Hospital Stays

Two Words You Must Understand: “Observation Status.”

If you are on Medicare, there are two words you need to understand that will save you unneeded stress and money. They are: “Observation Status.” When you or a loved one are taken to the Emergency Room, you can save yourself thousands of dollars by clarifying if you are on observation status or not.

Medicare pays for inpatient and outpatient services very differently. If you are on observation status, you have not been admitted to the hospital and are considered to be outpatient, even if you sleep in a bed over night. Confused yet?

So, why should you clarify if you are on observation status? Medicare Part A will only pay for a hospital stay if you have been admitted to the hospital with a doctor’s order; it will not pay if you are on observation status. In addition, observation status does not qualify you for the 3-day stay in the hospital that is required for Medicare Part A to pay for a skilled-nursing facility.

Let me give you an example. Sally was taken to the Emergency Room by her daughter. Sally received care, treatment and ate and slept at the hospital for 4 days. Upon discharge the doctor ordered rehabilitation to a skilled-nursing facility to help her recover strength and mobility prior to going home. Sally and her daughter were under the assumption that Medicare would pay the bill. They were shocked when Sally received a bill for close to $15,000.00 after she returned home from the nursing facility. Unfortunately, Sally found out after it was too late that she had never been officially admitted to the hospital, but was only on “Observation Status”, and therefore Medicare would not cover her stay.

Next time you find yourself at the hospital, make sure you clarify your status. Simply ask your doctor or the hospital staff, “Am I admitted Inpatient”, or “Am I on Observation Status?” You will be glad you did.

Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers Life Care Planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a senior’s legal, financial or healthcare needs, please call us.