Observation Status

Are You a Hospital Inpatient or Hospital Outpatient Observation?

Did you know that even if you stay in the hospital overnight, you might still be considered an "outpatient"?

What is Outpatient Observation status?
Outpatient observation services are short-term services provided in a regular hospital bed. You receive the same care and treatment you would receive had you been placed into inpatient status. Outpatient Observation status gives your physician time to further evaluate and treat your illness before deciding to place you in an inpatient bed or allow you to go home.

Will my insurance company pay for Observation services?
Insurance companies pay for observation services when ordered by the physician and according to the requirements of your plan, however, this service is considered an outpatient benefit. Your responsibility for each individual outpatient hospital service will apply and your responsibility for payment may be much different than your inpatient hospital benefit depending on your insurance coverage.

How would my hospital status affect the way that Medicare covers care I get in a skilled nursing facility (SNF)?
Your hospital status also affects whether Medicare benefits can be used to cover care you get in a skilled nursing facility (SNF). The Medicare benefit will only cover care you get in a skilled nursing facility if you first have a "qualifying hospital stay." A qualifying hospital stay means you've been a hospital inpatient for at least 3 days in a row (counting the day you were admitted as an inpatient, but not counting the day of your discharge). If you don't have a 3-day inpatient hospital stay, the physician may order skilled nursing or rehabilitation in other settings (like home health care, outpatient therapy) or perhaps any other coverage (like Medicaid or Veterans' benefits) may cover SNF care.

How would a hospital's observation services affect Medicare skilled nursing facility (SNF) coverage?
During the time you're getting observation services in the hospital, you're considered an outpatient. This means you can't count this time towards the 3-day inpatient hospital stay needed for this Medicare benefit to cover your skilled nursing facility stay.

If you have questions on how your insurance plan covers outpatient observation or inpatient hospital services contact your insurance company. If you are a Medicare beneficiary, you can call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

Source Medicare Information: CMS Product No. 11435, Dec. 2009.