Are you “admitted” or “under observation” at the hospital?

Health and Aging News, February 27, 2015

Today’s blog highlights an important but little known regulation regarding hospital stays for patients on Medicare.

On the books since 2008, the rule makes a distinction between patients who are “admitted” to a hospital and those who are “under observation.”

It’s important to understand the difference. Otherwise, financial effects on patients–frequently those in nursing homes–and their families could be devastating.

Here’s why: Under the ruling, Medicare pays hospital bills for patients who are “admitted,” to a hospital, but not for patients “under observation” even if a stay is overnight. Advocates for seniors say that families often believe the patient is admitted, but find, to their distress, that the patient was “under observation.” The final decision about status lies with the hospital, not the patient’s physician.

I was recently alerted to the dilemma by Tippy Irwin, director of San Mateo County Ombudsman Program, a federal program designed to protect the rights of nursing home residents.  Her concern was based on stories she heard from the field.

“When entering a hospital,” she wrote in an email, “it may be that in fact you are not being admitted, but held instead, on observations status. This can have very negative impact on our clients.  Unless a client spends three midnights actually admitted in a hospital, Medicare will not pick up payments for rehabilitation, nursing home stay or prescription drugs that are administered while in the hospital.”

The distinction is laid out by Medicare in lengthy “rules and regulations” both in print and online, but few patients or their families are moved to peruse the documents from beginning to end.

As complaints about the unexpected billing began to surface, journalists and advocates for seniors started spreading the word.  Stories on the topic appeared in the New York Times and other national publications (see below), or on the occasional blog concerned with senior issues.  Nevertheless, on this topic, large segments of the American public remain uninformed.

Seniors and their families – which at some point will include all of us —need to know the facts.  For information on the topic and efforts to change it, see the websites below. They feature articles on the regulation and its effects, followed by links to the Medicare website.  In today’s fragmented media world, it’s up to each of us to search for the information we need.

1.Medicare’s ‘Observation’ Status Can Cost You Big – Wall Street Journal

“Beware Medicare’s ‘Observation’ Status”


Oct. 19, 2013

When in the hospital, more Medicare recipients are being held for observation rather than being formally admitted, a status that can leave them with big bills for items including rehabilitation services.

While the federal agency that runs Medicare expects new rules to reduce the number of lengthy observation stays, consumer advocates say Medicare recipients remain at risk for surprise bills and should take steps to protect themselves.

(To complete the story, click on or Google: “Medicare Observation versus Admittance.”)

2.“Hospitalized but ‘under observation’? Seniors, beware”


CHICAGO Thu Jan 23, 2014

(Reuters) – A growing number of seniors who think they’ve been hospitalized are finding that they really weren’t.

The problem isn’t memory loss, confusion or dementia. Instead, seniors on Medicare who did in fact spend multiple nights in the hospital are learning later on that they weren’t formally admitted. Instead, they had “observation status” – a Medicare classification that can cost seniors thousands of extra dollars if they need post-hospital nursing care…

(To complete story go to or Google: “Medicare Observation versus Admittance”.)

3. “Fighting Observation Status,” By Susan Jaffe, Jan. 10, 2014, NY Times.

Every year, thousands of Medicare patients who spend time in the hospital for observation but are not officially admitted find they are not eligible for nursing home coverage after discharge…. . (To complete the story, Google:  “Fighting ‘Observation’ Status”

4. Medicare 3-Day Rule: Will it Stay or Go? Dr. Cheryl Phillips, Sept. 29, 2013,

II. Medicare Website

Are You a Hospital Inpatient or Outpatient? –

More news on current issues on aging next month.







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