What is "Outpatient Observation Status?"

By Jane Farrell

The web of Medicare rules and regulations can be confusing at the best of times, but if you’re facing an imminent hospital stay or are suddenly visiting the emergency room, you can feel downright frightened by the rules that will affect you immediately.

Here, the nonprofit Center for Medicare Advocacy, in partnership with the John A. Hartford Foundation, tells you about “outpatient observation status,” an essential part of what you should know about hospitals and Medicare.

Outpatient observation status is a hospital billing classification that can make Medicare patients pay out-of-pocket for the cost of their hospital stay; hospital prescriptions; and subsequent nursing home care.

How does this happen? There’s a time limit on reimbursable care. Patients must be classified as inpatients for three days in the hospital in order for Medicare to pay subsequent nursing home care.

It may just seem like semantics, but for Medicare beneficiaries, it can ruin lives because it saddles patients with increased out-of-pocket expenses when Medicare won’t pay for post-hospital nursing care.

And if post-hospital care in a nursing home won’t be covered, many people just go without that care altogether rather than face enormous bills.

Observation status is very hard to fight, but the most important thing you can do at the beginning of a hospital stay is to ask the doctor to classify you as an inpatient rather than an outpatient. (Don’t automatically assume that you are an inpatient because you have an overnight stay. Under federal rules, a person can be classified as an outpatient even if they stay overnight after an emergency-room visit.) You can also ask your regular physician to contact the hospital doctor in support of your request.

If the hospital doctor didn’t tell you about your inpatient or outpatient status, you can file a petition with the state health department. If post-operative nursing home care costs are denied, you can file a complaint with Medicare

To find out more about Medicare issues, click here to visit the Center for Medicare Advocacy.