Hospital Admission vs. Observation Status

When you go to the hospital emergency department, the examining doctor has to determine whether you need to be hospitalized. Sometimes, it requires a significant period of treatment or monitoring in order to make a decision concerning your admission or discharge. Observation status is commonly assigned to patients who need more time and testing before a decision can be made about admission.  

In the past, patients would typically remain in the emergency department, sometimes sitting in the hallways while extended testing was being completed. Today, patients are transferred to a room in the hospital and assigned a bed where they are more comfortable and can be monitored while awaiting the decision about admission. It appears to most people that the decision has already been made and that they are admitted to the hospital, but in fact, they are being held in "observation status". In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. When you are placed on observation status, as a Medicare recipient, despite the fact that you are physically in the hospital, no matter how many days, your care for billing purposes is considered outpatient care. 

As a general rule, you won't experience any issues with the payment for your hospital care, but if you need rehabilitation after leaving the hospital you won't qualify for Medicare benefits. Medicare Part A will pay for care in a skilled nursing facility (nursing home) only if the care follows a Medicare Part A covered three day inpatient stay in a hospital. Therefore, you need to be aware when you go to the emergency department: Ask about your admission status. If you're placed on Observation, ask for a written notice. Prepare for your discharge, understanding that qualifying homecare services will be paid by Medicare but in-patient rehabilitation or nursing home WILL NOT be covered.