What is "observation status"?

Imagine that your relative goes to the hospital for an outpatient procedure. That's no big deal. But their blood pressure skyrockets during the event. So the hospital decides to keep your family member overnight for monitoring. They have a bed and receive meals. You might readily assume they've been admitted as an inpatient. In this example, they are on "observation status" only.

Financially, this distinction could be very important. In Medicare terms, patients on observation status are outpatients. This means Medicare will likely cover at least some of your relative's hospital visit. But for observation, they pay under Part B, which could mean greater copays and additional uncovered expenses. Money out of pocket. Another detail: Only those formally admitted for three overnights are covered by Medicare for follow-up care in a skilled nursing facility (SNF). The cost of SNF care adds up VERY quickly.

Medicare has strict rules about whether or not a patient qualifies for hospital admission. If a doctor is unsure, they must put the patient in observation status. Ideally, when this happens you receive a notification called MOON (Medicare outpatient observation notice). This notice explains why the care is considered outpatient instead of inpatient. It usually also clarifies the difference in coverage for the hospital and for any aftercare.

If you feel your loved one has been wrongly assigned, you can appeal the decision. You may want to talk first to someone in the hospital billing office. They can help you determine what the out-of-pocket costs would be under inpatient versus observation status.

Avoid unpleasant surprises! Anytime it looks like your loved one will be staying overnight, ASK several people if they are an inpatient or on observation status.

Are you confused about Medicare's hospital coverage?

As the San Francisco experts in family caregiving, we at Compassionate Community Care make it a point to clarify a client's status when they are in the hospital. If they meet the criteria, we advocate for full admission. You don't have to do this alone. Give us a call at 415-921-5038.