QUESTION: What is the difference between a Medicare Beneficiaries Hospital Admission and Hospital Observation?

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ANSWER: Admission vs. observation can have a major impact on the out of pocket cost for care.
Prior to the Affordable Care Act hospitals were not held accountable for the number of readmissions that occurred within a 30 day period, which factored in driving up the cost of healthcare.

The ACA now emphasizes “performance”, hospitals are now rated by the effectiveness of their treatments and readmissions are considered incompetent. As a result, hospitals are more careful about admitting people.

Valerie Mathis-Leake

CLTC, CBC, AHIP Founder, Our Fight For Life

  • Medicare beneficiaries are sometime unknowingly entering hospital as observation patients, which is considered outpatient by CMS.
  • You should receive a Medicare outpatient Observation Notice (MOON) that will inform you if your services are outpatient.
  • Observation services can be costly. Your total copayment for all outpatient services, under observation, could be more than your inpatient hospital deductible.
  • Observation services are hospital outpatient services such as testing you receive while your doctor concludes supporting and/ or medically necessary documentation to admit or discharge you.
  • Observation services can also be facilitated in the emergency room as well as other departments with in a hospital and it could result in an overnight stay. It is important to know, if you are receiving outpatient observation services for more than 24 hours.