New Medicare MOON Rule

New Medicare MOON Rule for Retirement Planning in 2018

Many of my Medicare clients have had questions about the changes in inpatient and outpatient rules and how they financially affect hospital stays and skilled nursing facility visits and decisions.

If you need hospitalization, your hospital status—whether you're an inpatient or an outpatient—affects how much you pay for hospital services like X-rays, drugs, and lab tests. Your hospital status may also affect whether Medicare will cover care you get in a skilled nursing facility (SNF) following your hospital stay.

You're an inpatient starting when you're formally admitted to the hospital with a doctor's order. The day before you're discharged is your last inpatient day.

You're an outpatient if you're getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays, or any other hospital services, and the doctor hasn't written an order to admit you to a hospital as an inpatient. In these cases, you're an outpatient even if you spend the night in the hospital.

The Medicare Outpatient Observation Notice (MOON) went into effect March 8^th, 2017 and applies to those with an Original Medicare hospital stay. It DOES NOT apply to those with Medicare Advantage plans as they have their own rules and options regarding inpatient/outpatient services. The MOON will tell you why you’re an outpatient getting observation services, instead of an inpatient. It will also let you know how this may affect what you pay while in the hospital, and for care you get after leaving the hospital.

If you or a family member needs to stay in the hospital, the MOON (Medicare Outpatient Observation Notice) needs to be provided in written form, signed and dated with an oral explanation from the facility no later than 36 hours from the time the Medicare patient begins receiving outpatient observation services. This time limit is considered the new ‘two midnight stay observation’ policy.

(Note - Observation services are hospital outpatient services you get while your doctor decides whether to admit you as an inpatient or discharge you. You can get observation services in the emergency department or another area of the hospital).

I would recommend referencing the ‘Medicare & You’ handbook that all Medicare households receive in the fall or download a PDF here: Medicare and You. This guide explains in more detail the MOON rule as many Medicare enrollees may have missed this information.