BILL NUMBER:S3926

TITLE OF BILL:  An act to amend the public health law, in relation to
patient notice of the provision of observation services

PURPOSE:  Requiring general hospitals to provide notice to patients
placed in observation services and explain the implications thereof

SUMMARY OF PROVISIONS:

Section one amends the Public Health Law by adding a new section,
2805-v. Subdivision one requires every general hospital to provide
patients placed into observation services with verbal and written
notice within 24 hours of such placement explaining that the patient
is under observation status and has not been admitted to the hospital.
The signature of the patient or their legal representative must be
obtained to acknowledge receipt. The notice must include:  when the
observation services began, how observation status may affect the
patient's Medicare, Medicaid, and/or private insurance coverage for
the current hospital services, and contact information for further
understanding. Subdivision two provides that the commissioner shall
develop and make available a standard notice form within 30 days of
the effective date to be used by all general hospitals after that
date.

Section two provides that the act shall take effect immediately.
              

JUSTIFICATION:  A little known change at the federal level is having a
large impact on hospitals and, in turn, their patients. Patients who
think they have been "admitted" to the hospital, are finding out after
the fact that they were being "observed" instead. This difference in
status comes despite the fact that they have likely been moved from
the emergency room to a bed in the hospital just like an admitted
patient.  Unfortunately, the consequences for Medicare patients are
particularly severe as Medicare reimburses differently for outpatient
(i.e. hospital observation services). Additionally, the time a patient
spends in a hospital under observation status does not qualify them
for skilled nursing facility care they may require to rehabilitate.
This bill requires that patients be notified verbally and in writing
if they are placed in observation status and requires the Department
of Health to establish a standard notification form.

The federal Centers for Medicare and Medicaid Services (CMS) has begun
requiring hospitals to make a distinction between admitting a patient
and observing a patient to further evaluate the patient's condition
and need for an admission Hospitals are being audited to enforce these
provisions and where CMS decides that someone should have been in
"observation" status they are disallowing any Medicare payment to the
hospitals Since these audits have begun, reports have shown a national
increase in the number of patients that hospitals are placing under
observation care However, when a physician orders that a patient
receive observation care, the patient's status is that of an
outpatient and they lose important Medicare benefits.

As an outpatient, Medicare coverage comes under Part B (doctors'
services and outpatient care) rather than under Part A (hospital


insurance) as it would for an admitted patient This results in some
patients paying more out of pocket due to higher co-payments for
in-hospital services, especially if they need prescriptions drugs
that, in this situation would be covered under Part A and not under
Part B Additionally, under Medicare rules, patients qualify for full
coverage of the first 20 days of post-hospital rehab care in an
approved skilled nursing facility only after having spent three full
days in the hospital as an admitted patient. Thus, a patient who has
been under observation services (for all or part of that time) would
be responsible for the cost of the nursing facility care subsequent to
the patient's time in observation.

Patients are often not notified of their status and do not realize the
difference in out of pocket expense until it comes time to pay for the
services. This bill will ensure that patients are notified when they
are placed in observation status. of the differences that accompany
their status as a patient receiving observation services as opposed to
an admitted patient.

LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE:  This bill shall take effect immediately.