Medicare, health insurance companies, and hospitals are always looking for ways to save money.
Assigning you to observation status rather thaninpatient careis one way to do so.
But depending on the coverage you have, it might end up costing you more.
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What Is Observation Status?
When you are put in the hospital, youre assigned either inpatient or observation status.
From an insurance standpoint, observation patients are classified as a pop in of outpatient.
Depending on your coverage, these may or may not involve different out-of-pocket costs.
The room you are assigned may not help.
Some hospitals will have a special area or wing devoted solely to observational patients.
Others will put their observation patients in the same rooms as their inpatients.
Generally speaking, observation status is limited to 48 hours, but this is not always the case.
Some hospitals may keep you on observation status longer than this if they believe it is warranted.
The guidelines are complex and change every year.
These policies are largely standardized to ensure that hospitals and insurance companies see eye-to-eye.
These include InterQual or Milliman guidelines commonly used in the healthcare industry.
Just because your hospital considers you to be an inpatient doesn’t mean your insurer will.
In some cases, you might not discover this until you receive a letter stating that theclaimhas been denied.
As is the case with most health insurance questions, there’s no one-size-fits-all answer here.
This can happen months after you’ve been released.
If the hospital doesnt follow the guidelines closely, it risks such denials.
If the hospital fails to appeal the denial, you may be faced with additional bills.
Although it is unlikely your insurer will deny the entire claim, you may still take a financial hit.
If you have private insurance, your share of the cost will depend on the specifics of your plan.
But if you haveOriginal Medicare, you could end up paying a larger portion of the bill.
In recent years, the CMS has indicated that they are open to changing this rule.
Prior to 2020, this was not something you could do.
Under certain circumstances, Medical Part A benefits can still be applied.
Should I Fight or Settle?
Even so, the reassignment of your status is not always the solution.
If this happens, neither you nor the hospital will likely succeed in fighting the denial.
The hospital will often have a dedicated insurance or financial aid officer to assist you with this.
The assigning healthcare provider will also need to participate.
Some health plansincluding Medicarehave different cost-sharing for inpatient and outpatient treatment.
But it’s worth checking with the hospital just to verify you understand how your stay is being categorized.
Centers for Medicare and Medicaid Services.Costs.
CLA.Opportunities to bypass existing three-day inpatient stay requirement.
Centers for Medicare and Medicaid Services.Skilled nursing facility care.
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