Outpatient Observation

1. What is outpatient observation?
Observation is a billing technique that permits patients who have problems (which normally do not qualify for a hospital stay) to be allowed to stay in the hospital for a “specified amount of time.”

2. What is the difference in billing?
Your observation stay is billed under outpatient services (under Medicare this would be under Part B) while full inpatient admission is billed under inpatient services (under Medicare this would be billed under Part A).

3. What kind of problems do people have that would make observation appropriate?
Problems that can usually be treated aggressively and normally can be treated in 24-48 hours or conditions for which the cause has not yet been determined.

4. What are some examples of these problems?
Some examples are nausea, vomiting, weakness, stomach pain, headache, kidney stones, fever, some breathing problems, and some types of chest pain and back pain.

5. What is meant by a “specified amount of time?”
Different insurance payers have different amounts of time that are covered in observation.
  • Medicare - observation services cannot exceed 48 hours. Typically a decision to release or admit is made within 24 hours.
  • Medicaid allows up to 48 hours.
  • Private Insurances may vary, but most permit only 23 hours in observation.
6. What happens at the end of the “specified amount of time?”
Whether to release you from the hospital or upgrade your status to inpatient will be based on your doctor’s assessment of your condition along with coverage guidelines from your insurance or Medicare related to outpatient, observation or inpatient settings.

7. What if my condition requires acute inpatient care?
Your physician must then write an order to convert your outpatient observation stay to a full inpatient admission.

8. What if I do not meet the definition/criteria of needing inpatient care?
If utilization management determines that your condition does not meet your insurance/Medicare’s coverage guidelines for inpatient care, your doctor will be notified. If your care can be provided in a less acute setting (not a hospital setting), we will assist you to be discharged, possibly with home health care services or skilled nursing care, if necessary.

9. Can I be placed into outpatient observation after undergoing an outpatient surgical procedure?
Only if it is medically necessary. Medicare allows for a four to six hour “recovery period.” The intent of outpatient surgery is to have your surgery and be discharged the same day. However, if you experience a postoperative complication, then your physician may place you into observation to monitor you further.

10. What type of post-surgical conditions may warrant further evaluation in “outpatient observation?”
  • Inability to urinate
  • Inability to keep solids or liquids down requiring IV feedings
  • Inability to control pain
  • Unexpected surgical bleeding
  • Unstable vital signs
  • Inability to safely ambulate after spinal anesthesia
11. What if I desire to spend the night after my outpatient surgery? Will Medicare cover this?
No, Medicare will only pay if there is a medical condition that warrants postoperative monitoring. If you desire to stay over for patient/family convenience, you will be fully responsible for payment.

Please note: If you require skilled nursing care in a nursing home after you are released from outpatient observation, you may not be able to use Medicare’s skilled nursing facility benefit. Outpatient observation days do not meet Medicare’s qualification for a hospital stay prior to nursing home admission.

If you have questions about your level of care, call Utilization Management Service at (608) 775-3992 or (800) 362-9567, ext. 53992, 8 a.m. to 5 p.m., seven days a week.

If you have questions regarding your hospital statement (co-pay, deductible or other out-of-pocket expenses), please contact Gundersen Lutheran Patient Business Services at (608) 775-8660 or (800) 362-9567, ext. 58660, 7:30 a.m. to 5:30 p.m., Monday-Friday.
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