Medicare Moment

By  Phyllis Bailey, Director, August 2017.

Medicare Moment – At the Hospital, What Difference Does It Make If Are You “Admitted” or “Under Observation”?

LifeStyle Solutions long term care insurance policyholders often call the Coventry Service Program with questions about Medicare.  Recently we have gotten several questions from policyholders about the difference between being admitted to a hospital or under observation there.  For the most definitive information, we refer you to your health insurance company and to the website.  But because the question of being admitted to a hospital versus under observation can be confusing and has very significant financial ramifications; we are offering some simple information here. 

Key Questions Hospital Admission Observation status 
1) Why does this matter? A) Hospital Inpatient services are covered by Medicare Part A, subject to deductibles, regulations, etc.  This inpatient status must be ordered by your attending physician as medically necessary.

B) If the patient needs follow-up care in a skilled nursing facility or SNF (such as for rehabilitation, not chronic care), Medicare will only pay for patients who have had a 3 day inpatient hospital stay.

Your status affects how much you pay for hospital services and what Medicare will cover, both in the hospital and in a SNF.

A) Observation status is not covered by Medicare Part A, rather it is billed through Medicare Part B. When people in the hospital are classified as outpatients on observation status, they may be charged for services that Medicare would have paid if they were admitted as inpatients.  This can leave individuals with very significant financial bills for hospital charges, medications, etc.

B) Also, Observation status does not count towards the 3 day minimum hospital stay needed to trigger Medicare payment for follow-up skilled nursing facility care (SNF).  The observation status patient will be responsible for all of the associated costs in the SNF.

2) How is Admission defined versus Observation? What’s length of stay? An in-patient is usually admitted for two midnights or greater.  The patient’s condition must have been such that the level of care required could only have been provided in a hospital, and that the patient required skilled services (from a registered nurse, physical therapists, etc.)  Such as a person having major surgery who is expected to recover for a few days in the hospital. This is a person who is in the hospital with an expected stay of one midnight.  May have been seen in the emergency room, laboratory, imaging center, or had day surgery with the expectation of going home that day.
3) How can you clarify your status?

What can you do? 

Ask “Am I a Hospital Inpatient Or Outpatient? Am I in Observation status? Why?”

Ask the attending physician to explain in detail to the hospital why she/he believes it is medically necessary for you to receive services in the hospital.

Ask “Am I a Hospital Inpatient or Outpatient?  Am I in Observation Status? Why?”

Ask the doctor to write an order to formally admit you to the hospital as medically necessary.

If the hospital tells you it is changing you from inpatient to outpatient/observation status, the doctor has to agree and the hospital has to notify you in writing before discharge.  Ask the doctor not to agree to the observation status change.

4) What can help? The NOTICE Act: the Notice of Observation Treatment and Implication for Care Eligibility Act, effective March 8, 2017 –The MOON notice (see right) must be given if someone is not given in-patient status in the first 36 hours at the hospital.

–On the first page of the form, after name and case number there is a blank space for the hospital to write in the reason the patient is not admitted as an in-patient.

–On the back, the hospital (if it chooses) may add information about hospital charges, coverage, payment for post hospital care, medication charges, cost sharing responsibilities, how to contact hospital staff, etc.

Notice of non-in-patient status must be provided within 36 hours of arrival at the hospital.

–An acute care hospital must give oral and written notification to patients who are classified as outpatients or are on observation status for more than 24 hours.

–Notice must be in the form of the Medicare Outpatient Observation Status Notice or MOON effective March 8, 2017.

If you want to dig a little deeper, especially since the regulations change frequently, another good source is the Center for Medicare Advocacy at from which we gathered some of this information for you.

By  Phyllis Bailey, Director, August 2017