Modern Healthcare reports that  providers say that the lack of guidance from CMS about a new rule mandating that hospitals notify Medicare patients why they are receiving “observation” care could cause hospitals to lose billing privileges and patients.

Beneficiaries must spend three consecutive nights as admitted patients in a hospital  for Medicare to cover subsequent skilled-nursing facility costs; observation days don’t count.

The publication reported that  as of March 8 hospitals had to begin “giving out the notices, which alert patients that they received observation care rather than being admitted as an inpatient. CMS estimates as many as 1.4 million beneficiaries will receive the notices every year, and they are meant to cut down on the surprise bills observation patients tend to receive.”

“The CMS requires hospitals to give patients a reason for their observation status, but the CMS has declined repeated requests from hospitals to suggest language that providers should use. Providers are concerned that the vague instructions put them at risk of auditor citations.”

“The stakes are huge in that without guidance from CMS, each auditing organization is left only with their personal interpretation if a hospital is in compliance or not,” Ronald Hirsch, M.D., a vice president at R1 Physician Advisory Services, a consulting firm on billing matters for providers, told Modern Healthcare.

The publication added that a CMS spokesman declined to comment on the issue, but pointed to an FAQ document on the agency’s Web site “that encourages providers to use their clinical judgment when writing the notices and make them ‘reasonably understandable’ to the beneficiary.”

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