What are Hospital Outpatient “Observation” Services?

Patients who require “observation” or “extended recovery” in conjunction with the medical services

While observation and extended recovery involve the use of a hospital bed, patients are not considered an inpatient. The doctor may order tests, medications, and additional treatments, however they consider the patient an “outpatient”. Patients placed in observation or extended recovery for follow-ups to a planned outpatient procedure. This allows doctors to monitor/evaluate symptoms to decide to formally “admit” a patient to the hospital.

A doctor evaluates a patient’s condition to determine whether to admit them as an inpatient or if it’s safe for them to return home. Insurance companies consider observation and extended recovery services “outpatient” services for these reasons.

The only time observation can be used for a patient having a scheduled outpatient surgery or procedure is if there is a complication or adverse event either during the procedure or during the recovery period.

For Medicare beneficiaries, a formal admission to inpatient status can only occur when anticipated that the patient will require a minimum of two consecutive overnight stays and the doctor has  documented the medical necessity for the admission. Most insurance companies consider observation/extended recovery as hospital outpatient services.

Contact your insurance company if you have any questions about hospital outpatient services.