CMS Misstates the MOON Rules – Don’t Get Fooled

As I had mentioned in a past article, I was tipped off that the new discharge planning Conditions of Participation interpretive guidelines would soon be released. And lo and behold, the updates to the State Operations Manual Appendix A, also known as the interpretive guidelines, were released two weeks ago.

Now, I must admit that the guidelines themselves do not add a lot of information to what we already know about the regulations. I spent several years bugging the Centers for Medicare & Medicaid Services (CMS) to please address in the discharge planning guidelines what to do when a patient wants to transfer to a post-acute facility that has no open beds, but sadly, they did not. That means I am going to stick with my contention that first, if a facility does not have an open bed, it should not be on the choice list given to the patient. Such a facility cannot meet the patient’s needs, and that is a primary requirement for inclusion. And second, if they choose a facility without capacity, they should be offered a facility with capacity, and if they refuse, they can appeal their recommended discharge to the Quality Improvement Organization (QIO).

But another update in that document warrants discussion. And this is important because CMS has used very misleading terminology in their memorandum, which may create confusion in your hospital. Although we have all been using the Medicare Outpatient Observation Notice (MOON) for 10 years, it was not until now that CMS updated their survey guidelines on its delivery.

But CMS messed up. In the document, it states that “this guidance describes the requirements for providing notification to all Medicare beneficiaries that they are outpatients when receiving observation services.” And we all know that is not correct. It is not “all.”

The Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act and the federal regulation only require delivery of the MOON for Medicare and Medicare Advantage (MA) patients who receive 24 or more hours of observation services.

Yes, we can deliver it to every observation patient, but it is not required. For instance, the post-surgical patient who is on post-op Day 1 and needs a few hours of additional care after routine recovery could have observation ordered, but since that will be for a limited time, and certainly less than 24 hours, the MOON is not required.

So, what may happen? A compliance officer may read this memo and review your MOON policy, then determine you are out of compliance. Then the policy gets changed, requiring a MOON for every observation patient, and suddenly, your work has increased needlessly. And one person already posted to a case management user group asking if they need to adjust their policies.

Now, let me assure you, I did contact CMS, and did my best to get them to correct the memo, but they refused. I am at a loss to explain why they could not see the error of their ways, but at least I can say I tried.

But the message for you is to not let the CMS poor choice of words result in a change at your facility. Review the actual regulations, which still clearly state that the MOON is required only if the patient receives over 24 hours of observation services.  

I’d also like to offer an update on CMS’s push for more prior authorization. I have talked about the new prior authorization demonstration project starting in January, called the Wasteful and Inappropriate Service Reduction Model (WISeR), that will use contractors with artificial intelligence (AI) tools to review requests for which CMS will be paying contractors based on savings to the Medicare Trust Fund (meaning they get paid more if they deny more). Well, a congressional representative from Florida introduced an amendment to the budget bill in Congress to cut funding for the program, and eight representatives introduced a resolution condemning it.

No idea if that will have any effect, but we can only hope; not one of us, nor any Medicare beneficiary, needs another Recovery Audit Contractor (RAC)-like program with financial incentives to deny care.