Hospital Association of Pennsylvania > Advocacy > Hospital Operations and Oversight > NOTICE-Act-Comment-Letter


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January 4, 2016

Andrew Slavitt
Acting Administrator
Centers for Medicare & Medicaid Services
U.S. Department of Health and Human Services
P.O. Box 8016
Baltimore, MD 21244-8016

RE: Implementation of the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act)

Dear Acting Administrator Slavitt:

On behalf of The Hospital & Healthsystem Association of Pennsylvania (HAP), which represents approximately 240 member institutions, we appreciate the opportunity to comment regarding the Centers for Medicare & Medicaid Services’ (CMS) implementation of the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act).

HAP’s member hospitals and health systems provide services across the continuum of care. In addition to acute care facilities, HAP members include rehabilitation hospitals, behavioral health and long-term care providers, hospice providers, and trauma facilities.

HAP has particular interest in this issue because Pennsylvania has enacted its own law, Act 169 of 2014, the Hospital Observation Status Consumer Notification Act, that requires hospitals to provide notice to a patient (or the patient’s designee) of the patient’s outpatient status, and the impact of the outpatient status regarding insurance coverage. Pennsylvania’s law took effect on April 20, 2015.

With regard to CMS’ implementation of the federal law, HAP offers the following comments:

Certification of Compliance. As previously mentioned, Pennsylvania already has implemented an observation treatment notification law that achieves the policy objectives addressed by the federal NOTICE Act. In light of the existence of similar state laws in Pennsylvania and a handful of other states, HAP recommends that CMS establish a process that permits the review of state laws that address notification to patients and authorizes CMS to "certify" that the state law meets the intent and spirit of the federal requirements. In the event that the state law satisfies the federal requirements, providers that comply with the existing state law could be deemed in compliance with the federal law.

In the event that CMS does not develop this suggested "certification" process, it is important for CMS to design the federal requirements in a way that avoids potential conflicts with existing state laws and minimizes the administrative burden to providers. HAP also recommends that CMS provide guidance about how its federal requirements interact with existing state laws.

Adequate Implementation Timeframe. In order to operationalize the federal requirements, many providers may need to make changes to their information technology infrastructure, revise their policies and procedures, and educate staff. As a result, HAP requests that CMS provide a six-month period for providers to comply following implementation of the new regulatory requirements.

Standard Notice/Template for Written Notification. The federal law requires that the notification must include an explanation of why the patient’s status is categorized as outpatient rather than inpatient. Additionally, the notification must explain the possible financial implications of the patient’s observation status, including information about cost-sharing requirements and subsequent eligibility coverage for services furnished by a skilled nursing facility.

From an operational perspective, case management staff or nursing staff generally are responsible for monitoring the status of the patient and providing notice. Medicare provides that patient status determinations are clinical judgments made by the physician, and nurses and case managers are not in a position to infer the physician’s clinical judgment in order to explain the reason for the status determination to the patient. As a result, HAP recommends that clinical detail should not be required to be included in the explanation of the patient’s outpatient status.

In addition, hospitals already are strained in meeting discharging planning requirements and ensuring proper transitions to the next provider. Hospitals seek multiple referrals at the same time to provide options for placement. Attempting to obtain financial information from multiple post-acute providers/skilled nursing facilities will be labor-intensive and time-consuming. In addition, hospitals often struggle to obtain answers from insurance companies, and phone wait times often are significant (and help lines are often closed after 4:30/5:00 P.M. weekends and holidays). For these reasons, notice requirements that exceed a standard statement that the observation status may result in a greater level of patient cost-sharing and could impact skilled nursing benefits may prolong the patient’s hospital stay.

HAP recommends that providers be permitted to comply with federal notice requirements by issuing a standard non-clinical statement relating to the reason for the outpatient status, as well as notice that the observation status may result in a greater level of patient cost sharing and could impact qualification for skilled nursing benefits. HAP also recommends that CMS provide a standard template that could be adopted by providers to ensure compliance with federal requirements.

Timing of Required Notification. The law requires both oral and written communication to Medicare patients placed into observation status for longer than 24 hours. The law allows for a maximum of 12 hours for the hospital to provide the notification and requires notice to be provided prior to a patient’s release from the hospital.

HAP recommends that time spent in the emergency room should not be considered as part of the 24-hour notice calculation. Additionally, the key insurance coverage issues not controlled by a hospital should be addressed. Specifically, hospitals should not be held accountable for notice of changes in patient status decisions made by an insurer or payer that are outside the control of the hospital, which often HAPpens after a patient leaves a hospital.

Penalties for Non-Compliance. HAP also recommends that CMS describe how it will enforce the federal law, including outlining the penalties for non-compliance. HAP recommends that any penalties be levied through a graduated process, which first provides for a "warning" and corrective action plan, and imposes penalties only after a pattern of non-compliance.

Language Availability. The law requires the notification to be written and formatted using plain language and made available in appropriate languages as determined by the secretary. HAP agrees with this concept, as it promotes patient-centered care; however, printing notices in multiple languages could be cost-prohibitive. HAP recommends that CMS provide hospitals with the flexibility needed to consider their unique patient population as well as the community in which the health care is delivered.

HAP appreciates the opportunity to submit these comments to CMS. If you have any questions regarding HAP’s comments, please feel free to contact me at (717) 561-5325, or Norris Benns, HAP’s vice president, insurance and managed care at (215)-575-3737.



Jeff Bechtel
Senior Vice President
Health Economics and Ploicy

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