This important information is provided as a courtesy to patients who require “observation” or “extended recovery” in conjunction with the medical services ordered by their doctor.

While both observation and extended recovery involve the use of a hospital bed, patients in either status are not considered to be an inpatient admission to the hospital even though the doctor may order tests, medications, additional treatments and, the hospital staff monitors symptoms and reports back to the doctor. Patients are often placed in observation or extended recovery in follow-up to a planned outpatient procedure or to monitor/evaluate symptoms in an effort to determine whether a patient should be formally “admitted” as an inpatient to the hospital.

During the observation or extended recovery phase of patient care, the doctor is evaluating a patient’s condition in order to determine whether: 1) to formally admit them as an inpatient to the hospital or, 2) it is safe for them to leave the hospital and return home. This is the reason why observation and extended recovery services are considered to be “outpatient” and not “inpatient” hospital services for health insurance purposes.

For Medicare beneficiaries, a formal admission to inpatient status can only occur when it is anticipated that the patient will require a minimum of two consecutive overnight stays (where the patient is in the hospital at midnight) and the doctor has clearly documented the medical necessity for the admission. Other health insurance companies may have the same or different rules for inpatient admissions, but most consider observation and extended recovery to be hospital outpatient services.

We recommend that you contact your insurance company directly if you have any questions about hospital outpatient services and the potential out-of-pocket expenses involved.