Press Release

May 18, 2015
Cardin, Enzi Introduce NOTICE Act to Ensure Seniors Know Their Hospital Status Long Before the Bills Arrive

BALTIMORE – U.S. Senators Ben Cardin (D-Md.) and Mike Enzi (R-R-Wyo.), both members of the Senate Finance Health Care Subcommittee, announced that they have introduced S. 1349, Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act. The legislation is designed to save seniors under Medicare Part A the sticker shock that comes after they are discharged from the hospital and realize that Medicare will not cover the cost of post-acute care in a skilled nursing facility, simply because their overnight stays in a hospital were classified as outpatient observation instead of inpatient admissions. This no-cost legislation would require hospitals to notify Medicare beneficiaries of their outpatient status within 36 hours after the time of their classification or, if sooner, upon discharge. Outpatient status affects a patient’s ability to receive Medicare coverage for post-acute care in a skilled nursing facility after discharge from the hospital. The House version of the NOTICE Act, H.R. 876, was introduced by Rep. Lloyd Doggett (D-Texas-35) and recently passed the House unanimously by a vote of 395-0.


“Common sense would say that if you are kept overnight for multiple nights in a hospital that you are most likely being treated as an inpatient. The reality is very different and seniors and their families, at a vulnerable time in their recovery, are being hit with exorbitant bills with no warning,” said Senator Cardin. “Seniors have a right to know when their overnight stays in the hospital are classified as something other than an inpatient admission and what that means for Medicare coverage of any post-acute care needed after they are discharged from the hospital.”


“This bill is about helping seniors understand when their treatment after a hospital stay will be covered by Medicare and when it isn’t,” said Senator Enzi. “With this little bit of information we can help people feel a little bit more secure in their medical care.”


“As its name suggests, the NOTICE Act gives Medicare patients notice when they are about to be billed personally, potentially many thousands of dollars, after being categorized as ‘under observation’ in the hospital,” said Congressman Doggett. “This legislation, which has already been approved by the House, equips patients and caregivers with the knowledge necessary to be their own advocates, and it combats an unfair and costly practice.”


Under current law, Medicare will only cover post-acute care in a skilled nursing facility (SNF) if the beneficiary had three consecutive days of hospitalization as an inpatient -not counting time spent in the Emergency Department or the day of discharge. Many hospitals, however, are not admitting beneficiaries as inpatients, but instead classify them under “outpatient observation” for billing purposes, even though these patients may spend multiple nights in the hospital and receive the same type and level of care as inpatients. This means that Medicare will not cover post-acute SNF care for these “outpatient observation” patients after they are discharged from the hospital, which can result in thousands of dollars in out-of-pocket costs for those Medicare beneficiaries. 


Under S. 1349, the NOTICE Act, hospitals must notify patients to

  • Explain the individual’s status as an outpatient under observation (or any similar status) and not as an inpatient;
  • Explain the reason for that classification;
  • Explain the implications of that outpatient status on the individual’s eligibility for Medicare SNF coverage as well as cost-sharing requirements;
  • Include appropriate additional information;
  • Be written using plain language and available in appropriate languages; and
  • Be signed by the individual (patient) or his or her representative to acknowledge receipt, or if the individual or representative refuses to sign, it must be signed by hospital staff.


An Office of Inspector General (OIG) report found that the average out-of-pocket cost for SNF services not covered by Medicare was more than $10,000 per beneficiary.

A study published in Health Affairs found that the ratio of hospital observation stays to inpatient admissions increased by 34% between 2007 and 2009.  The same study also found that the number of observation stays exceeding 72 hours has increased by 88%.