March 23, 2026
The Centers for Medicare & Medicaid Services has updated its Medicare Outpatient Observation Notice. Providers should transition to using the new notice by April 20, 2026, according to CMS. The updated version is effective through Feb. 28, 2029.
How it’s used: Hospitals and critical access hospitals are required to give the standardized notice to members of Medicare Advantage plans who are under outpatient observation for more than 24 hours. The notice explains why the members aren’t inpatient and what their coverage and cost-sharing obligations will be.
The notice must be completed no later than 36 hours after observation begins. If the patient is admitted, transferred or released, it must be delivered before 36 hours after observation begins.
To complete the notice
Download the notice from the CMS website. Forms in English, Spanish and large print are available.
- Fill in the reason the member is outpatient rather than inpatient.
- Explain the notice verbally to the member if they are in observation more than 24 hours.
- Have the member sign to confirm they received and understand the notice. If the member declines, the staff member who provided the notice must certify that it was presented.
- Document all member communications regarding the notification process in members’ records.
Learn more from the CMS Medicare Claims Processing Manual, Section 400, Chapter 30.
The information provided does not constitute coding or legal advice. It is only intended to be a summary of the law that has been enacted and is not intended to be an exhaustive description of the law or a legal opinion of such law. If you have any questions regarding the law mentioned here, you should consult with your legal advisor.