·  Legal News, Analysis, & Commentary

Health & Medicine

Medicare Turns 50 as the NOTICE Act awaits President Obama’s Signature

— July 31, 2015


Photo courtesy of Healthcare Finance News/Kaiser Health News
Photo courtesy of Healthcare Finance News/Kaiser Health News

The U.S.’s fundamental national healthcare program Medicare, as well as Medicaid officially turned 50 years-old on Thursday. President Lyndon Johnson signed an amendment to the Social Security Act which set the programs into law on July 30th, 1965. Medicare, the landmark program for seniors, now enrolls 55.2 million Americans. While a recent Kaiser Family Foundation poll released this month found that 91 percent of respondents have had a positive relationship with their insurers regarding Medicare billing, many seniors have become confused due to increased modifications to the program over the years that have divided different aspects of the program into various components. Senior director of the National Council on Aging Center for Benefits Access, Leslie Fried, says “Medicare and its alphabet soup of parts are confusing to individuals when they first are eligible for the program.” Fried continued, “the success of the Medicare program and its related marketplaces depends on the ability of millions of consumers to make good decisions about complex insurance and plan options when they first enroll in Medicare and annually thereafter.” Information about Medicare Advantage plans and Medicare Supplement plans is found here.

On Monday, the Senate passed legislation that aims to alleviate one major cause of confusing by unanimously approving the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act. The bill would require hospitals to notify patients when they have received observation care but haven’t been officially admitted to the hospital. The distinction between the two can be a major cause of billing headaches and surprises. The law requires hospitals to provide written explanations within 36 hours of anyone receiving observation care beyond 24 hours as to why they were not admitted to the hospital and its financial implications. Observation care can be a financial disaster for seniors as it prevents more comprehensive hospitalization provisions of Medicare to kick in as well as it may prevent Medicare for paying for nursing home care required by a physician after the observation. In order to qualify for Medicare’s nursing home coverage, seniors must spend three consecutive midnights at a hospital, in which observation care does not count toward.

According to attorney Toby Edelman of the Center for Medicare Advocacy, although the NOTICE Act will benefit seniors by making them aware of the observation classification; he notes that there is not much patients can do about the designation. Unlike other issues like disputing discharges and other billing concerns, there is no set process for disputing an observation designation. Patients can plead for doctors and staff to change their status to an admission, but it is not retroactive and only applies to the time after the permission is granted. Congress stalled a measure put forth by CMS to change the three-midnight rule to two nights, claiming that the rule was confusing and arbitrary. According to a recent CMS study, total Medicare claims have jumped 91 percent since 2006; however a Kaiser analysis notes that observation stays of at least 48 hours have increased by 450 percent during the same period. Some hospital officials are concerned about the NOTICE Act, fearing an increase of patients who will leave hospitals against medical advice. Although federal officials have been reluctant in the past to pass similar legislation, New York, Connecticut, Maryland, Pennsylvania and Virginia all have observation care notice requirements. The bill is awaiting the president’s signature, which is expected.



Med City News – Susan Jaffe

Modern Healthcare – Virgil Dickson

USA Today – Charisse Jones


Join the conversation!