How Are Hospital Observation Services Covered?
How Are Hospital Observation Services Covered? For those covered under Original Medicare or a Managed Medicare plan there can be a big difference in out of pocket costs for a hospital stay. The amount of coverage you receive depends on how your carrier classifies the services. Your insurance carrier may consider a hospital either inpatient or outpatient even if someone stays overnight.
A hospital stay can only be classified as “inpatient”
If your doctor’s order admits you into the hospital, your hospital stay is classified as inpatient. Inpatient stays fall under part A of Medicare and are subject to a deductible. In some cases however, a person may spend substantial time at the hospital (even stay overnight) without a doctor’s order to admit. In this situation the stay is considered an outpatient stay even thought the patient stayed overnight. Observation services fall under the definition of outpatient services and are subject to the part B benefits of Medicare. In some situations, this leads to costs higher than the Medicare part A deductible. In this case, there is often a copay or coinsurance for each outpatient service that you receive.
An inpatient vs. outpatient
An inpatient vs. an outpatient hospital stay can also have an effect on the skilled nursing coverage you will receive. Medicare will only cover a skilled nursing service if you first have a qualifying inpatient hospital stay of 3 or more consecutive days. If someone is in the hospital for observation instead of as an inpatient, insurance may not cover your skilled nursing facility care. It is important to ask a doctor or the appropriate hospital staff if Medicare will cover a skilled nursing stay. Therefore, you will be able to avoid surprise bills that may arrive in your mailbox later on.
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