MHI – Q: What is a Medicare Outpatient Observation Notice?

Posted by MedEd at MHI
A: The Medicare Outpatient Observation Notice (MOON) is written documentation provided to people on Medicare who are hospitalized without actually being admitted to the hospital. Sounds confusing, doesn’t it?

Staying overnight in the hospital does not necessarily mean you are an inpatient. You are not considered an inpatient if you are receiving care in the ER or having outpatient surgery. If it hasn’t been determined whether your condition is serious enough to meet Medicare’s requirement for hospital admission, your status would be “observation” rather than “inpatient”.

Why would you care? Medicare will not cover the cost of any skilled nursing care needed after leaving the hospital unless you have had three consecutive days in inpatient status. With a co-pay of $164.50 per day for skilled care, a status of “observation” rather than “inpatient” can result in thousands of dollars in medical bills.

Unfortunately, we can’t simply tell the hospital to assign us the preferred “inpatient” status. The decision as to whether our status is “inpatient” or “observation” is determined by a specific set of guidelines set up by Medicare. Our preferences have nothing to do with it. It’s like my father used to tell me “Jan, it’s not what you want in this world; it’s what you get.”

Hospitals are now required to provide Medicare beneficiaries copies of the Medicare Outpatient Observation Notice if they are in observation status for more than 24 hours. The MOON informs them that any skilled care required when they leave the hospital will not be covered by Medicare. Clearly, this does resolve the issue of Medicare failing to cover the cost of skilled care for those in observation status, but it does remove the element of surprise associated with it.

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