Knowing how your Medicare coverage applies is important, especially if you’re a patient in the hospital. There are differences between Medicare coverage for inpatient vs outpatient vs under observation.
Each status can determine whether Part A or Part B of your Medicare plan will help pay your costs. These differences will also determine if you can receive coverage for a skilled nursing facility stay.
Medicare Coverage for Inpatient vs Outpatient vs Under Observation
Inpatient care means you’re admitted to the hospital on a doctor’s order. As soon as you are formally admitted, you’re classified as an inpatient care recipient.
For example, when you visit the Emergency Room (ER), you’re initially considered outpatient, you haven’t been admitted yet.
If your visit results in a doctor ordering you to be formally admitted to the hospital, then your status becomes inpatient. The care you receive is considered inpatient until the day you’re finally discharged.
Despite a stay in the hospital, your care may be considered outpatient if you’re receiving outpatient care on the same day that you are discharged from the hospital. Even if you spend the night in the hospital, your care could still be considered outpatient.
Let’s say your doctor orders observation of your condition or tests to help diagnose your condition while you’re in the hospital, you remain classified as an outpatient client until a doctor orders inpatient hospital admission.
Outpatient care is defined as hospital or medical facility care that you receive without being admitted or for a stay of less than 24 hours (even if this stay occurs overnight). Outpatient care can also include any health services that you receive while at the facility.
What is “Under Observation”?
When you’re “under observation” your doctor must monitor you for a time to decide whether you should be admitted for a hospital stay or not. This is a form of outpatient care.
When your doctor decides to admit you to the hospital for treatment, that’s when you will transition from outpatient to inpatient.
You can receive many services through outpatient care, including but not limited to:
- Emergency room services
- Medical observation
- Outpatient (day) surgery
- Lab tests
- Other services received without the doctor ordering admission
Inpatient Hospital Stays mean Skilled Nursing Facility Care
Medicare will only cover a Skilled Nursing Facility stay that is preceded by a qualifying inpatient hospital stay. This means that you need to receive inpatient hospital care for at least three straight days (this includes the first day that you are admitted as an inpatient and excludes the day you’re discharged from the hospital.
Many patient advocate groups call this requirement a Medicare loophole that does a disservice to aging adults. These adults need the quality and specialized care that comes from a skilled nursing care center.
Medicare patients find themselves in a situation where they face sticker shock looking at Medical bills. Others must decide whether they will pay out-of-pocket for medically necessary rehab and skilled nursing care or cut their care short.
When you or a loved one arrives at the hospital, you can also ask questions like:
- What is the patient’s status inpatient or observation?
- How long do you think the hospital stay be?
- Will there be a need for skilled or rehab care after the patient is discharged?
Asking questions throughout your stay is important because hospitals can change the status from one day to the next.
You can ask to have your status changed, but it is important to do so while you’re still in the hospital. If necessary, you can request the hospital’s patient advocate for assistance.
Inpatient Medicare Expenses
Medicare Part A will cover hospital services while you’re receiving inpatient care.
These services include:
- Semi-private rooms (two or three patients per room)
- General nursing
- Medications necessary for your inpatient care
- Any supplies and treatments necessary to treat your condition
For an inpatient stay, you’re required to pay your Part A deductible amount for all hospital services received during the first 60 days of your stay.
If you receive doctor services during an inpatient hospital stay, those services will be covered under Medicare Part B. You must pay 20% of the Medicare-approved amount for these services after paying your Part B deductible.
If you receive coverage from a Medicare Advantage plan, you will be covered by that plan for inpatient hospital care. Medicare Advantage plans are offered by Medicare-approved private insurance companies and they are required to provide the coverage equal to or better than Original Medicare Part A and Part B. This excludes hospice care which is still covered by Part A.
Outpatient Medicare Expenses
Medicare Part B covers outpatient services. You will pay a coinsurance for every outpatient service you receive, and the amount will vary depending on the service and facility. For example, your coinsurance for the ER is likely to be different than your coinsurance for outpatient (day) surgery.
Part B will cover outpatient doctor services, you’ll be responsible for paying 20% of the Medicare-approved amount for these services after you pay your Part B deductible, which is $135.50 for 2019.
There are some screening and preventive services that are covered without cost to you since the Part B deductible doesn’t apply. If you’re enrolled in a Medicare Supplement plan, many if not all of your out-of pocket expenses could be covered.
Prescription and over-the-counter drugs received in an outpatient care setting (like an Emergency Room) aren’t covered by Part B. Many hospitals have policies that don’t allow patients to bring prescription or other drugs from home for safety reasons.
If you have a Medicare Part D Prescription Drug policy or a Medicare Advantage Prescription Drug plan, you may be covered under certain circumstances.
If you need more information, give us a call. We can help determine if your current Medicare plan is the best plan for you. If you need information on enrolling in a Medicare plan for the first time, we can help with that too!
The best part about working with an insurance expert is the confidence you will have in your coverage, the peace of mind you will have with your health care, and the control you will have over your medical expenses.
Your agent will help you compare plans and they will be able to explain why the plan they recommend is suitable for your needs. Compare plans and rates online here.