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Observation Status and What you need to know

Many people are confused as to what observation status is and how it can affect them.  Today we will look at what hospital admission status is and what it means in terms of hospital care and long term skilled nursing care.

When a person enters a hospital for treatment they are be placed into one of two admission categories, outpatient or inpatient.  Inpatient status means that they have been formally admitted to the hospital by a doctor’s order.  Outpatient status means that you are there for emergency department (ER) service, outpatient surgery, lab tests, X rays or observation.  When a person is  in the hospital under outpatient they do not have a doctors order for admission.

Observation status covers many different circumstances, the following are examples.  One example of observation stats: A person who has outpatient surgery but is kept at the hospital for 24 hours in order for medical staff to address any complications from surgery that may occur.  In these circumstances the patient has been told beforehand that they will be kept for 24 hours after their procedure.  Another common example is someone enters  the Emergency Department and is put under observation to determine if they are sick/injured enough to require inpatient treatment.

Observation status has been in use  for a very long time, until recently the observation status was usually short term, less than 48 hours, most often 24 hours.  But, now a person can be kept in the hospital under observation status for days.  Many people do not understand the importance of admission status and how it can significantly affect the way needed long term skilled care is paid for.

When a person requires skilled care, such as rehabilitation, in order for Medicare to pay for that care the person has to have a qualifying hospital stay.  A qualifying hospital stay is one where a person has been admitted as an inpatient to the hospital for 3 midnights.  If they have a qualifying hospital stay prior to transfer to a skilled care facility, than Medicare covers the first 20 days of rehab at no cost to patient, and covers days 21-100 with a 2014 daily co pay of $152.  If a person goes into a rehabilitation setting at a skilled care facility and does not have a qualifying hospital stay, than Medicare covers nothing.    This is why it is so very important for patients and their families to understand the patient’s admission status.  A patient may enter a hospital through the emergency department and be placed in observation status for 3 nights and then be told there is nothing more the hospital can do they need to go to rehab.  The problem is the patient will be responsible for the entire rehab bill because they did not have a qualifying hospital stay.

So, how do you know what admission status a patient is under?  You ask and keep asking until someone tells you.  A person cannot presume that they are admitted just because certain things happen.  Observation status and inpatient admission status really do not look any different from the patients view point.  In both situations the nurses ask the same question about health, lifestyle etc.  If you are told that the patient is under observation status then the patient/patients advocate has the right to ask why they are not fully admitted as an inpatient.  Never assume that someone has inpatient status, always ask.

Additionally, the way Medicare covers self-administered drugs (prescriptions that the patient normally takes at home) for patients in outpatient status is much different.  To learn more about observation status, Medicare Prevention and Wellness benefits, as well as other Medicare topics, you can go to  You can always contact your local SHIP (Senior Health Insurance Program) Counselor.  To find your closest SHIP counselor in Southwestern Illinois you can call the Area Agency on Aging at 618-222-2561 or 800-326-3221.


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