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  • Being Kept “Under Observation” Can Matter More Than You Think

    It’s a common practice for doctors to keep a patient in the hospital “under observation” when their condition needs monitoring, but may not require an extended hospital stay to stabilize. Even a patient who stays overnight in the hospital may still technically be considered an outpatient under observation. But what does this mean for your clients?

    A few important things to know about the difference between being an outpatient under observation and an admitted inpatient.

    Costs for the same services over the same timeframe can vary significantly depending on patient status – Because patients under observation are still considered outpatients, their treatment is covered by Part B. Once admitted as an inpatient, Part A takes over coverage for any required services. Because the deductibles and coinsurance are separate, the cost can vary for clients who have certain Medicare Supplement plans. For example, a client with Plan G would pay nothing for an inpatient stay, since their plan covers both the Part A deductible and Part A coinsurance, but would pay Part B charges out-of-pocket until the Part B deductible is met. While Medicare Advantage plans may not mirror the same inpatient and outpatient deductibles in their coverage, their copays and deductibles likely still differ between inpatient and outpatient services.

    Outpatient observation days do not count towards a qualifying hospital stay for skilled nursing facility care – To be eligible to have skilled nursing facility care covered under Original Medicare and a Medicare Supplement plan, a member has to first have a qualifying hospital stay of at least three days. Time spent under observation, even preceding an inpatient stay, does not count towards the required hospital days. However, Medicare Advantage plans will vary and many do not require a previous inpatient stay.

    Only a specific doctor’s order can change a patient’s status from outpatient under observation to inpatient – Inpatient status is not a factor of the length of time spent in the hospital. A patient could theoretically go to the ER, spend hours in the ER being evaluated, then be moved to a regular hospital bed for another day or more for observation, and never officially be admitted to the hospital. Only once a doctor determines that a patient requires a full inpatient stay and writes an admitting order is someone considered an inpatient.

    Some Medicare Advantage plans will not charge an Emergency Room copay and a hospital copay for the same day – Under some MA plans, the ER copay is waived if you’re admitted to the hospital during the same visit, but this does not apply if you stay in the hospital under observation and are then released.

    It’s easy to assume that being in the hospital is enough to qualify as an inpatient, but it’s important to remember that there can be more to it than simply being in a hospital bed.