| Thu, Sep 08, 2016 @ 09:00 AM

What Is Hospital Observation Status?

Posted by Medicare Made Clear

Doctor walking with senior patient in wheelchairIt’s logical to think that when you are a patient in a hospital you are an inpatient. Not so. You can be in a hospital room, in a hospital bed, wearing a hospital gown and eating hospital food, sometimes for days, without ever being admitted as an inpatient.

How is Hospital Status Determined?

Hospitals assign patients to either inpatient status or observation status. In general:

  • You are likely to be assigned inpatient status when you are sick enough to need skilled, technical care. You must be formally admitted to the hospital by doctor’s orders to have inpatient status.
  • You may be assigned observation status when doctors aren’t sure how sick you are or what care you may need—but you are too sick to get care in the doctor’s office.

As an example, let’s say you are having chest pain. You go to the hospital emergency room. Doctors there aren’t sure whether you are having a heart attack or not. They decide to keep you in the hospital on observation status to monitor your condition.

You stay in a hospital room for two nights. You are attached to a heart monitor and have your blood drawn for tests every few hours. You receive oxygen and regular nursing care. Maybe you receive other diagnostic tests.

Your chest pain subsides and your condition stabilizes. Tests reveal that you are not having a heart attack. You are discharged from the hospital and sent home.

In this example, you were on observation status for your entire stay.

Alternatively, doctors in the example may have determined that you were having a heart attack, or that you had another problem requiring skilled care. At that point your status might have changed to inpatient. The change of status could be retroactive to your first day in the hospital or it could be applied only to the rest of your stay. The hospital determines what your status is based on your condition and the doctor’s recommendation.

Why Does It Matter?

When you are in the hospital on observation status, you may pay more than you would as an inpatient for the same care. In addition, any necessary follow-up care in a skilled nursing facility may not be covered by Medicare at all.

Care you receive while on observation status in the hospital is covered under Medicare Part B (medical insurance). Observation status is viewed as outpatient care for insurance purposes. In the example given above, you would pay coinsurance for the care, services and tests you received while in the hospital. In addition, you would be responsible for 100% of the cost for any follow-up care or rehabilitation you needed when you left the hospital.

Inpatient care is covered under Medicare Part A (hospital insurance). After the deductible is met, Part A covers the full cost of hospital care and services up to 60 days in one benefit period. A benefit period begins the day you go into the hospital or skilled nursing facility. It ends when you’ve been out for 60 days in a row. So in the example above, you would pay nothing for your hospital care beyond any outstanding deductible amount.


Do not assume that you are an inpatient in the hospital only to find out after the fact that you were not. It’s a good idea to ask your doctor, a nurse or another hospital staff person each day: Am I an inpatient or an outpatient? Talk to your doctor or a patient advocate at the hospital if you learn that you are on observation status and are concerned about the cost of your care.

You may be able to appeal to Medicare if you are faced with a large, unexpected hospital bill due to being on observation status. But it may be better to avoid the situation by being proactive and informed.

Related Content

Medicare Part A: The Ins and Outs of Hospital Coverage

Medicare Part A Coverage & Costs

How to Appeal a Medicare Decision



Are You a Hospital Inpatient or Outpatient?: Get Medicare’s publication on the topic.

Medicare.gov: Visit the official U.S. government site for Medicare.


For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.


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