Navigating Medicare and Hospital Stays: Understanding Observation vs. Admission and Your Rights as a Patient

Many Medicare beneficiaries assume that if they are in a hospital bed, they have been admitted as an inpatient. However, this is not always the case! Hospitals often classify patients as being under “observation status” rather than admitting them as inpatients. This distinction has significant financial and medical consequences. 

You may have heard the terms outpatient and inpatient. Typically, we think of an outpatient procedure as one that does not require an overnight stay in a hospital. However, you might be surprised to learn that you can stay overnight and still be considered an outpatient! 

Here are the key differences in status when you’re in the hospital: 

Observation Status: 

• Patients under observation are technically considered outpatients, even if they stay in a hospital room for multiple days. 
• Medicare Part B covers observation services, which means that patients are subject to outpatient cost-sharing (copayments, coinsurance, and deductibles). Medicare Advantage has different copays and coinsurances that are plan specific.
• Skilled Nursing Facility (SNF) coverage is not available under Medicare unless a patient has been admitted as an inpatient for at least three consecutive days. The patient then must be admitted to the SNF within 30 days of the hospital discharge and admitted with the same diagnosis for that SNF to be covered by Medicare.

Inpatient Admission: 

• When a doctor formally admits a patient as an inpatient, Medicare Part A covers hospital services for those enrolled in Original Medicare. Medicare Advantage has different copays and coinsurances that are plan specific. 
• Original Medicare covers inpatient stays after the deductible is met, and coinsurance may apply for extended stays. Medicare Advantage has different copays and coinsurances that are plan specific.
• After a qualifying inpatient hospital stay of at least three days, Medicare Part A covers skilled nursing care if necessary.  The patient then must be admitted to the SNF within 30 days of the hospital discharge and admitted with the same diagnosis for that SNF to be covered by Medicare. 

What can you do? If you or a loved one on Medicare are hospitalized, ask your healthcare provider about your status. If you are under observation status but believe inpatient care is necessary, ask your doctor to re-evaluate your case.

Hospitals sometimes discharge patients before they feel ready to leave. If you or a loved one believe a discharge is premature, you have rights under Medicare to appeal the decision. 

Steps to Take: 

1. 1. Request a Medicare Discharge Appeal: Contact your beneficiary and
      Family-Centered Care Quality Improvement Organization (BFCC-QIO) immediately. You can find your BFCC-QIO contact information on your Medicare Summary Notice or at www.medicare.gov 
   2. Obtain a Detailed Notice of Discharge: The hospital must provide a "Detailed Notice of Discharge" explaining why they believe you are ready to leave.
   3. Stay in the Hospital While the Appeal is Pending: If you appeal before you leave the hospital, Medicare will cover your costs until a decision is reached.
   4. Get a Second Opinion: If you are discharged but still feel unwell, consult another doctor or return to the hospital if symptoms worsen.

At Medicare Dana, we cannot stress this enough: knowledge is power! The more information you have, the more protected you are. Part of navigating our current healthcare system is being able to advocate for yourself.

Knowing your Medicare coverage is the first step. Understand what services are covered under Medicare Part A (hospital insurance) and Medicare Part B (outpatient care and medical services.) as well as by your supplement plan or Medicare Advantage plans. My video about the different parts of Medicare can help you learn about the differences! 

Communication is often the rest of the equation when navigating the healthcare system. Ask questions like these: 

• “Am I admitted as an inpatient or under observation status?” 

• “What is the expected length of my stay?” 

• “What is the treatment plan, and who will oversee my care?” 

• “What discharge services or follow-up care will I need?” 

When you or someone you love is leaving the hospital, be sure to plan for post-hospital care. If you will need skilled nursing or rehabilitation services, confirm Medicare eligibility before discharge. 

Be sure to arrange for home health services, if necessary, which may be covered under Medicare Part B with Original Medicare and check with your Medicare Advantage plan for how home health services are covered.

When you are discharged from the hospital, there can be a lot of paperwork including discharge papers, notes about continuing care at home, and prescriptions. Keep copies of medical records, hospital details, and prescriptions so you can continue taking medications at home. 

Knowing the differences between observation status and inpatient admission and understanding your Medicare benefits can help you advocate for yourself in a hospital setting and protect both your health and finances. 

If you need help understanding your Medicare plan or finding a Medicare plan that is more aligned with your finances and healthcare needs, give Medicare Dana a call!

When you are a client of ours, you have a dedicated Medicare agent for life – someone as a point of contact to help walk you through the details of your plan and any claims questions you may have.