Everyone knows the rule (but they really don’t) that if you enter a nursing home after a three-day stay in a hospital, Medicare will pay the nursing home bill for a while. That is simply not the case. For the last few years, in a cost-cutting ruse, Medicare has been cajoling hospitals not to admit patients to the hospital, but rather to place them under observation status. That is, to merely “watch” them. There have been cases of loved ones staying overnight in a hospital for a week; being discharged to a nursing home; and later discover their loved one was not admitted to the hospital after all. She was merely being observed. The result-Medicare refused to pay any part of the nursing home bill!
This lunacy resulted in Congress passing the Medicare Outpatient Observation Notice Act, commonly called called “The MOON ACT”. This notice requires that patients who are in a hospital for 24 hours or more and who are not admitted, but rather are simply under observation status, be provided Notice that they are only under observation status. This notice must be provided within 36 hours of their arrival to the hospital. So if your stay at the hospital is covered by your Medicare Part B, then the hospital must provide you with an Advanced Beneficiary Notice (ABN). Further, if they decide that for some reason your stay was not actually necessary and you were under observation status, then you must receive notice to that effect.
The failure by Medicare to pay for expensive hospital stays will be financially devastating. Therefore, any notice of an observation status should be appealed immediately. If you need to file an appeal, feel free to reach out to me in order that I can help you.

Thomas R. Mullen
Thomas R. Mullen has been an attorney since 1977 and has devoted his practice exclusively to elderlaw since 1988. He is nationally recognized as one of the foremost experts on Medicaid planning. His additional Practice areas include estate planning and trusts for disabled people, as well as assisting attorneys with Medicaid lien allocations and the Medicare Secondary Payer Act. In the Spring 2013 issue of the National Academy of Elder Law Attorneys (NAELA) Journal, Attorney Thomas R. Mullen of Quincy, Mass. was described by the Academy’s Massachusetts past president and law professor William J.Brisk as being “a prominent and innovative elderlaw attorney.”