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Your Guide to Observation Care

Did you know that even if you stay in a hospital overnight, you might still be considered an "outpatient"?  Your hospital status (whether the hospital considers you an "inpatient or "outpatient") affects how much you pay for hospital services and may also affect whether Medicare will cover skilled nursing care (such as the William Newton Swing Bed program) following your hospital stay.

Although outpatient observation stays are now commonplace in hospitals, you may be unfamiliar with what it actually means.  Following are some frequently asked questions to help you better understand outpatient observation status, billing, and patient responsibility.

What is outpatient observation?

Observation services are hospital outpatient services that a physician orders to allow for testing and medical evaluation of your condition.  Within approximately 24-48 hours of your stay, your physician will decide whether you need to be admitted as an inpatient to the hospital or can be discharged home.  

What kind of conditions usually require observation care?

Observation services are typically ordered for conditions that can be treated in 48 hours or less, or when the cause of your symptoms has not yet been determined.  Some examples are nausea, vomiting, weakness, stomach pain, headache, kidney stones, fever, some breathing problems, and some types of chest pain.

Does observation care count toward my three-day hospital stay for skilled care?  

No. Any of your time spent during an observation stay does not count toward Medicare’s three-day (consecutive) hospital stay rule to qualify for skilled nursing placement. If your status changes from observation to inpatient, your three-day hospital stay begins only from the time when you become an inpatient.  

Do I need to bring my medications?  

Please bring all medications you are currently taking in their original bottles and give to your nurse.

How is an observation stay billed?  

An observation stay is billed under outpatient services (under Medicare this would be under Part B) while an inpatient admission is billed under inpatient services (under Medicare this would be billed under Part A). 

What am I expected to pay for as an observation patient?

Since observation stays are billed as an outpatient service, your insurance co-pays and deductible, along with any additional costs, will probably be based on the outpatient terms of your policies. Your out-of-pocket costs may change depending on whether your stay is designated as observation or full inpatient admission. 

What if my physician decides my condition requires acute inpatient care?  

Your physician must then write an order to covert your outpatient observation stay to a full inpatient admission.

What if my physician decides that I do not require inpatient care?  

You will be discharged from the hospital.  

Can I be placed into outpatient observation after undergoing an outpatient surgical procedure?  

It is possible. For example, Medicare allows for a 4-6 hour recovery period. The intent of outpatient surgery is to have your surgery and be discharged the same day. However, if you experience a post-operative complication, then your physician may place you into observation to monitor you further. 

If I want to spend the night after my outpatient surgery, will Medicare cover this? 

Medicare will only pay if there is a medical condition, approved by your doctor, that warrants postoperative monitoring.  If you desire to stay over for patient/family convenience, you may be fully responsible for payment.

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