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After more than 18 months of planning by the Centers for Medicare & Medicaid Services (CMS) and a mad scramble by hospitals in response to last-minute guidance, the Medicare Outpatient Observation Notice (MOON) is now the law of the land, and has been since it became effective March 8, 2017.

Yet many hospitals are struggling to determine how to deliver this important notice, according to Ronald Hirsch, MD, vice president of R1 Physician Advisory Services.

Hirsch believes that the problem stems from the notion that CMS “just can’t write a rule with clarity,” noting that there have been a number of fits and starts in getting the MOON rule published.

According to Hirsch, there are five key misconceptions surrounding the MOON that appear to befuddle healthcare providers. In an email to RACmonitor, Hirsch described these issues, which could represent an unsettling view of what is now the new audit lunarscape.

Among Hirsch’s five MOON misconceptions are the following:

  1. The MOON must be given between hour 24 and 36 of observation.
  2. If the hospital does not give the patient the MOON, it cannot bill for the stay.
  3. The physician must complete the MOON, indicating the reason for observation.
  4. The MOON must be presented to the patient by a registered nurse (RN).
  5. If a patient refuses to sign the MOON, they should be admitted as inpatient.

In detailing the first misconception, Hirsch said that while the MOON is required to be given to patients who have had over 24 hours of observation service, it may be given sooner than the 24th hour.

“But CMS does caution providers that patients should be able to properly understand the MOON when (it is) presented, and patients are often overwhelmed at the onset of observation, so caution should be used,” Hirsch said.

When it comes to the second misconception, Hirsch said that CMS has not laid out any policy that makes an observation stay non-payable if the MOON is omitted.

“Unlike a signed admission order, the MOON is not a condition of payment,” Hirsch said. “But,” he added, “if a MOON is missed, a process improvement analysis should be performed.”

Hirsch went on to note that “some hospitals are electing to send the patient a copy of the MOON, but that is not a CMS requirement.”

What about the third misconception? According to Hirsch, CMS has not specified such a requirement.

“The MOON does require a clinical reason specific to the patient, and it is the physician who makes that determination and orders observation, but the form does not need to be completed by the physician,” Hirsch said.

Hirsch believes the confusion associated with the fourth misconception comes from the fact that CMS used the RN salary scale as a cost estimate when the agency was required to submit the MOON for approval by the Office of Management and Budget (OMB). Hirsch noted that CMS has stated that hospitals are in the best position to determine who is most appropriately qualified to deliver the MOON.

And finally, the fifth misconception, which could be considered among the most contentious, links back to the issue of inpatient versus observation status. In the event the patient refuses to sign the MOON, the patient should not be admitted as an inpatient.

“If a patient refuses to sign the MOON after the oral explanation, a notation should be made on the MOON of such refusal, with the name of the person providing the explanation and a copy of the unsigned MOON left with the patient,” said Hirsch. “They should not be admitted as inpatient.”


Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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