Hospitals are required by federal law to notify you via a MOON letter if you will be monitored as an outpatient for longer than twenty-four hours. The amount you pay under Medicare during this period depends on whether you are an inpatient or an outpatient.

If your doctor needs additional time to determine whether you should stay overnight or go home, you can be placed under observation in the hospital.

The purpose of your observation and how it may impact your financial obligations during your hospital stay and after you are released are explained in the Medicare Outpatient Observation Notice (MOON).

Informally known as the MOON letter, hospitals are required to provide this notice within 36 hours of beginning observation services, or at the time of discharge if earlier.

Continue reading to find out more about the significance of the MOON letter and how it relates to Medicare.

Does Medicare require a MOON letter?

Before determining whether to admit you to the hospital, doctors take into account a number of factors. If you require hospital care for at least two days, you will usually be admitted.

However, your healthcare provider may need some time to make a decision about your admission. You might be regarded as an outpatient during this period.

The MOON letter is not required by Medicare itself. However, hospitals are required under federal law to give one to patients who are receiving outpatient observation services for longer than twenty-four hours.

After the Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) was passed in 2015, hospitals have been required to do this since 2017.

Providers are required to provide you with the MOON letter and an oral explanation of how it was delivered.

What is the purpose of the MOON letter?

The MOON letter is important because it determines whether you are an inpatient or an outpatient, which affects the kind of care you receive and the amount you will be required to pay for it under Medicare.

When you are admitted to the hospital on a doctor’s order, you are referred to as an inpatient. However, even if you spend the night at the hospital, you are typically considered an outpatient if you require lab work, X-rays, emergency or observation services, or any of these without being officially admitted as an inpatient.

In some situations, medical professionals could decide to keep you in the hospital while they make a decision on whether to discharge you or admit you as an inpatient. You might still be regarded as an outpatient in certain circumstances.

How does the MOON letter relate to out-of-pocket costs?

Hospital stays for acute care, rehabilitation, long-term care, and psychiatric therapies are covered by Medicare Part A. In contrast, outpatient medical care is covered by Medicare Part B.

Therefore, the amount you pay after your coverage begins might be directly impacted by whether you are classified as an inpatient or an outpatient.

In 2025, you would have to pay a $1,676 deductible as an inpatient insured by Part A. After that, the first sixty days of your hospital stay will be covered in full by Part A. This implies that your initial days of therapy would be completely paid for.

However, if the hospital keeps you as an outpatient even if you stay there, whatever care you receive will be covered by Part B, which in 2025 has a $257 deductible.

The remaining 20% may be your responsibility until you are placed in inpatient status and Part A coverage begins, as Part B then covers 80% of your expenses.

Because of this, the MOON letter might help you get a better idea of how much you would be required to pay. Furthermore, your eligibility for care in a Part A skilled nursing facility may be impacted by your classification as an inpatient or outpatient.

Takeaway

Your doctor must provide you with a MOON letter to notify you of your status as an outpatient if you are staying in the hospital under observation for longer than twenty-four hours.

This is significant because it can impact the amount of money you may have to pay out of pocket and whether your treatment during this period is covered under Part A or Part B.

Knowing your current condition is crucial so you can make well-informed decisions regarding your care.

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