The difference between an observation stay and an admitted stay is a distinction often lost in the bustle of a hospital visit. And the consequences can be dire.
A doctor orders a Medicare patient to visit the hospital for needed care. The patient is checked in, given a room assignment, and the nurses and doctors begin to give treatment. After a few days of assistance, the patient has progressed and is on the verge of being released. It looks and feels like a standard, admitted hospital visit. It isn't. It is simply an observation stay and the financial ramifications are massive.
A beneficiary must first spend three consecutive days as an admitted patient in a hospital to qualify for Medicare's nursing home coverage. Time spent under observation does not count. Until the hospital officially admits the patient, Medicare's hospitalization coverage does not cover the cost. A beneficiary is liable for potentially thousands of dollars in outpatient costs, co-payments related to the stay, and the hospital charges for any routine drugs the patient had taken.
Good news! The United States Senate unanimously passed the NOTICE Act, which requires hospitals across the nation to tell Medicare patients when they receive observation care but have not been admitted to the hospital. The House of Representatives have passed the measure.
President Obama signed the act into law.