Medicare Program; Notification of Hospital Discharge Appeal Rights, 68708-68725 [E6-20131]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Rules and Regulations]
[Pages 68708-68725]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-20131]



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Part IV





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 405, 412, 422, and 489



Medicare Program; Notification of Hospital Discharge Appeal Rights; 
Final Rule

Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / 
Rules and Regulations

[[Page 68708]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 412, 422, 489

[CMS-4105-F]
RIN 0938-AO41


Medicare Program; Notification of Hospital Discharge Appeal 
Rights

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule sets forth requirements for how hospitals must 
notify Medicare beneficiaries who are hospital inpatients about their 
hospital discharge rights. Notice is required both for original 
Medicare beneficiaries and for beneficiaries enrolled in Medicare 
Advantage (MA) plans and other Medicare health plans subject to the MA 
regulations. (For purposes of this preamble, these entities will 
collectively be known as ``Medicare health plans''). Hospitals will use 
a revised version of the Important Message from Medicare (IM), an 
existing statutorily required notice, to explain the discharge rights. 
Hospitals must issue the IM within 2 days of admission, and must obtain 
the signature of the beneficiary or his or her representative. 
Hospitals will also deliver a copy of the signed notice prior to 
discharge, but not more than 2 days before the discharge. For 
beneficiaries who request an appeal, the hospital will deliver a more 
detailed notice.

EFFECTIVE DATE: These regulations are effective on July 1, 2007.

FOR FURTHER INFORMATION CONTACT:

Eileen Zerhusen, (410) 786-7803, (For issues related to Original 
Medicare).
Tim Roe, (410) 786-2006, (For issues related to Medicare Advantage).

SUPPLEMENTARY INFORMATION: 

I. Background

    In recent years, we have published several rules regarding hospital 
discharge notice policy, as well as rules regarding required notices in 
other provider settings when Medicare services are terminated. (See our 
proposed rule published April 5, 2006 in the Federal Register (71 FR 
17052) for a description of these rules.) In accordance with section 
1866 of the Social Security Act (the Act), hospitals currently must 
deliver, at or about the time of admission, the ``Important Message 
from Medicare'' (IM) to all hospital inpatients with Medicare to 
explain their rights as a hospital patient, including their appeal 
rights at discharge. In addition, a hospital must provide a Hospital-
Issued Notice of Noncoverage (HINN) to any beneficiary in original 
Medicare that expresses dissatisfaction with an impending hospital 
discharge. Similarly, Medicare health plans are required to provide 
enrollees with a notice of noncoverage, known as the Notice of 
Discharge and Medicare Appeal Rights (NODMAR), when an enrollee 
disagrees with the discharge decision (or when the individual is not 
being discharged, but the Medicare health plan no longer intends to 
cover the inpatient stay). See section III of this preamble for more 
information about the HINN and NODMAR, under ``Existing Notices.''
    On April 5, 2006, CMS published a proposed rule in the Federal 
Register (71 FR 17052) proposing revised discharge notice requirements 
for hospital inpatients who have Medicare. The provisions of that 
proposed rule, the related public comments and our responses, and the 
final regulations in this regard are set forth below.

Requirements for Issuance of Regulations

    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final regulation. Section 
902 of the MMA also states that the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final regulation except under exceptional 
circumstances.
    This final rule responds to comments on the April 5, 2006 proposed 
rule. In addition, this final rule has been published within the 3-year 
time limit imposed by section 902 of the MMA. Therefore, we believe 
that the final rule is in accordance with the Congress's intent to 
ensure timely publication of final regulations.

II. Provisions of the Proposed Regulations

    As noted above, on April 5, 2006, we published a proposed rule 
regarding hospital discharge notice requirements under both the 
original Medicare and the Medicare Advantage program. The proposed rule 
set forth a two-step notice process for hospital discharges similar to 
the process in effect for Medicare service terminations in home health 
agencies (HHAs), skilled nursing facilities (SNFs), swing beds, 
comprehensive outpatient rehabilitation facilities (CORFs), and 
hospices. In general, we proposed to require hospitals to deliver, 
prior to discharge, a standardized, largely generic notice of non-
coverage to each Medicare beneficiary whose physician concurs with the 
discharge decision. Hospitals or Medicare health plans, as applicable, 
would also deliver a more detailed discharge notice to beneficiaries 
who exercised their right to appeal the discharge. The specific details 
of the proposal are set forth below.

Proposed Sec.  405.1205

    We proposed to add a new Sec.  405.1205, to require hospitals to 
deliver a standardized, largely generic discharge notice to original 
Medicare beneficiaries.
    We proposed in Sec.  405.1205 that hospitals would be required to 
deliver a standardized notice of non-coverage to beneficiaries on the 
day before the planned discharge from an inpatient hospital stay. The 
notice would include: (1) The date that coverage of inpatient hospital 
services ends; (2) the beneficiary's right to request an expedited 
determination including a description of the expedited determination 
process as specified in Sec.  405.1206, and the availability of other 
appeal procedures if the beneficiary fails to meet the deadline for an 
expedited determination; (3) the beneficiary's right to receive more 
information as provided in Sec.  405.1206(e); (4) the date that 
financial liability for continued services begins; and (5) any other 
information required by CMS.

Proposed Sec.  405.1206

    We proposed to replace existing Sec.  405.1206 with a new provision 
similar to the notice requirement associated with the expedited review 
process for home health, hospice, skilled nursing, swing bed, and CORF 
settings set forth in Sec.  405.1202. Proposed section 405.1206 set 
forth the responsibilities of the hospitals, Quality Improvement 
Organizations (QIOs), and beneficiaries relative to the expedited 
determination process. Most notably, we proposed in Sec.  405.1206 that 
hospitals would be required to deliver a detailed notice to 
beneficiaries if beneficiaries exercise their right to request an 
expedited determination. The hospital would be required to deliver the 
detailed notice by the close of business of the day of the QIO's 
notification of the beneficiary's request for an expedited 
determination.

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    The detailed notice would include: (1) A detailed explanation why 
services are either no longer reasonable and necessary or are otherwise 
no longer covered; (2) a description of any applicable Medicare 
coverage rule, instruction, or other Medicare policy, including 
citations to the applicable Medicare policy rules or information about 
how the beneficiary may obtain a copy of the Medicare policy; (3) facts 
specific to the beneficiary and relevant to the coverage determination 
that are sufficient to advise the beneficiary of the applicability of 
the coverage rule or policy to the beneficiary's case; and (4) any 
other information required by CMS.

Proposed Sec.  422.620 and Sec.  422.622

    In these two sections, we proposed to replace the existing NODMAR 
notice and review regulations for Medicare health plan enrollees with 
notice requirements that largely parallel those proposed for 
beneficiaries in original Medicare. That is, proposed Sec.  422.620 
would require the hospitals to deliver the standardized, largely 
generic notice to all enrollees who are hospital inpatients, on the day 
before a planned discharge. The content of the notice would be 
essentially the same as under original Medicare. Similarly, Sec.  
422.622 would require the Medicare health plan to deliver a detailed 
notice to those enrollees who request an immediate QIO review of the 
discharge decision. Again, the timing and content requirements 
paralleled those in proposed Sec.  405.1206.
    Section 422.622 also specified the procedural responsibilities of 
Medicare health plans, hospitals, and QIOs as well as any possible 
liability for hospitals and Medicare health plans during the immediate 
QIO review process.

Conforming Changes Proposed to Sec.  489.27 and Sec.  412.42

    Finally, we proposed to make conforming changes to two related 
existing regulatory provisions. First, we proposed to amend the 
provider agreement requirements in Sec.  489.27(b) to cross-reference 
the proposed notice requirements. Thus, proposed Sec.  489.27(b) would 
specify that delivery of the hospital discharge notices consistent with 
proposed Sec.  405.1205 and Sec.  422.620 is required as part of the 
Medicare provider agreement. The other conforming change would affect 
Sec.  412.42(c), which involves limitations on charges to beneficiaries 
in hospitals operating under the prospective payment system.
    As revised, proposed Sec.  412.42(c)(3) would simply include a 
cross-reference to the notice and appeal provisions set forth in Sec.  
405.1205 and Sec.  405.1206. This change would clearly establish that 
the provision of the appropriate expedited review notices would be one 
of the prerequisites before a hospital could charge a beneficiary for 
continued hospital services.

III. Analysis of and Responses to Public Comments

    We received approximately 500 public comments on the proposed rule 
from healthcare professionals and professional associations, hospitals, 
State and national hospital associations, beneficiary advocacy groups, 
and managed care organizations.
    Comments centered on the details of the proposed notice procedures 
and the relationship between those procedures and the current hospital 
discharge and notification processes, including the IM. In general, 
healthcare professionals, hospitals, and hospital associations strongly 
opposed the proposed notification process. Patient advocacy groups 
generally supported the rule as proposed. Managed care organizations 
also opposed the notice process and pointed out MA-specific issues with 
the rule. Summaries of the public comments received on the proposed 
provisions and our responses to those comments are set forth below.

The Proposed Notice Process

    Comment: The overwhelming majority of commenters strongly opposed 
the hospital discharge notification procedures set forth in the April 
5, 2006 proposed rule. Only a few commenters supported the process.
    Those commenters supporting the proposed process stated that it 
would provide Medicare beneficiaries with a timely notice of the right 
to challenge a discharge decision that may be premature and harmful to 
that beneficiary's health. They believe that the proposed changes would 
serve as a check against existing financial incentives for hospitals 
and health plans to discharge beneficiaries too early. These commenters 
supported the proposed requirement that the generic notice be delivered 
on the day before discharge, stating that it gives beneficiaries the 
information they need to initiate an appeal at the time they need it, 
and allows beneficiaries enough time to consider their right to appeal 
and obtain the help of representatives, if needed. Several of these 
commenters suggested the generic notice be given 2 days in advance of 
discharge or even earlier when possible.
    As noted, however, the vast majority of commenters opposed the 
proposed process. These commenters focused their objections on two key 
issues--the overall need for the new notice and the timing of its 
delivery.
Need for Notice Process
    Many commenters noted that, because hospitals are already required 
to deliver the Important Message from Medicare (IM) to all Medicare 
inpatients, the proposal actually constituted a 3-step notice process 
that adds unnecessary burden to hospitals and managed care plans. Many 
commenters stated that the current notice process--delivery of the IM 
at or near admission, and a Hospital Issued Notice of Noncoverage 
(HINN) if the beneficiary disputes the discharge decision--adequately 
informs beneficiaries of their appeal rights. They saw no compelling 
reason to warrant the implementation of the proposed notice process. 
Other commenters noted that there are problems with the current notice 
delivery process that CMS should address before deciding to add another 
notice. These commenters agreed with many others that CMS should 
strengthen the current notice delivery process, rather than adding an 
additional notice at discharge. Specifically, some commenters stated 
that the IM is often handed to the beneficiary at admission without any 
explanation, along with many other papers. Thus, more often than not, 
the IM ends up unread. Additionally, several commenters noted that the 
current process is not enforced by CMS and recommended that CMS 
sanction hospitals that are not complying with notice delivery 
requirements.
    Many commenters made recommendations for improving the current 
notice delivery process including revising the IM to be a more complete 
notice of discharge appeal rights (similar to the proposed generic 
notice), or replacing the IM with the proposed generic notice and 
providing it at or near admission. Several commenters suggested we 
allow the generic notice to be given at admission or during the course 
of the hospital stay, and some commenters recommended that the hospital 
review the information with the beneficiary and that the beneficiary 
sign the notice.
Timing of the Generic Notice
    Commenters also strongly objected to the requirement that hospitals 
provide the proposed generic notice on the day before discharge, as 
proposed in Sec.  405.1205 and Sec.  422.620. They indicated that, 
given the rapidly changing conditions of most hospital patients, it is 
often difficult or impossible to predict the exact date of

[[Page 68710]]

discharge a day in advance. Commenters pointed out that physicians 
often make discharge decisions and write the discharge order on the day 
of discharge. Several commenters stated that they cannot assume 
physician concurrence until the discharge order is written.
    Many commenters pointed out that although hospitals begin the 
discharge planning process at admission, hospital staff, physicians 
(and health plans, if applicable) must wait for the results of blood 
work and other diagnostic tests and are constantly monitoring patients 
for signs of clinical progress before the discharge decision can be 
made. Commenters offered many clinical examples in support of this 
contention, including the following: Surgical patients' diets are 
gradually progressed from liquids to solids based on their tolerance, 
which varies from patient to patient; patients on oxygen therapy must 
be evaluated frequently to determine if it is appropriate to wean and 
later to determine if home oxygen is appropriate; patients receiving 
medications such as narcotics or steroids must be weaned from these 
medications and observed for complications, and patients cannot be 
expected to respond in a predictable manner.
    In addition, many commenters pointed out that giving a notice on 
the day before discharge to a beneficiary experiencing a short stay (1 
or 2 day stay) would in practice necessitate that the discharge notice 
be given at admission, when the course of treatment may not be known. 
Others stated that many of these beneficiaries also are waiting for 
test results and the discharge decision will depend on the results of 
those tests.
    Other commenters stated that predicting the discharge date a day or 
more in advance would be particularly difficult for beneficiaries with 
complicated cases, since many of these beneficiaries are under the care 
of more than one physician while in the hospital, requiring 
coordination among specialists regarding the discharge decision.
    For beneficiaries who need to be placed in facilities such as a SNF 
or psychiatric facility, discharge will depend on that facility's 
acceptance of the beneficiary, and the hospital may not know about 
placement 24 hours in advance in order to give a notice. In addition, 
commenters noted that it is not unusual for a physician to discharge a 
patient earlier than anticipated because of that individual's progress, 
making notice delivery on the day before discharge impossible.
    Commenters also stated that it often takes time to reach the 
representative of a beneficiary who is incompetent or unable to make 
informed decisions. Some commenters said representatives are often more 
available near the time of admission than on the day before discharge.
    Response: We have carefully considered the numerous comments 
regarding the extent to which a new notice is needed and the timing of 
such a notice. We recognize that the proposed generic notice clearly 
contains nearly the same information as IM, which is already delivered 
at or near admission as required by Section 1866(a)(1)(M) of the Social 
Security Act (the Act). Moreover, we fully appreciate, as many 
commenters pointed out, the difficulties inherent in predicting the 
precise date of discharge in advance in the hospital setting. At the 
same time, we are committed to ensuring that all Medicare beneficiaries 
are made aware of their hospital discharge rights in an effective 
manner.
    As the comments made clear, a hospital's frequent inability to 
predict a discharge in advance in acute care settings constitutes the 
fundamental obstacle to the 24-hour advance notice proposal. This 
problem is particularly pronounced for patients with complicated 
medical concerns, those under the care of more than one physician, and 
those requiring subsequent placement in other facilities. Clearly, 
discharge decisions are normally made by physicians, and physicians 
generally depend on test results, other outcome-related indicators, and 
observations gained from patient rounds in making these decisions. Many 
of these indicators may not become evident or available sufficiently 
early to permit 24-hour advance notice on a routine basis.
    Thus, we considered other alternatives to the proposed ``24-hour 
notice'' requirement that could still ensure that beneficiaries are 
made aware of their discharge appeals rights in time to exercise them, 
without adversely affecting the hospital discharge process or the 
availability of hospital beds. This is consistent with our commitment 
in the proposed rule to consider comments on all aspects of hospital 
notice procedures. One option that we considered carefully was to 
establish the 24-hour advance notice requirement as a general rule, but 
allow for exceptions when this requirement was impractical, such as the 
situations described above where a beneficiary's discharge date could 
not reliably be predicted in advance. We concluded, however, that such 
a standard would be highly subjective and difficult to administer, 
given the variety of reasons why a discharge decision could be made on 
the day of discharge, while still potentially leaving a large 
proportion of hospital patients unaware of their discharge rights until 
they would have little or no time to exercise them.
    Moreover, we also had to take into account the high percentage of 
short stays in the hospital setting. (The most recent available CMS 
data--2003 data from the 2005 CMS Statistical Supplement--regarding 
acute inpatient hospital admissions show that over 43 percent of 
hospitals stays are 3 days or less in duration, and nearly 30 percent 
are 2 days or less.) In those situations, given the statutory 
requirement that hospitals deliver an IM to each patient at or about 
the time of admission, requiring a generic discharge notice as well 
would be of questionable value because they would be given at about the 
same time. As many commenters pointed out, the proposed generic notice 
contains much of the same information as the IM. Thus, requiring 
hospitals to deliver both notices at roughly the same time would place 
an administrative burden on hospitals without any apparent benefit to 
patients.
    Based on all these considerations, we decided not to adopt an 
exception-based standard. Instead, we considered additional 
alternatives for meeting our goal of designing hospital notice 
procedures that balance a beneficiary's need to be informed about his 
or her appeal rights in an appropriate manner and at an appropriate 
time, and take into account the statutory requirements associated with 
the IM, but do not impose impractical requirements on hospitals, or 
interfere with appropriate discharge decision-making practices. As many 
commenters recommended, we concluded that the most viable approach 
would be to build on the existing requirement that hospitals deliver 
the IM to all beneficiaries, which already takes into account hospital 
discharge processes. Accordingly, under Sec.  405.1205(b)(Sec.  
422.620(b) for MA enrollees), this final rule establishes a revised 
version of the IM as the advance written notice of hospital discharge 
rights.
    As revised, the IM will contain virtually all of the elements that 
would have been included in the proposed standardized generic notice, 
with the exception of the discharge date. Thus, the revised IM will 
continue to meet the requirements of section 1866(a)(1)(M) of the Act, 
including a statement of patients' rights, information about when a 
beneficiary will and will not be liable for charges for a continued 
stay in a

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hospital, as well as a more detailed description of the QIO appeal 
rights that corresponds to the content of the proposed generic notice. 
We have revised requirements for notice content at Sec.  405.1205(b) 
and Sec.  422.620(b) to reflect these changes. Proposed Sec.  489.27 
has also been revised accordingly. However, similar to the generic 
notice, the revised IM must be signed by the beneficiary (or 
representative, if applicable) to indicate that he or she has received 
the notice and comprehends its contents. The hospital must provide the 
original, signed notice to the beneficiary and retain a copy of the 
signed notice. As with the proposed generic notice, we anticipate that 
the revised IM will also include language stressing the importance of 
discussing discharge planning issues with physicians, plans, or 
hospital personnel to try to minimize the potential for disputes. The 
precise language of the revised IM will be subjected to public review 
and comment through the Office of Management and Budget's Paperwork 
Reduction Act process.
    Sections 405.1205(b) and 422.620(b) also establish the time frames 
for notice delivery. Specifically, hospitals must deliver the advance 
written notice at or near admission, but no later than 2 calendar days 
after the beneficiary's admission to the hospital. We believe that 
requiring this revised IM be delivered and signed at or near the time 
of admission gives the hospital flexibility in developing processes to 
deliver the notice in a timely manner and makes the IM a more 
meaningful notice for beneficiaries and representatives, allowing them 
ample time to consider acting on those rights.
    At the same though, we continue to believe that it is important for 
beneficiaries to receive information about their discharge rights at or 
near the time of discharge when they may need to act on this 
information. Therefore, Sec.  405.1205(c), and Sec.  422.620(c) for 
Medicare health plan enrollees also requires that hospitals deliver a 
copy of the signed IM to each beneficiary before discharge. The notice 
should be given as far in advance of discharge as possible, although 
not more than 2 calendar days before the day of discharge. This time 
frame would be consistent with the suggestions of several commenters 
who advocated for delivery of discharge rights notices 2 days before 
discharge.
    This follow-up notice would serve as a reminder of the earlier 
notification about the beneficiary's discharge rights. It would not be 
required if the initial delivery and signing of the IM took place 
within 2 days of discharge. This means that hospitals will have some 
flexibility to tailor their notice delivery practices to meet their own 
needs, with the possibility of eliminating the need to deliver a copy 
of the notice for stays of up to 5 days. (We note that the average 
hospital length of stay in an acute care setting for a Medicare 
beneficiary is approximately 5 days and, again, large numbers of 
beneficiaries experience stays ranging from overnight to 2 or 3 day 
stays.) Although the follow-up notice often would not be needed in 
short-stay situations, it would serve as an important reminder of 
beneficiary rights in longer stay cases. Thus, all individuals will 
receive the original notice at or near admission, in addition to 
receiving a copy of the signed notice if the original notice is 
delivered more than 2 days before discharge.
    Section 405.1206(b)(1) and Sec.  422.622(b)(1), will allow 
beneficiaries to request an expedited determination at any time up 
through the day of discharge, either in writing or by telephone. 
However, we believe that the better alternative will be for 
beneficiaries to be aware of their rights as early as possible and then 
communicate with their physicians, plans and appropriate hospital staff 
to reach a consensus on their appropriate discharge date.
    Given that there is no longer a noon deadline for a beneficiary to 
request an expedited QIO determination, we recognize that such requests 
could be made near or after the close of the business day. Thus, we 
have revised the appropriate sections to specify that the subsequent 
deadline for the hospital or plan to provide beneficiaries with 
detailed notices as soon as possible but no later than noon of the day 
after the QIO notifies the hospital or plan that the beneficiary has 
requested QIO review. We have also specified that the hospital or plan 
must submit necessary information to the QIO as soon as possible, but 
no later than noon of the day after the QIO notifies the hospital or 
plan of the request. We note that a beneficiary's liability protection 
would continue throughout this process.
    In summary, we believe that the revised notification process being 
set forth in this final rule will offer several advantages over the 
proposed approach, while still containing many similar elements and 
achieving the same goals. The process is consistent with the existing 
IM requirements--while also establishing much greater hospital 
accountability (and enforceability) for delivering the IM--promotes 
beneficiary understanding of their discharge rights, and gives 
hospitals appropriate discretion in notice delivery practices and, more 
importantly, in discharge decision-making, rather than letting notice 
delivery rules dictate when patients are discharged.

Consequences of the 24-Hour Notice Requirement

    Many commenters believed that if hospitals were not able to deliver 
the generic notice on the day before discharge, that patients would be 
entitled to stay an additional day in order to meet the 24-hour 
requirement. We received many comments regarding what commenters 
believed would be the consequences of this additional day.
    Comment: Many commenters addressed the perceived consequences of 
their belief that, in most cases, hospitals would not be able to give 
the notice until the actual day of discharge. In general, commenters 
indicated that beneficiaries would then be entitled to stay another day 
in order to decide if they want to appeal. Commenters contended that 
delaying discharge an additional day to allow hospitals to satisfy the 
notice requirement conflicted with the discharge planning process set 
forth at section 1861(ee)(2) of the Act, which directs the Secretary to 
develop guidelines to ensure a smooth and timely discharge to the most 
appropriate setting. Several commenters pointed to the Joint Commission 
on Accreditation of Healthcare Organizations (JCAHO) requirements at 
LD.3.15 that require hospital leadership to mitigate impediments to 
efficient patient flow throughout the hospital. Other commenters stated 
that the Hospital Conditions of Participation (COP) for patients' 
rights at Sec.  482.13 already makes clear that a patient has the right 
to make informed decisions, and has the right to a process for 
submitting grievances, including concerns about quality of care and 
premature discharge.
    Many commenters feared that the proposed process and the 
possibility of an additional day would severely impact the hospital's 
bed capacity, ability to move patients within and outside of the 
hospital, and costs. Many commenters believed that this requirement 
would cause unnecessary delays in a patient's discharge or transfer to 
a more appropriate level of care.
    Several commenters gave the example of the Medicare beneficiary who 
has secured a bed in another facility such as a skilled nursing 
facility (SNF). If the hospital were not able to provide the generic 
notice until the day of discharge, and Medicare beneficiaries were able 
to stay an additional day to ensure they received the notice at least 
24 hours in advance of discharge,

[[Page 68712]]

commenters said, this beneficiary would risk losing that bed and 
finding another bed could take several more days. Commenters believed 
that hospitals would then be required to provide additional notices to 
this beneficiary and work within new timeframes.
    Response: We agree with the commenters that to the extent that 
hospitals are not able to deliver the generic notice until the day 
beneficiaries are ready to be discharged, the proposed 24-hour notice 
requirement could potentially affect the hospital's compliance with the 
requirement for a smooth and timely discharge to a more appropriate 
setting. As noted above, we find persuasive comments regarding the 
fluidity of the discharge process. Thus, as explained in detail above, 
we have modified the proposed notification procedures to attempt to 
mitigate the potential for disruption of the discharge planning 
process.

Existing Notices

    Comment: Hospitals asked whether the existing HINN and NODMAR would 
continue to be necessary.
    Response: Currently, hospitals or plans issue a HINN or NODMAR at 
discharge only when the patient disagrees with the discharge decision. 
In this context, the HINN and NODMAR are used to tell a patient why a 
hospital or plan believes their stay will no longer be covered, to 
provide information about the QIO review process, and to describe the 
patient's potential liability. Under the process set forth in this 
final rule, ALL individuals will be provided with information upon 
admission about the QIO review process and associated liability, and 
individuals who disagree with the discharge decision will receive 
detailed information about why the hospital or plan believes their stay 
will no longer be covered. Thus, with this new process, the HINN and 
NODMAR will no longer be used to notify patients of their right to a 
QIO review of a stay. In the vast majority of cases, a beneficiary will 
agree to the discharge decision. In almost all other cases, 
beneficiaries who disagree with the discharge decision will initiate a 
QIO review, so that their stay can continue without liability until the 
QIO confirms the discharge decision or determines that the stay should 
continue. Only in the extremely rare instance where patients decide to 
remain in the hospital past the ordered discharge date and do not 
choose to initiate a review would they be notified of liability via a 
traditional liability notice akin to the existing HINN. (Note that the 
term ``HINN'' actually refers to several different notices, used under 
various circumstances, to inform patients under original Medicare that 
all or part of a hospital stay may not be covered by Medicare. For 
example, a HINN is also used in pre-admission situations. This final 
rule addresses only HINNs now used at the end of a hospital stay when a 
patient disputes a discharge decision. Under these circumstances, the 
HINN is no longer needed.) The NODMAR will be discontinued.

Aligning Hospital Discharge Notice Processes With Those of Other 
Settings

    We received multiple comments on our proposal to align hospital 
discharge notice processes with those used in other settings such as 
HHAs, SNFs, and CORFs.
    Comment: Many commenters indicated that it was unrealistic and of 
little value to achieve consistency between hospital discharge notice 
processes and those of other providers such as SNFs and HHAs. 
Commenters stated that hospitals are fundamentally different from these 
non-hospital settings because of hospitals' focus on the provision of 
acute medical care. The commenters stated that hospital lengths of stay 
are generally shorter, the conditions of acutely ill patients are more 
unpredictable, there is a greater volume of discharges per day, and 
they contended that discharge decisions are generally made on the day 
of discharge often based on the availability of diagnostic tests 
results. Conversely, commenters stated that SNFs and other settings 
have more predictable patient outcomes and longer lengths of stay that 
allow advance notice of discharge under most circumstances. Moreover, 
they pointed out that in the non-hospital setting, beneficiaries could 
be liable for additional days if they request a review; conversely, in 
the hospital setting, beneficiaries may stay without additional 
liability while the QIO's decision is pending. Finally, unlike 
hospitals, other providers are not required to provide the IM that 
already includes an explanation of the discharge appeal rights. Thus, 
they urged that CMS reconsider its proposed hospital notice approach.
    A few commenters did support aligning the provider notice 
procedures. These commenters believe that uniformity among appeals 
notice process in all settings would increase public understanding and 
utilization of the QIO appeal process. The commenters noted that 
protections against premature discharge are even more necessary in the 
hospital setting than in other settings because of the vulnerability 
and acute care needs of hospital patients. Further, they argued, 
inpatient hospital providers are at least as capable of complying with 
these requirements, as are SNFs and other outpatient providers.
    Response: We agree that there are notable differences between the 
hospital setting and the other provider settings where an expedited 
determination notice process is in effect. As commenters pointed out, 
the critical differences for purposes of this rule are the presence of 
the IM in the hospital setting, the shorter and less predictable 
lengths of stay, and the statutory liability protections afforded to 
hospital inpatients in accordance with section 1869(c)(3)(C)(iii)(III) 
of the Act. We found the comments on these issues to be especially 
persuasive. Thus, in developing this final rule, we have attempted to 
set forth a process that better takes into account the unique 
circumstances of the hospital setting.

Discharge Planning Process

    Many commenters stated that the hospital notice requirements needed 
to take into consideration the discharge planning requirements in the 
Conditions of Participation (COPs).
    Comment: A number of commenters stated that the existing discharge 
planning process carried out by hospitals already informs beneficiaries 
of discharge plans and facilitates smooth transitions to post-hospital 
settings. The commenters stated that the discharge planning COP at 
Sec.  482.43 addresses the development of a discharge plan and requires 
that the patient and representative be involved in the discharge 
planning process. Commenters also stated that discharge decisions are 
made by physicians, not hospitals.
    Commenters noted that discharge planners are very effective at 
developing individualized discharge plans, making arrangements for 
post-hospital care, and preparing patients and caregivers for 
discharge. Commenters also pointed out that because discharge planners 
are involved in arranging patients' post-hospital care, they are able 
to identify patients early on who will have special needs at discharge 
and work with them (or their representatives) to address their issues. 
Thus, many commenters questioned the need for written discharge 
notices, given the extensive discharge planning process already 
required in hospitals. Alternatively, several commenters suggested that 
we add language to the notice that informs beneficiaries of the 
discharge planning process.
    Response: We recognize the important work of hospital discharge 
planners in

[[Page 68713]]

the development of individualized discharge plans and preparing 
patients for post-hospital care, and we agree that any process to 
notify beneficiaries of their appeal rights must be consistent with the 
discharge planning process required by section 1861(ee)(2) of the Act 
and the COPs at Sec.  482.43. However, we note that while hospitals 
must have in effect discharge planning procedures that apply to all 
patients, discharge planning generally focuses on identifying 
individuals who are likely to have special or ongoing needs following 
discharge. Obviously, not all hospital inpatients will require post-
hospital care, therefore some patients will have very limited 
involvement with the discharge planning process. Thus, we are not 
convinced that it is appropriate to rely on the discharge planning 
process as the mechanism for ensuring all patients receive timely 
notification of discharge rights under the Medicare program. Instead, 
we believe that the Medicare discharge notice should be able to stand 
alone, or complement discharge planning.
    To reflect the importance of discharge planning, we intend to 
incorporate language into the revised IM about planning for discharge 
and encouraging beneficiaries to talk to their physician or other 
hospital staff if they have a concern about being discharged. If 
beneficiaries are still not satisfied with their discharge decision, 
they can request a QIO review.

Liability

    Many commenters were concerned about the prospect of hospitals 
being financially liable for additional patient care days during the 
QIO process.
    Comment: Many commenters asked that CMS clarify who would be liable 
for the extended days during the appeal. They stated that because the 
beneficiary will have no liability, Medicare should pay the hospital 
for the additional days or the additional days should be incorporated 
into the DRG payment. A few commenters stated that the liability 
protections set forth in section 1879(a)(2) of the Act should relieve 
the hospital of any liability because the hospital would not have known 
that payment would not be made for hospital services beyond the planned 
day of discharge.
    Response: This rule has no effect on existing policy with respect 
to liability during a QIO review. All operating costs incurred during 
the beneficiary's inpatient stay are considered part of the overall DRG 
payments.

Impact on Number of Appeals

    Many commenters believe that this notification process would 
increase in the number of appeals to the QIO.
    Comment: Many commenters believe that once beneficiaries become 
aware of their right to a review without liability, there will be a 
large increase in the number of beneficiaries appealing and staying 
additional days during the review. Many commenters stated these extra 
days could seriously affect hospital processes, have a significant 
effect on hospital costs. Longer lengths of stay, they contended, would 
hinder the hospital's ability to move patients through the system, 
seriously affecting bed capacity. Hospitals would not be able to accept 
new admissions, would experience backups in already crowded emergency 
rooms, and would not be able to move patients out of post-anesthesia 
care units or intensive care units. Most importantly, commenters said, 
the longer Medicare beneficiaries remain in the hospital, the greater 
their risk of hospital-acquired infections, falls and other negative 
outcomes.
    Several commenters said CMS should assess whether the 1 to 2 
percent estimate of the number of beneficiaries who currently request 
QIO reviews in the nursing home or home health settings would hold up 
in the hospital setting where liability is not an issue for 
beneficiaries while their appeal to the QIO is pending.
    Response: The right to a QIO review without beneficiary liability 
is a longstanding statutory feature of the Medicare inpatient hospital 
prospective payment system. To the extent that commenters are correct 
that beneficiaries are not aware of the existing QIO review right, 
there could be an increased use of the process under the new notice 
rules. However, we view this contention as evidence of the need for a 
more effective notice process, as opposed to an argument against 
notification.
    At the same time, however, we have historically believed, based on 
the limited evidence available, that hospital beneficiaries who are 
notified of their discharge rights are not significantly more likely to 
exercise them. For example, as discussed in previous rulemaking, the 
proportion of Medicare health plan enrollees that disputed their 
discharge historically has been no higher than that of original 
Medicare beneficiaries, despite the more stringent notice requirements 
under the Medicare + Choice program (68 FR 16664). Moreover, several 
commenters noted, and we agree that the vast majority of inpatients 
welcome their discharge. Therefore, we believe that the revised notice 
process will not increase the number of requests for a QIO review nor 
have a significant impact on hospital bed capacity, patient access, or 
hospital revenue.

Impact on Beneficiaries

    Many commenters were concerned about the impact of the proposed 
notice process on beneficiaries, and the possibility that some 
beneficiaries would use the process to game the system. Some commenters 
offered suggestions on how to better educate beneficiaries about their 
rights.
    Comment: Many commenters were concerned that the notices in the 
proposed process would confuse beneficiaries and increase their anxiety 
level during an already stressful time. Many commenters stated that 
beneficiaries are under an inordinate amount of stress during a 
hospital stay and that issuing a notice regarding potential financial 
liability would only serve to alarm them. Several other commenters 
stated that the notices as written would be difficult for many frail 
elderly Medicare beneficiaries to understand. Other commenters stated 
that beneficiaries are already overwhelmed by the number of notices 
they receive and that an additional notice would exacerbate the 
problem. Still other commenters stated that many beneficiaries these 
days are cautious about signing forms.
    Conversely, some commenters felt that Medicare beneficiaries 
generally are not aware of their right to appeal a discharge and that 
the current process for communicating the information to them is not 
effective.
    Response: We believe that it is important for Medicare 
beneficiaries to understand their discharge appeal rights and be able 
to act on them. Moreover, based on the often conflicting comments 
received on the proposed rule, we believe that not all beneficiaries 
are made aware of these rights uniformly under the current process. We 
recognize that liability issues in particular can be difficult for 
beneficiaries to understand, and we intend to make sure the revised IM 
is as clear as possible in this regard. We also intend to consumer test 
the notices prior to requesting OMB approval. Finally, it is important 
to keep in mind that hospitals will be expected to review the notices 
with beneficiaries (or representatives when appropriate), answer any 
questions and, if necessary, help them to initiate the QIO review 
process. We believe these efforts will serve to reduce confusion and 
enhance beneficiaries' understanding of their rights and their ability 
to act on them.

[[Page 68714]]

    Comment: Many commenters stated that this proposed process would 
encourage beneficiaries who do not want to leave the hospital to 
``game'' the system in order to stay for reasons other than medical 
necessity. These commenters said that some beneficiaries might want to 
remain in the hospital, either for reasons of convenience, because the 
hospital offers a more secure and comfortable environment, or because a 
bed is not available in a setting of their choice. Additionally, a few 
commenters pointed out that beneficiaries who do not meet the 3-day 
qualifying stay for a nursing facility might use the appeal process to 
get the extra day(s) in order to qualify.
    Response: We understand that hospitalized beneficiaries and their 
family members may be anxious about discharge for many reasons. 
Nevertheless, we expect the vast majority of beneficiaries who exercise 
their statutory right to a QIO review to do so for legitimate purposes. 
As discussed above, we also recognize the benefits of an effective 
discharge planning process in identifying those beneficiaries who may 
have concerns about their discharge and in working with these patients 
early on in order to facilitate a smooth discharge.
    Finally, in accordance with Sec.  409.30, a 3-day qualifying stay 
must be for medically necessary hospital or inpatient CAH care. 
Therefore, if a patient has not met the 3-day qualifying stay and 
requests a review, the QIO will determine whether the decision to 
discharge was the correct one.
    Thus, we do not expect significant numbers of individuals to use 
this process to ``game'' the system, although we note that opportunity 
has always existed. Again, we believe that patients should be informed 
of their statutory rights.
    Comment: Some commenters recommended that, instead of adding to the 
number of notices that hospitals are required to deliver, we educate 
consumers about their discharge rights through other methods. Several 
commenters recommended specific measures such as educational campaigns, 
mailings, or printing appeal rights on the back of the Medicare card. 
Comments were mixed as to whether Medicare beneficiaries are 
knowledgeable about their rights or are confused by the complexity of 
the program and the large number of notices they already receive.
    Response: The IM is a statutorily required notice that hospitals 
are required to deliver at or about the time of an individual's 
admission as an inpatient to the hospital. Neither educational 
campaigns nor mailings can meet that requirement. We do agree with 
commenters, however, that it is necessary to educate beneficiaries 
about their discharge appeal rights using other means. Currently, 
information about these rights is in the ``Medicare and You Handbook'' 
and the Medicare health plans' ``Evidence of Coverage'' (EOC), and we 
will work with hospitals, beneficiary advocates, and other partners to 
help educate beneficiaries about their rights.

Burden

    We received a large number of comments on the burden estimates for 
both the proposed generic and detailed notices.
    Comment: The vast majority of commenters believed that the 5-minute 
time estimate by CMS for the delivery of the generic notice was much 
too low, and did not acknowledge the time necessary to complete the 
notice, explain it to the beneficiary, answer questions, or contact a 
representative, particularly in cases where the beneficiary's 
competency is at issue or there is a language barrier. Generally, 
commenters offered a range of 10 to 30 minutes to complete the notice, 
deliver and explain the notice and obtain a signature, with more time 
required when interpreters or representatives were involved.
    In addition, some commenters thought the time required to complete 
the detailed notice would be comparable to the current notification 
process that utilizes the HINN and NODMAR. A few commenters stated that 
the detailed notice could take from 120 to 180 minutes to fill out, 
accounting for additional tasks such as calling the QIO, or providing 
evidence to the QIO for its review in their estimate. Also included in 
this estimate was the burden associated with having to research 
specific Medicare coverage rules and citations.
    Response: Although this final rule no longer requires issuance of 
the separate generic notice, as specified in the proposed rule, we have 
taken these comments into consideration in estimating the time required 
for delivery of a revised, signed IM. Thus, we now estimate the average 
time for IM delivery at 12 minutes--which represents an 11 minute 
increase over the estimated time for delivery of the current IM. We 
note that this estimate reflects an ``average'' amount of time needed 
to deliver the notice; some beneficiaries will be able to read the 
notice easily and others will need more time and assistance. Further, 
we estimate that delivery of the signed copy of the IM that may be 
required for longer hospital stays should only take an average of 3 
minutes to deliver to the beneficiary or representative because it is 
essentially a review of information received at or near admission and 
questions regarding the process can also be referred to the QIO.
    Regarding the detailed notice, in response to suggestions that it 
would be especially difficult for hospital staff to research and list 
specific citations to applicable Medicare policy rules, we no longer 
require the notice to list specific citations to the applicable 
Medicare policy rules. We have, however, maintained the requirements 
that the detailed notice explain why services are no longer necessary 
and describe relevant Medicare coverage rules, instruction or other 
policy. Commenters recognized that the detailed notice essentially 
replaces the HINN and NODMAR processes when beneficiaries and enrollees 
do not agree with the discharge. Therefore, we believe that the 
detailed notice will not constitute a new burden, but will essentially 
replace the time associated with filling out and delivering the HINN 
and NODMAR. We believe that, in addition to the time it currently takes 
to complete the HINN and NODMAR, an extra 60 minutes is sufficient for 
filling out and delivering the detailed notice. We intend to permit, in 
guidance, that hospitals and plans may use predetermined language 
regarding medical necessity and other Medicare policy. Both the IM and 
the detailed notice will be published for public comment through the 
OMB Paperwork Reduction Act process. Therefore, we welcome further 
input on the form and content of the detailed notice through the OMB 
approval process.

QIOs

    Several commenters noted that the current QIO schedule for hospital 
reviews could delay the appeal process.
    Comment: Several commenters stated that QIOs do not currently 
review hospital stays on weekends, which could cause additional delay 
in the processing of these appeals.
    Response: QIO reviews of disputed hospital discharges are a long-
standing feature of the Medicare program. However, we will work closely 
with the QIOs to ameliorate any difficulties associated with the notice 
procedures. We note that the QIO review process for other providers 
requires QIO involvement 7 days a week.

[[Page 68715]]

Information Technology (IT)

    Some commenters were concerned that the notice process would affect 
their IT systems.
    Comment: A few commenters stated that hospitals, especially larger 
centers, would have to develop or change their IT process to, for 
example, track ``next day'' discharges, based on the proposed rule. 
Several commenters stated that the proposed rule was contrary to the 
movement toward electronic medical records.
    Response: As described above, based on the comments, we have 
revised the requirement for delivery of the notice so that it may be 
delivered up to 2 days prior to discharge. We believe this added 
flexibility will relieve hospitals of any burden of developing an IT 
process to track ``next day'' discharges. We also agree that the 
movement toward electronic medical records is an important advancement. 
However, given that section 1866(a)(1)(M) of the Act requires a written 
statement of rights, there is still a need for a hard copy delivery of 
the IM. Hospitals may choose to store the signed copy of the notice 
electronically.

Delivery to a Representative

    Several commenters asked that we allow hospitals to provide 
notification to representatives via a telephone call.
    Comment: Several commenters requested that CMS clarify what ``valid 
delivery'' means if a beneficiary is incompetent and a representative 
must be contacted. Other commenters suggested that we allow telephone 
notification to beneficiary representatives.
    Response: We intend to provide guidance regarding how hospitals and 
health plans may deliver the appropriate notice in cases where a 
beneficiary's representative may not be immediately available.

Managed Care

    Several commenters noted there were specific issues with regulation 
in terms of managed care and also commented on the scope of the 
regulation and coordination issues among hospitals, plans and the QIO.
    Comment: Several commenters pointed out coordination issues among 
Medicare health plans, hospitals, and QIOs, regarding the proposed 
process. Several commenters specifically described issues of 
coordination regarding delivery of the proposed detailed notice. One 
commenter stated that an MA private-fee-for-service (PFFS) plan may not 
have knowledge of the hospital stay to comply with these rules. Another 
commenter stated that plans may not have a contract with the treating 
hospital in order to delegate responsibility for the detailed notice 
delivery. Other commenters stated that plans are too far removed from 
the hospital setting to have the information to fill out and deliver a 
meaningful detailed notice in a timely manner. Some stated that it 
would be unworkable for the plan to provide the detailed notice by 
close of business of the day the beneficiary contacts the QIO. In this 
case, commenters suggested requiring plans to provide written 
explanation of the discharge decision to the enrollee by the close of 
business on the day following notification of the plan by the QIO. Some 
commenters pointed out difficulties hospitals have following two 
different sets of regulations, one for original Medicare and one for 
MA.
    Response: We believe, consistent with the immediate QIO review 
process in the non-hospital settings at Sec.  422.622, that Medicare 
health plans are in the best position to deliver the detailed notices 
regarding their specific policies and the criteria that they applied in 
evaluating an enrollee for discharge. Moreover, in view of the fact 
that Medicare health plans are responsible for making coverage 
determinations for their enrollees, we believe it is appropriate that 
plans be responsible for preparing and delivering the detailed notice 
in a timely manner. Therefore, we are maintaining the requirement that 
the plan be responsible for delivery of the detailed notice. Although 
we expect that the plans will deliver the detailed notice as soon as 
possible, we have revised the timeframe for delivery of the detailed 
notice as well as any information the QIO needs to complete the review, 
to noon of the day following the QIO's notification of the enrollee's 
request, as discussed previously.
    We recognize that the PFFS model presents unique challenges to 
plans in terms of notice delivery requirements. We believe hospitals, 
as part of their daily business practices, should be informing all 
plans, including PFFS plans, of an enrollee's admission as soon as 
possible, and have a financial interest in doing so. Therefore, we are 
maintaining requirements that plans participate in the discharge 
process and deliver the detailed notice to their enrollees when 
appropriate.
    In addition, we have attempted to create a consistent notification 
and appeal process by aligning the regulations for original Medicare 
and the MA program. Thus, we have reordered the requirements at Sec.  
422.620 and Sec.  422.622 to parallel those at Sec.  405.1205 and Sec.  
405.1206. For example, QIO requirements at Sec.  422.622 have been 
revised to parallel those at Sec.  405.1206, and requirements that 
hospitals provide information needed for the QIO review at Sec.  
422.622 now parallel those at Sec.  405.1206. We believe this will 
strengthen beneficiary rights regarding hospital discharges and make 
the QIO review process easier to understand and administer.
    Comment: Some commenters asked if these rules apply to Medicare 
Cost Plans.
    Response: In accordance with 42 CFR 417.600(b), Medicare Cost Plans 
are subject to the regulations at 42 CFR part 422, Subpart M. 
Therefore, these rules apply to them to the same extent that they apply 
to all other Medicare health plans.
    Comment: Some commenters expressed concern that MA organizations 
might be responsible for additional costs if hospitals fail to provide 
a timely generic notice on the day before discharge and the enrollee 
needed to stay an extra day to request an appeal.
    Response: As discussed in detail above, we have removed the 24-hour 
requirement for delivery of the generic notice and replaced the generic 
notice with a signed IM given at or near admission. Under this revised 
approach, a patient will not need to stay in a hospital an extra day 
merely to request an appeal. We believe our revised approach addresses 
the commenters' concern.

Definition of Discharge

    We received a few comments on the definition of discharge provided 
in proposed Sec.  405.1205 and Sec.  422.620.
    Comment: Some commenters asked that we clarify the definition of 
discharge. Specifically, they asked that we clarify that a transfer to 
another hospital does not constitute a discharge. Commenters suggested 
that, for purposes of the proposed notice process, the definition of 
discharge should not include beneficiaries who exhaust Part A benefits.
    Response: In response to these comments, we have revised the 
definition of discharge in both Sec.  405.1205 and Sec.  422.620 to 
state that a discharge is the formal release of a beneficiary or 
enrollee from an inpatient hospital. This definition is consistent with 
the definition at Sec.  412.4 for hospitals paid under the prospective 
payment system. We removed the term ``complete cessation of coverage'' 
from the proposed definition in order to reduce confusion about 
beneficiaries who exhaust Part A days. We believe

[[Page 68716]]

that the number of beneficiaries who exhaust Part A days during a 
hospital stay is low. However, if this were to occur, hospitals would 
not be required to issue a follow up copy of the signed IM. Current 
guidance states that the HINN may be used voluntarily by hospitals to 
notify beneficiaries who exhaust Part A days (See Transmittal 594, 
Section V) and Medicare health plans would give the Notice of Denial of 
Medical Coverage. Under this new process, hospitals would use a 
liability notice akin to the HINN for this purpose. Hospitals will be 
required to deliver the IM at or near admission, thus all beneficiaries 
and enrollees will receive information on their right to a QIO review.

Content of Notices

    We received many comments that the wording of the generic notice 
does not reflect hospital processes and is not beneficiary friendly.
    Comment: Many commenters stated that the generic notice was 
alarmist and focused too much on termination of Medicare payment and 
financial liability and not enough on the fact that the discharge 
decision was made based on whether the beneficiary could safely go home 
or could safely receive care in another setting. For example, they 
believed that the use of the words such as ``liability,'' 
``noncoverage'' and ``immediate review'' might upset some beneficiaries 
who are facing discharge. In the commenters opinion, hospitals must 
give beneficiaries the confidence they need to transition to a 
different level of care and the wording of the notice would cause 
beneficiaries to doubt the discharge decision unnecessarily.
    Response: As discussed above, the process set forth in this final 
rule no longer entails a new, generic notice. However, we have taken 
these comments into consideration as we have developed the revised IM. 
For example, as discussed above, we intend to include information about 
discharge planning in the IM.
    Please note that the precise wording and content of the notices is 
generally not subject to the rulemaking process, but instead is subject 
to OMB's Paperwork Reduction Act process. Thus, we intend to republish 
these notices through that process, providing an additional opportunity 
for public input prior to implementation.

Other Recommendations

    Many commenters made other recommendations for how CMS could get 
feedback on the proposed notification process.
    Comment: Some commenters recommended that CMS pilot the proposed 
process and notices. Others said that the notices themselves should be 
tested with beneficiaries. Other commenters recommended that CMS 
convene a national workgroup to review the hospital notices and 
recommend changes.
    Response: The process set forth here builds on existing hospital 
notice requirements regarding a patient's right to a QIO review of a 
discharge decision. Thus, we do not believe that a pilot of either the 
proposed process or the proposed notices is appropriate or necessary. 
However, as noted above, there will be ample opportunity for public 
input on the notices through the PRA process. We also intend to carry 
out consumer testing of the notices prior to implementation of the new 
process.

Scope

    Several commenters asked for clarification on issues related to the 
scope of the rule.
    Comment: Several commenters asked if the notification process would 
be applicable to observation stays.
    Response: The notice requirements set forth in this rule apply only 
to inpatient hospital stays.
    Comment: Several commenters stated that Medicare beneficiaries who 
are transferred from an acute hospital to another hospital should not 
receive the generic notice because they are still using their hospital 
Medicare benefit days. Other commenters recommended that no notice be 
required in the following situations: when a beneficiary is moved to 
the same level of care or to a hospital that provides more complex 
medical/surgical care, when there is an emergency transfer from a 
psychiatric hospital to an acute care hospital for an acute problem, 
when a beneficiary is discharged to a rehabilitation hospital, 
psychiatric hospital or skilled nursing facility when the hospital has 
been waiting for a bed in one of those facilities. Another commenter 
requested that CMS distinguish between inter-hospital transfers and 
intra-hospital transfers.
    Response: Although this comment was made in response to the 
proposed generic notice that is required to be given prior to 
discharge, we believe that it is important to restate that, in the 
context of the final rule, hospitals are required to deliver the IM at 
or near admission to all beneficiaries and enrollees with a copy at or 
near discharge except in short stay situations. For pu