Observation Status is a designation used by hospitals to bill Medicare. Unfortunately, it can hurt hospital patients who rely on Medicare for their health care coverage.
People who receive care in hospitals, even overnight and for several days, may learn they have not actually been admitted as inpatients. Instead, the hospital has classified them as Observation Status, which is an “outpatient” category. This designation can happen even for people who are extremely sick and spend many days in the hospital. For example, we have heard from people with recent hip and pelvic fractures who were designated as Observation Status.
The “outpatient” classification is often a surprise to patients; many do not realize their status until the patient is getting ready to leave the hospital. Most of the time hospital patients are not told or given a written notice when they are designated as outpatients on Observation Status. (Note: The NOTICE Act will provide notice that a patient is on Observation Status, but no means to appeal the decision).