The Centers for Medicare & Medicaid Services (CMS) has updated the Medicare Outpatient Observation Notice (“MOON”) in English and Spanish, effective April 21, 2026 and requiring its use through February 28, 2029. CMS describes the new MOONs as improving the notice’s readability and design. Although the new MOON is easy-to-read and includes new space for the hospital to explain why the patient is not an inpatient, the notice omits critical, detailed explanations of the consequences of outpatient status for hospitalized patients, as described in prior MOONs. The new MOON does not mention payments for medications in the hospital or the effect of receiving Medicare coverage through a Medicare Advantage plan. Most significantly, the new MOON fails to explain that Medicare Part A coverage at a SNF will not be available unless the patient is admitted as an inpatient for at least three consecutive days, stating only “After you leave the hospital, Medicare may not pay if you go to a skilled nursing facility.”
Why is there a MOON notice at all?
The Medicare program did not historically inform hospital patients when they were called outpatients (not inpatients), even when they were in a hospital bed receiving care and treatment for multiple days. The consequences of outpatient status were significant for patients who needed post-hospital care in a skilled nursing facility (SNF), however; the Medicare program pays for SNF care only if patients are classified as hospital inpatients for at least three consecutive days, not counting the day of discharge.
The Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), enacted August 6, 2025, required hospitals to notify patients who were in observation status for more than 24 hours that they were in observation (not inpatients) and the consequences of their outpatient status. CMS created the MOON and required hospitals to use it. Medicare beneficiaries cannot file an appeal from the MOON.
Better solutions
Although the MOON can provide some information about their hospital status for patients, it is not a sufficient response to the problems that observation status creates for Medicare beneficiaries. One federal legislative response is counting all time in the hospital, whether observation or inpatient, for purposes of satisfying the three-day inpatient requirement. A broader legislative solution to the observation status issue is repealing the three-day inpatient hospital stay requirement for subsequent care in a SNF. See “Repeal the 3-Day Hospital Stay Requirement for Care in a Skilled Nursing Facility” (CMA Alert, Sep. 18, 2025).
Repealing the three-day inpatient requirement would save Medicare money. The Centers for Medicare & Medicaid Services waived the three-day inpatient rule during the COVID-19 pandemic. Recent research finds that reinstatement of the three-day inpatient rule after the end of the public health emergency increased Medicare costs and did not improve patients’ health outcomes. See “3-Day Inpatient Hospital Requirement Increases Total Medicare Costs” (CMA Alert, Feb. 12, 2026).
Additional Rersources
- CMA’s many materials about observation status at https://medicareadvocacy.org/?s=observation+status.
- “Observation Status and the NOTICE Act: Advocates Not Over the MOON” (CMA Alert, Apr. 27. 2016)
- “Further Center Comments on the NOTICE Act – June 2016” (CMA Alert, Jul. 8, 2016)
- “CMS Delays Implementation of NOTICE Act until Fall 2016” (CMA Alert, Aug. 4, 2016)
- “Hospitals Must Give Patients Notice of Their Observation Status, Beginning March 8, 2017” (CMA Alert, Dec. 14, 2016)
- “CMS Issues Instructions Regarding the Medicare Outpatient Observation Notice (MOON)” (CMA Alert, Feb. 15, 2017)
- “Look for the Moon!” (CMA Alert, Mar. 1, 2017)
March 5, 2026 – T. Edelman