The Importance of Understanding Inpatient vs Observation Status on Medicare
by Susan R. Tolbert, Licensed Health Agent
If a Medicare beneficiary goes to the hospital and stays for several days the assumed conclusion is that his or her claims are going to be applied for coverage under Medicare Part A for inpatient hospital care. However, this is not always the case. Hospitals keep patients overnight or even several nights without admitting them but classifying them as ‘under observation’. The hospitals say they use this classification because the patient needs to be observed further in order to determine if an admission is necessary.
A patient who is in the hospital under observation is considered outpatient. Observation services may be given in the emergency department or in other areas of the hospital. In order to be inpatient, a doctor must order a hospital admission for the patient. In addition, the hospital must also formally admit the patient. The designation of inpatient versus under observation will affect what a patient pays while in the hospital. Inpatient status also affects whether Medicare beneficiaries qualify for the skilled nursing benefit under Part A which requires a 3-day hospital admission for coverage to go effective.
The observation status has come under great scrutiny over the years, but legislation to enact changes have been unsuccessful. In 2016 Medicare implemented a required document for hospitals to give Medicare patients if they are being treated as outpatient. The document acronym is MOON and stands for Medicare Outpatient Observation Notice. A patient should receive this notice of observation status when between 24 to 36 hours have passed as an outpatient.
Medicare patients should be aware of their status at the hospital of being inpatient or outpatient. The Medicare & You 2019 Handbook states: “You or a family member should always ask the hospital and/or your doctor if you are inpatient or outpatient each day of your stay.” It is particularly important to be considered an inpatient admission if skilled nursing care will be needed after the hospitalization. In this case, seek the doctor’s help in being admitted as an inpatient, and tell the hospital you want documentation from your doctor showing why admission is medically necessary.
The purpose of this article is to educate Medicare beneficiaries on the inpatient vs observation status while at the hospital. For any questions on how this may impact you based on your specific Medicare coverage, please feel free to contact me at susan@newbrookeinsurance.com.