What is Observation Status?

Observation status is a hospital billing classification where patients receive care and monitoring to determine whether they need formal admission or can be safely discharged. Despite receiving hospital-level care, often in the same beds as admitted patients, those under observation are considered outpatients for billing purposes. This distinction significantly affects Medicare coverage, copayments, and eligibility for skilled nursing facility care following the hospital stay.

Why observation status matters

• Affects costs: Patients typically pay more out-of-pocket under observation than inpatient status
• Impacts Medicare benefits: Time under observation doesn't count toward the three-day hospital stay required for SNF coverage
• Creates billing confusion: Patients may not realize they're under observation until receiving bills

How Solace can help

A Solace healthcare navigator can help you understand your hospital status, appeal inappropriate observation classifications, and navigate the financial implications of observation versus admission. Advocates can also assist with Medicare coverage issues and help plan for post-hospital care when observation status affects your benefits.