Medicare Observation Status: Beware of this Coverage Pitfall

After a 3 day or more in-patient hospital stay, an individual transferred from a hospital directly to a nursing home or rehabilitation center is entitled to Medicare coverage for a certain period of time. However, individuals kept on “observation” status are not entitled to such Medicare coverage.

Imagine that your loved one was in the hospital for 3 days and was then transferred to a facility for rehabilitation.  A few weeks later, you receive a bill from the rehab center for $500 per day. Only then do you learn that your loved one was never formally admitted to the hospital but was instead on “observation” status and is therefore not entitled to Medicare coverage in the rehab center. By then, your loved one owes thousands of dollars for their care.

Luckily, this cannot happen anymore.  The Social Security Act has been amended to require notice to Medicare beneficiaries kept on “observation” status after 24 hours.

How It Works:
A Medicare beneficiary in the hospital who has received “observation” services for more than 24 hours must be informed verbally and in writing that s/he is an outpatient, not an in-patient, and the reasons for such status.  The patient or their authorized representative must receive a Medicare Outpatient Observation Notice (“MOON”) no later than 36 hours after observation services began.

Click here for a copy of the MOON form


By knowing your rights, you can advocate for your loved one to make sure your loved one gets the benefits to which s/he is entitled.

As always, contact us if you have any questions. Our Elder Law attorneys are always available to address your questions and concerns.
Call us at 631.390.5000 or click here.

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