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MOON Advisory: Medicare Updates Observation Status Rules

By Christopher Cheney  
   December 08, 2016

Beginning in March, hospitals will be required to notify Medicare beneficiaries of the financial consequences of receiving at least 24 hours of hospital services under outpatient status.

An updated version of the Medicare Outpatient Observation Notice (MOON), which alerts Medicare beneficiaries about the potential coverage consequences of inpatient vs. outpatient status at hospitals, was released by the Centers for Medicare & Medicaid Services this week.

By March 8, 2017, hospitals will be required to present the MOON advisory in writing and verbally to Medicare beneficiaries who receive at least 24 hours of hospital services under outpatient status.


Read the MOON


Patient status can have a significant financial impact on how Medicare pays for medical services provided in hospitals and post-acute-care settings such as skilled nursing facilities.

Advisory Highlights
Under the advisory, for outpatient care in a hospital, services are paid under Medicare Part B. "For Part B services, the beneficiary generally pays. Medicare beneficiaries admitted to hospitals as inpatients have their services reimbursed at the higher Medicare Part A rates.

If a Medicare beneficiary is not admitted to a hospital as an inpatient for at least three days, stays at post-acute care facilities are not reimbursable at Medicare Part A rates.

In addition to giving Medicare beneficiaries advance warning about the three-day minimum inpatient-stay requirement for Part A reimbursement of SNF care, MOON also helps alert Medicare beneficiaries about the potential reimbursement consequences of CMS' so-called two-midnight rule.

Two-Midnight Rule
Under the two-midnight rule, which CMS adopted in October 2013, hospital stays for a period of time spanning less than two-midnights are generally not considered appropriate for inpatient status unless a doctor orders inpatient status.

The advisory tells Medicare beneficiaries that a doctor can order inpatient status for any hospital stays.

CMS instructions for MOON give hospital staff the following guidance for presenting the advisory to patients verbally: "explain the notice and its content, document that an oral explanation was provided and answer all beneficiary questions to the best of [your] ability." 

MOON was mandated under legislation adopted in August 2015: the Federal Notice of Observation Treatment and Implication for Care Eligibility Act. MOON, which is administered by CMS, was also included in Medicare's 2017 Inpatient Prospective Payment System final rule.

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


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