By Caral Edelberg, CPC, CPMA, CAC, CCS-P, CHC

President, Edelberg Compliance Associates, Baton Rouge, LA.

Ms. Edelberg reports no financial relationships relevant to this field of study.

Hospital observation services have received much attention in the past several years, because of issues relating to patient copays and charges for Medicare outpatient vs. inpatient services.

CMS is responding to patient concerns that, although they may have perceived their stay as an inpatient stay for an extended period of time, their stay actually was categorized as “outpatient” under existing observation designation requirements.

This often results in higher charges than expected, but more significantly, required nursing home coverage may not qualify under current provisions.

In an effort to address these issues, CMS has developed the Medicare Outpatient Observation Notice (MOON), effective for dates of service beginning Feb. 21, 2017, under CMS-10611 Transmittal 3695, dated Jan. 20, 2017. The MOON is mandated by the Federal Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, which became law on Aug. 6, 2015.

What Is MOON?

MOON is the form required to inform all Medicare beneficiaries when they are considered outpatients and receiving observation services. They would not be considered as inpatient status in a hospital or critical access hospital (CAH).

The MOON must be delivered to beneficiaries or their representatives (original Medicare fee-for-service and Medicare Advantage enrollees) who receive observation services as outpatients for more than 24 hours.

However, the MOON must be provided no later than 36 hours after observation services begin. Also included are beneficiaries who:

  • do not have Part B coverage;
  • are subsequently admitted as an inpatient prior to the required delivery of the MOON; and/or
  • designate Medicare as either the primary or secondary payer.

What Is the Observation Period?

During the observation period, documentation must clearly identify the time of placement into observation and the time the patient is either discharged, transferred, or admitted to the hospital.

Once the patient reaches the 24-hour observation mark, the MOON applies. As a precaution, patients may receive the MOON upon placement in observation, as it must be delivered no later than 36 hours after observation services begin.

Imagine a busy ED placing the patient in observation status and watching the clock for the magic 24th through 36th hours to assure that the MOON has been reviewed and signed by the patient and hospital representative. This is not an easy task in a busy ED.

As it must be delivered within 36 hours after observation, providing the MOON at the time of transfer into observation status removes the possibility of delay should the observation period exceed 24 hours.

Observation start time is defined as the clock time observation services are initiated as documented in the patient’s medical record following the physician’s order.

Important Considerations

CMS has provided the appropriate MOON forms for use by institutions and allows some modification within certain limits.

The most important considerations are the requirements for the type of information that must be provided on the form:

  • patient name;
  • patient number;
  • reason the patient is an outpatient.

In addition, the following must be assured:

  • signature of the patient or representative indicating an understanding of the contents;
  • presence of a staff person and, we recommend, signature of that individual, attesting that the patient and/or representative understands the document;
  • availability of institution staff to address any questions or concerns.

How Does One Define Notification?

Both the standardized written MOON form and oral notification must be provided and documented in each patient’s medical record.

In instances in which the patient refuses or is unable to sign the MOON and there is no patient representative to sign on the patient’s behalf, the notice must be signed by the staff member of the hospital or CAH who presents the written notification.

This attestation must include the staff member’s signature, name, and title as well as the date and time the notification was presented to the patient. The date and time of the staff member’s signature/attestation becomes the official date of notice of receipt.

In some cases, patients will require a signature of the authorized representative who may make healthcare decisions on the patient’s behalf. In cases in which a beneficiary is temporarily incapacitated, a family member or close friend who has been determined by the institution to be the representative of the patient, although not legally named as a representative, may be a representative for purposes of receiving the MOON.

Note that this authorization may be obtained in person or over the phone with a hospital/CAH representative documenting the required information.

Documenting Additional Information

The MOON also provides an opportunity for the institution to document additional information about the patient. This might include:

  • contact information for specific hospital departments or staff members;
  • additional content relating to the notice of observation services that may be required by the state;
  • any Part A cost-sharing responsibilities of the patient following admission as an inpatient before the 36 hours following initiation of observation services has occurred;
  • date and time of inpatient admission, if the patient is admitted as an inpatient prior to delivery of the MOON;
  • Medicare Accountable Care Organization information;
  • hospital waivers of beneficiary responsibility for cost of self-administered drugs; and/or
  • unique information pertaining to certain patient circumstances.

All information associated with the MOON must be maintained in the patient’s medical record.

To obtain a copy of the official MOON form, please visit: To obtain instructions, please visit: