[Senate Report 114-107]
[From the U.S. Government Publishing Office]
Calendar No. 186
114th Congress } { Report
SENATE
1st Session } { 114-107
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NOTICE OF OBSERVATION, TREATMENT, AND IMPLICATION FOR CARE ELIGIBILITY
(NOTICE) ACT OF 2015
_______
July 30, 2015.--Ordered to be printed
_______
Mr. Hatch, from the Committee on Finance,
submitted the following
R E P O R T
[To accompany S. 1349]
The Committee on Finance, to which was referred the bill
(S. 1349) to amend title XVIII of the Social Security Act to
require hospitals to provide certain notifications to
individuals classified by such hospitals under observation
status rather than admitted as inpatients of such hospitals,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
I. LEGISLATIVE BACKGROUND
The Committee on Finance, to which was referred the bill
(S. 1349) to amend title XVIII of the Social Security Act to
require hospitals to provide certain notifications to
individuals classified by such hospitals under observation
status rather than admitted as inpatients of such hospitals,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
Background and need for legislative action
On February 11, 2015, Representative Lloyd Doggett (D-TX)
and Representative Todd Young (R-IN) introduced H.R. 876,
legislation requiring hospitals to notify Medicare
beneficiaries, who have been in a hospital for at least 24
hours, if they have been classified by the facility as
receiving care under outpatient observation status or if they
have been admitted as an inpatient. H.R. 876 was favorably
reported by the Committee on Ways and Means on February 26,
2015. On March 16, 2015, H.R. 876 passed the House of
Representatives by a vote of 395-0 (Roll Call Vote Number 115).
On March 14, 2015, Senator Benjamin L. Cardin (D-MD) and
Senator Michael B. Enzi (R-WY) introduced S. 1349, the Notice
of Observation Treatment and Implication for Care Eligibility
(NOTICE) Act. S. 1349 is identical to the House-passed bill,
H.R. 876. S. 1349 provides Medicare beneficiaries accurate and
timely information about their patient status. Prior notice
will provide Medicare patients increased certainty regarding
their status as an outpatient under observation or as an
inpatient admission in the hospital setting. S. 1349 requires a
hospital provide Medicare patients the following:
Explanation for the reason behind a Medicare
patient's classification as either outpatient or
inpatient;
Clarification on how a Medicare patient's
classification under outpatient status impacts the
individual's eligibility for Medicare coverage for
certain items and services (such as skilled nursing
facility care) as well as the individual's cost-sharing
liabilities;
Name and title of the hospital staff member
who delivered the required oral notification to the
Medicare patient as well as the date and time of the
notification; and
Requirement that the hospital written
notification be signed by the patient to acknowledge
receipt. If the patient refuses to sign, then the staff
of the hospital who presented the written notification
must sign the document indicating that notice was
provided.
II. EXPLANATION OF THE BILL
A. Amend title XVIII of the Social Security Act to require
hospitals to provide certain notifications to individuals
classified by such hospitals under observation status rather
than admitted as inpatients of such hospitals.
PRESENT LAW
Under Medicare payment rules, services furnished to
beneficiaries as hospital inpatients are generally billed under
the Inpatient Prospective Payment System, while services
furnished to outpatients are generally billed under the
Outpatient Prospective Payment System. Beneficiaries' liability
for Medicare cost-sharing can be impacted by whether the
beneficiary was admitted as an inpatient or treated on an
outpatient basis. In general, Medicare Part A requires
beneficiaries to pay an inpatient deductible ($1,260 in CY2015)
if they are admitted to the hospital. For beneficiaries who
receive hospital outpatient services, beneficiaries typically
pay 20 percent of the Medicare reimbursement amount for
outpatient items and services after paying the annual Part B
deductible ($147 in CY2015). Therefore, beneficiaries who
receive several outpatient services could potentially have
greater cost-sharing liabilities as an outpatient under
observation than if they were admitted as an inpatient to the
hospital. In 2012, according to the Health and Human Services
Office of Inspector General, for 6 percent of all observation
stays, beneficiaries paid more than the inpatient deductible.
In addition, beneficiaries' coverage for Medicare skilled
nursing facility (SNF) services depend on whether or not they
were admitted to an acute care hospital as an inpatient, or
were treated as an outpatient. To receive coverage for SNF
services following a beneficiary's hospitalization, the
Medicare statute requires that the beneficiary had a qualifying
hospital inpatient stay of at least three consecutive days. For
purposes of SNF coverage, the time spent under observation does
not count towards the requirement of a three-day hospital
inpatient stay.
The number of Medicare beneficiaries receiving outpatient
observation care over the last several years has been steadily
increasing. Some beneficiaries are surprised to learn that
although having received treatment overnight in a hospital bed,
the beneficiary was never formally admitted as an inpatient but
was instead a hospital outpatient. In most cases, beneficiaries
who spend 24 hours or more in a hospital as an outpatient are
under ``observation.'' Observation care is often characterized
as a component of emergency medicine which allows hospitals to
triage patients who do not immediately require a hospital
inpatient admission but are too sick to immediately discharge.
Under observation, the hospital provides assessment, ongoing
short-term treatment, and reassessment before determining
whether or not the patient should be admitted as an inpatient
for additional treatment or the patient is well enough to be
discharged from the outpatient department. Current law does not
include a specific requirement that hospitals notify Medicare
beneficiaries of their patient status.
EXPLANATION OF PROVISION
Beginning one year after the date of enactment, S. 1349
would require hospitals and critical access hospitals (CAHs) to
provide a written notification to an individual who has
received observation services for more than 24 hours, that
explains: (1) the status is outpatient and not inpatient care,
and the reasons for such status, (2) the implications of such
status for cost-sharing requirements under Medicare and
eligibility for SNF care, and (3) other information the
Secretary determines appropriate. The written notification is
to be provided no later than 36 hours after the time the
individual began receiving observation care and must be signed
by such individual (or a person acting on the individual's
behalf) or by the staff member of the hospital or critical
access hospital that provided such notification in cases where
the individual refuses to provide a signature. The written
notification must be formatted using plain language and made
available in appropriate languages as determined by the
Secretary. An oral explanation of the written notification must
also be provided.
EFFECTIVE DATE
The provision becomes effective 12 months after the date of
enactment.
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimates
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
B. Budget Authority
In compliance with section 308(a)(1) of the Congressional
Budget and Impoundment Control Act of 1974 (P.L. 93-344), the
Committee states that no provisions of the bill as reported
involve new or increased budget authority.
C. Consultation With Congressional Budget Office
In accordance with section 403 of the Congressional Budget
and Impoundment Control Act of 1974 (P.L. 93-344), the
Committee advises that the Congressional Budget Office has
submitted a statement on the bill. The following is the cost
estimate provided by the Congressional Budget Office pursuant
to section 402 of the Congressional Budget Act of 1974.
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 9, 2015.
Hon. Orrin G. Hatch,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1349, the Notice of
Observation Treatment and Implication for Care Eligibility Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Jamease
Kowalcyzk and Kevin McNellis, who can be reached at 226-9010.
Sincerely,
Keith Hall.
Enclosure.
S. 1349--Notice of Observation Treatment and Implication for Care
Eligibility Act As ordered reported by the Senate Committee on
Finance on June 24, 2015
S. 1349 would require hospitals to notify Medicare
beneficiaries receiving observation services for more than 24
hours of their status as an outpatient under observation. The
written notification would have to explain that, because the
beneficiary is receiving outpatient--rather than inpatient--
services:
The beneficiary will be subject to cost-
sharing requirements that apply to outpatient services,
and
The beneficiary's outpatient stay will not
count toward the three-day inpatient stay required for
a beneficiary to be eligible for Medicare coverage of
subsequent skilled nursing facility services.
Enacting S. 1349 could affect direct spending; therefore,
pay-as-you-go procedures apply. CBO expects that some
beneficiaries would decide to receive a different set of
medical services after being notified of their observation
status than they would under current law. Those decisions could
either increase or decrease costs, depending on each
beneficiary's particular needs and preferences. However, CBO
estimates those effects would not be significant over the 2015-
2025 period. Enacting the bill would not affect revenues.
S. 1349 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
On March 13, 2015, CBO provided a cost estimate for H.R.
876, as ordered reported by the House Ways and Means Committee
on February 26, 2015. The bills are the same, as are the
estimated budgetary effects.
The CBO staff contacts for this estimate are Jamease
Kowalcyzk and Kevin McNellis. The estimate was approved by
Holly Harvey, Deputy Assistant Director for Budget Analysis.
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the Committee states that, with a
majority present, the ``Notice of Observation, Treatment, and
Implication for Care Eligibility (NOTICE) Act'' was ordered
favorably reported by voice vote on June 24, 2015.
V. REGULATORY IMPACT AND OTHER MATTERS
A. Regulatory Impact
Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact that might be
incurred in carrying out the provisions of the bill.
Impact on individuals and businesses, personal privacy and paperwork
In carrying out the provisions of the bill, there is no
expected imposition of additional administrative requirements
or regulatory burdens on individuals or businesses. The
provisions of the bill do not impact personal privacy.
B. Unfunded Mandates Statement
The Committee adopts as its own the estimate of federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act of 1995 (P.L. 104-4). The Congressional Budget Office
estimates the bill would not impose intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act and would impose no costs on state, local, or tribal
governments.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).
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