• Outpatient
  • Clinically appropriate services provided to patients before decision can be made regarding inpatient admission or discharge
    • Short term treatment
    • Assessment
    • Reassessment
  • Covered only when provided under physician order or someone authorized by state law and hospital staff bylaws to admit to inpatient status or order outpatient tests
  • Decision to admit or discharge should be made within 48 hours, usually less than 24 hours
  • Observation status generally assigned to patients who present to emergency department (ED) and then require treatment/monitoring before a decision to admit or discharge can be made
  • "Direct Admit" occurs when patient in community admits to observation bypassing ED or clinic
Not Observation
  • Not medically necessary or reasonable for diagnosis or treatment
    • Services provided for convenience of patient, patient's family, or physician
  • Services covered under Part A (medically appropriate inpatient admission)
  • Services that are part of another Part B service
  • Standing orders for observation following outpatient surgery

Medicare Outpatient Observation Notice (MOON) - Effective no later than March 8, 2017

  • Hospitals and Critical Access Hospitals (CAHs) must deliver the MOON to any Medicare beneficiary (including Medicare Advantage enrollee) who receives observation services as an outpatient for more than 24 hours. The written notice must be delivered no later than 36 hours after observation services are initiated, must include the reason the individual is receiving observation services. The hospital must obtain the signature of the beneficiary or an individual representing the patient.
  • The MOON will serve as the standardized notice used to notify persons entitled to Medicare benefits who receive more than 24 hours of observation care.
  • MOONs are not given every time items and services are furnished in a hospital. Hospitals are only required to deliver the MOON to beneficiaries receiving observation services as outpatients for over 24 hours.
  • Hospitals must deliver a hardcopy of the MOON to beneficiaries. Hospitals must retain a copy of the signed MOON and may store the MOON electronically. Regardless of whether a paper or electronic version is issued, and whether the signature is digitally captured or manually penned, the beneficiary must be given a paper copy of the signed MOON.
  • In situations where the beneficiary has a representative who is not physically present, hospitals are permitted to give the MOON by telephone as long as a hardcopy is delivered to the representative.
For more information regarding the MOON, including copies of the form and instructions for its completion, visit the CMS Beneficiary Notices Initiative (BNI) website.




Last Updated Dec 09 , 2023