What’s the difference between Inpatient and Observation status in the hospital?

Q: What’s the difference between Inpatient and Observation status in the hospital? Does Medicare handle it differently?

by: Barbara Fradkin

  • Inpatient status means that you have been formally admitted to a hospital with

               a doctor’s order for medical problems.

  • Observation status means that doctors want to monitor your condition –to see if inpatient admission is warranted.

With healthcare, the devil is in the ever-changing details. The difference between “inpatient” and “observation” status at the hospital doesn’t sound very important, but IT IS.  A patient who arrives through the Emergency Room is considered to be on observation status (covered under Medicare, Part B).  Why observation status? Because the doctor did not write an order to admit you to the hospital as an inpatient. So, you are still considered an outpatient. The decision for inpatient hospital admission is based on your doctor’s judgement and your need for medically necessary hospital care.  Only once the doctor writes the order for inpatient care, does your status change and the inpatient stay “count” begin.

Importantly, Medicare does not count the time you are in observation status towards the 3-day “inpatient” hospital stay required to cover expenses for rehabilitation (Rehab).

Physicians are feeling the heat from their patients, since there can be a significant financial gap between in-patient versus observation status. If you have secondary insurance with your Medicare, then there usually is not a problem. But for those who cannot afford “Medigap”– the financial burden is real. 

For seniors, hospital status is a situation where it pays to be your own best advocate.  Many doctors are unaware of the potential issues with Medicare.  Talk to your doctor and ask for admission as an inpatient as early as possible —especially if you will need to go to a skilled care facility for short term rehabilitation. Remember: A patient’s status is always assigned based on how the hospital stay ended, not how it started. See more about this important subject online at medicare.gov.

One Senior Place is a marketplace for resources and provider of information, advice, care and on-site services for seniors and their families.  Questions for this column are answered by professionals in nursing, social work, care management and in-home care. Send questions to askOSP@OneSeniorPlace.com or visit One Senior Place, The Experts in Aging. 

Barbara Fradkin is a Social Worker, Certified Care Manager and the Director for One Senior Place, Viera.