Outpatient Observation Care

Your doctor or healthcare provider may chose Outpatient Observation care for you because your medical condition requires additional tests and monitoring. As a patient in Outpatient Observation, your condition will be monitored until time and information allow a decision to be made about your diagnosis and treatment plan.

It is important to know that you have not been admitted into the hospital. Your stay is not classified or billed as a hospital admission.

Outpatient Observation care has become more common in hospitals across the nation, but you may be unfamiliar with what this service actually means to you - the patient. We have listed a few commonly asked questions to help you better understand the care you are receiving.

What are observation services?

Observation is an outpatient service that a doctor or other healthcare provider orders so that testing and medical evaluation of your medical condition can be completed. 

While under observation care, your bed may be located on any unit or floor of the hospital. However, please know that the quality of your care is exactly the same as any patient, whether you are an observation patient or have been admitted into the hospital.
The doctor will decide whether you need to be discharged or admitted into the hospital. This decision is usually made with the first 24 hours of observation care, which should not exceed 48 hours.

What conditions usually require observation care?

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

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

No. Any of your time spent during an Outpatient Observation stay does not count toward Medicare’s three-day (consecutive) hospital stay rule to qualify for placement in a skilled nursing home. If you are actually admitted into the hospital, your three-day hospital day begins only from the time when you become an inpatient (are actually admitted).

How is an observation stay be billed?

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

Can I be placed into Outpatient Observation after an outpatient surgical procedure?

This is possible. For example, Medicare allows for a 4 to 6 hour recovery period.  The reason for outpatient surgery is the ability for you to have the surgery and be discharged the same day.  However, if you experience a complication after that surgery, you doctor may place you into Outpatient Observation to watch you further.

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

No, Medicare will only pay if there is a medical condition that requires you to be monitored following surgery.  If you want to stay overnight in the hospital as a matter convenience for you or your family, you will be fully responsible for that payment.

What am I expected to pay as a patient in Outpatient Observation care?

Since observation stays in the hospital are billed as an outpatient service, your insurance co-pays and deductibles, along with any additional costs, will most likely 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.
Therefore, any costs from a nursing home following an observation stay or any inpatient hospital stay less than three days are the financial responsibility of the patient and will not be covered by Medicare as a Part B service.

How do different payers define Outpatient Observation?

Insurance payers have different amounts of time that are covered in observation. 
For example:
  • Medicare limits Outpatient Observation services to 48 hours. Typically, however, a decision to discharge or admit a patient is made within 24 hours. 
  • Medicaid allows Outpatient Observation up to 48 hours.  
  • Private insurances may vary, but most permit only 23 hours in observation care. 

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

Your physician will then write an order to change your Outpatient Observation stay to a full inpatient admission. You will be officially admitted into the hospital at that time.

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

You will be discharged from the hospital at that time.

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