If you are on Medicare and you are hospitalized, it’s important for you to know if you are being classified as a hospital “inpatient” or “outpatient!”

If you are classified as an outpatient or “under observation,” this can adversely affect how much you will pay for hospital services such as X-rays, drugs, and lab tests. This may also affect whether Medicare will cover the care you receive in a Skilled Nursing Facility (SNF) following a hospital stay.

You’re an inpatient beginning when you are formally admitted to a hospital with a doctor’s order. The day before you are discharged is your last inpatient day.

You’re an outpatient if you’re getting emergency department services, observation services, outpatient surgery, lab tests, X-rays, or any other hospital services, and the doctor hasn’t written an order to admit you to a hospital as an inpatient.

IMPORTANT: Even if you stay overnight in a hospital, you could still be classified as an “outpatient” or “under observation.”

Observation services are hospital outpatient services given to help the doctor decide if you need to be admitted as an inpatient or if you can be discharged. These services may be given in the emergency room or another area of the hospital.

The decision for inpatient hospital admission is a complex medical decision based on your doctor’s judgment and your need for “medically necessary” hospital care. An inpatient admission is generally appropriate for payment under Medicare Part A when you’re expected to need 2 or more midnight’s of medically necessary hospital care, but your doctor must order this admission and the hospital must formally admit you for you to become an inpatient.

You may get a Medicare Outpatient Observation Notice (MOON) that lets you know you’re an outpatient in a hospital or critical access hospital. You must get this notice if you’re getting outpatient observation services for more than 24 hours.

The MOON will tell you why you’re an outpatient getting observation services, instead of an inpatient. It will also let you know how this may affect what you pay while in the hospital, and for care you get after leaving the hospital.

How Much Do I Pay as an Inpatient?

Medicare Part A (Hospital Insurance) covers inpatient hospital services. Generally, this means you pay a one-time deductible for all of your hospital services for the first 60 days you’re in a hospital.

Medicare Part B (Medical Insurance) covers most of your doctor services when you’re an inpatient. You pay 20% of the Medicare-approved amount for doctor services after paying the Part B deductible.

NOTE: Most Medicare Supplement insurance plans will pay the entire Part A hospital deductible of $1,408 (in 2020) and most or all of the remaining 20% of the Medicare Part B expenses that are not covered by Medicare.

How Much Do I Pay as an Outpatient?

Medicare Part B covers outpatient hospital services. Generally, this means you would pay a co-payment for each outpatient hospital service. This amount may vary by service. Part B also covers most of your doctor services when you’re a hospital outpatient. You pay 20% of the Medicare-approved amount after you pay the Part B deductible. Again, most Medicare Supplement insurance plans will pay for most or all of the Part B expenses that are not covered by Medicare.

In most cases, prescription and over-the-counter drugs you get in an outpatient setting such as an emergency room are not covered by Part B.

In certain circumstances, if you have a Medicare Prescription Drug Plan (PDP), also known as Medicare Part D, these prescriptions may be covered. You may have to initially pay out-of-pocket for these prescriptions and then submit a claim later on to your PDP for a refund.

How Would My Hospital Status Affect Skilled Nursing Home Care?

Medicare will only cover care you receive in a Skilled Nursing Facility (SNF) if you first have a “qualifying inpatient hospital stay.” This means that you must have been classified as a hospital inpatient (not an outpatient or under observation) for at least three days counting the day you were admitted as an inpatient, but not counting the day of your discharge.

If you don’t have a 3-day inpatient hospital stay and you need care after your discharge from a hospital, you should ask if you can get home health care or if any other programs such as Medicaid or Veterans’ benefits can cover your SNF care. Always ask your doctor or hospital staff if Medicare will cover your SNF stay.

Any days you spend in a hospital as an outpatient before you are formally admitted as an inpatient are not counted as inpatient days. An inpatient stay begins on the day you are formally admitted to the hospital as an inpatient with a doctor’s order. That’s your first inpatient day. The day of discharge does not count as an inpatient day.

NOTE: During the time you’re getting observation services in a hospital, you’re considered an outpatient. This means Medicare won’t count this time towards the 3-day inpatient hospital stay needed for Medicare to cover your SNF stay. If you have a Medicare Advantage (MA) plan, your costs and coverage may be different. You should check with your plan.

To qualify for SNF care, you must meet Medicare’s requirements and enter a Medicare-approved facility within 30 days after leaving a the hospital. Medicare covers the first 100 days of nursing home care after a three-day inpatient hospital stay. During the first 20 days in a nursing home, Medicare pays for all approved amounts. During the 21st through the 100th day, Medicare pays all up to $176 per day. After the 100th day, Medicare pays nothing.

NOTE: Most Medicare Supplements will pay the difference that is not covered by Medicare during the 21st though the 100th day in a skilled nursing home.

Common Hospital Situations That May Affect Your SNF Coverage

Situation You came to the ER and you were formally admitted to the hospital with a doctor’s order and spent 3 days in the hospital as an inpatient after admission. You were discharged on the 4th day.

Is My SNF Stay Covered? Yes, if all other coverage requirements are met. You met the 3-day inpatient hospital stay requirement for a covered SNF stay.

Situation You came to the ER and spent one day getting observation services. Then, you were formally admitted to the hospital as an inpatient for 2 more days.

Is My SNF Stay Covered? No. Even though you spent 3 days in the hospital, you were considered an outpatient while getting ER and observation services. These days don’t count toward the 3-day inpatient hospital stay requirement.

You Have Medicare Rights

No matter what type of Medicare coverage you have, you have certain guaranteed rights. As a person with Medicare, you have the right to all of these:

• Have your questions about Medicare answered.
• Learn about all of your treatment choices and participate in treatment decisions.
• Get a decision about health care payment or services, or prescription drug coverage.
• Get a review of (appeal) certain decisions about health care payment, coverage of services, or prescription drug coverage.
• File complaints (sometimes called “grievances”), including complaints about the quality of your care.

For more information about your rights, the different levels of appeals, and Medicare notices, visit Medicare.gov to view the booklet “Medicare Rights & Protections.” You can also call 1-800-MEDICARE (1‑800‑633-4227). For more information, please click here to access a video I made about this subject.

Conclusion

If you are hospitalized, you must be classified as an “inpatient,” not an “outpatient” or “under observation” to receive maximum Medicare benefits, and you must be hospitalized for three full days as an inpatient in order to receive care in a skilled nursing facility. Otherwise, you may have high out-of-pocket costs and you may not be able to get other Medicare benefits you would otherwise be entitled to.

If you have any questions, or if you would like a Medicare Supplement quote, please contact me at (760) 652-6060 or at Ron@RonLewisInsurance.com or go to www.MedigapExpress.com.