Medicare Out Patient Observation Notice (MOON)

MOON was developed to inform patients of their status when they are not inpatient of a hospital or critical access hospital (CAH).  This went into effect February 21, 2017 and is to be implemented no later than March 8, 2017.

What is the purpose of MOON you might ask?
Well it's to address the status of patients who come in through the Emergency Room Department and require prolonged treatment or monitoring.  This includes initial assessment and then reassessment to determine whether additional interventional services are warranted beyond observation.  Either the patient will be converted to inpatient status, they will be discharged to home or transferred to another treatment facility.  

It should be written in easily understandable terms for the patient and should indicate that:
a) The physician has ordered outpatient observation services in order to evaluate the beneficiary's symptoms and diagnosis, if known and....
b) The beneficiary's conditions and symptoms will continue to be evaluated to assess whether they will need to be admitted as an inpatient of the hospital or whether they may be transferred or discharged from the hospital.

This allows hospitals to populate the free-text field with a clinical rationale specific to each patient's circumstances, based on the treating physician's clinical judgement.  It should be reasonable and understandable to the patient.

Please note that Psychiatric Hospitals are also subject to the MOON Notice Act.  All hospitals must provide this notice as indicated to both recipients of Original Medicare (Fee for Service) and Medicare Advantage enrollees.

What makes this notice of particular importance is the fact that it impacts payment for services.  Generally speaking, Medicare Part A does NOT cover outpatient services like an observation stay.  Outpatient services are covered by Medicare Part B.  In addition, should the patient require a Skilled Nursing Facility after discharge from the hospital, Medicare Part A will only cover those services if you have had a minimum 3-day medically necessary inpatient hospital stay for a related illness or injury.   The date of discharge is not included in the inpatient stay.

For those patients with Medicaid, Medicare Advantage or another plan they most likely will have different rules for SNF coverage after you are discharged from the hospital.  The patient will want to check with their plan to confirm their benefits coverage. 

To obtain examples of what the notice looks like and for additional information please access the following link from CMS:

Lois McGruder-Jarman, CPC is the Director of Coding & Compliance at MedCycle Solutions, which provides Revenue Cycle Management, Credentialing, Outsourced Coding, and Consulting Services to a number of healthcare providers in a variety of specialties. To find out more about MedCycle services or to sign-up for our free blog, please visit 
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