It’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 in inpatient.

How is hospital status determined? Hospitals assign patients 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 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.

You 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 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. (**see end of article for appeal information)

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. The amount could add up quickly. 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 beyond any outstanding deductible amount.

What can you do? The most important thing for you, or someone on behalf of you, to do is to make sure you ask about your status when you are in the hospital.

Ask every day: Am I an inpatient or an outpatient?

Do not assume that you are an inpatient, only to find out after the fact that you were not. 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 (** see end of article for appeal information) 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.

**Just weeks ago, The Office of Medicare Hearings and Appeals announced that Medicare appeals at the Administrative Law Judge level, the fourth step before a final district court suit, will be suspended for two years! There are only 65 Administrative Law Judges.

The backlog of appeals has caused the Office of Medicare Hearings and Appeals (OMHA) to suspend taking new appeals as of July, 2013. The office says the average weekly influx of hearing requests grew from an average of 1,250 in January, 2012 to more than 15,000 in December, 2013. Currently there are 460,000 pending appeals.

The American Healthcare Association claims the Medicare recovery audit contractors are driving up the appeal backlog by issuing excessive inappropriate denials. This includes thousands of complaints that people were denied for skilled care benefits simply because they had not been admitted to the hospital.