides that someone should have been in "observation" status they are disallowing any Medicare payment to the hospitals. Since these audits have begun, reports have shown a national increase in the number of patients that hospitals are placing under observation care. However, when a physician orders that a patient receive observation care, the patient's status is that of an outpatient and they lose important Medicare benefits.

As an outpatient, Medicare coverage comes under Part B (doctors' services and outpatient care) rather than under Part A (hospital

insurance) as it would for an admitted patient. This results in some patients paying more out of pocket due to higher co-payments for in-hospital services, especially if they need prescription drugs that, in this situation would be covered under Part A and not under Part B. Additionally, under Medicare rules, patients qualify for full coverage of the first 20 days of post-hospital rehab care in an approved skilled nursing facility only after having spent three full days in the hospital as an admitted patient. Thus, a patient who has been under observation services (for all or part of that time) would be responsible for the cost of the nursing facility care subsequent to the patient's time in observation.

Patients are often not notified of their status and do not realize the difference in out of pocket expense until it comes time to pay for the services. This bill will ensure that patients are notified when they are placed in observation status. of the differences that accompany their status as a patient receiving observation services as opposed to an admitted patient.

Legislative history

New Bill.

Fiscal implications

None.

Effective date

This bill shall take effect immediately provided the hospital notices shall be required 90 days after enactment.