When a Medicare beneficiary is admitted to the hospital, very few individuals lie awake at night wondering what their “patient status” is. Under current Medicare rules, one can be admitted to the hospital under observation or as an inpatient. The meaning of "observation" is the same as outpatient and is covered under Medicare Part B; while an inpatient stay is covered under Medicare Part A.
If the patient has both Medicare Part A and B, there is no worry, the hospitalization will be covered and subject to the Part B copays (generally, the deductible plus 20%).
It is important to know whether you are in the hospital as an inpatient or an observation patient. You should not rely on what your hospitalization looks like. You can be in the intensive care unit under observation; you can also receive blood transfusions and have surgery while being an observation patient. You must ask your providers.
The answer to the inpatient/observation question becomes critically important when your doctor recommends that you receive continuing rehabilitation services at a skilled nursing facility or rehab center. The first requirement for Medicare to pay for a rehabilitation stay at a skilled nursing facility is that you have a qualifying three-day stay in the hospital. If you were an observation patient, it does not matter how long you were in the hospital, your stay will never meet the qualifying three-day rule. The end result, is that you will be responsible for 100% of the cost of your stay at the rehab setting.
As a Medicare beneficiary, however, you always have the right to receive your services in your home -- this includes physical, occupational and speech therapy. If you were an observation patient, and private paying for a rehabilitation stay will pose a financial hardship for you, let your doctor know that you would like to receive your rehab services at home. Your doctor can arrange for your therapy, nursing and home health aid services in your home and 100% of these services will be covered by Medicare.
For assistance with an observation status stay followed by a rehabilitation stay that was not covered by Medicare, you can contact ApparentPlan at 952-215-7052, the Senior Linkage Line 1-800-333-2433 or the Office of Ombudsman for Long-Term Care.