1. Observation vs Inpatient
Lauren Dufresne, ACM-RN,BSN

2. Observation vs Inpatient
What does that mean?
What are the indications of each status?
How will this affect a patient financially?
How will this affect discharge planning?
What are the patient and/or the discharge planner’s options?

3. Observation Observation = Outpatient
Observation is applied to patient’s who are receiving outpatient services (Stress test, Imaging studies, lab test)
Being in Observation status indicates:
Your doctor needs more information to make a decision on whether you need inpatient care
Your doctor expects that your medical condition will improve without needing inpatient care.
Anticipated LOS is less than or equal to one midnight.
Bills Medicare Part B (outpatient coverage).
Outpatient observation services are short-term services provided in a regular hospital bed.
Receives the same care and treatment as one would with an Inpatient status

4. Medicare Part B
Generally, you will pay a copayment for each individual outpatient hospital service. This amount may vary by service.
Will not pay for SNF and/or Acute Rehab.
For Medicare patients, the copayment for a single outpatient hospital service can’t be more than the inpatient hospital deductible.
If you receive multiple outpatient services, you will pay a copayment for each service.
Therefore, the total of your copayments for your OP services may be higher than your inpatient deductible.

5. Medicare Outpatient Observation Notice
Federal law requires hospitals to provide oral and written notifications to patients being admitted with an observation status
Requirements can vary by state
MO Law – all Medicare FFS and Managed Care Products
IL Law – ALL observation patients, regardless of payor source
Required to be given by the 36 hour mark (per MO law)
Illinois law – within 24 hours
AKA = “MOON”

6. MOON continued….
MOON outlines co-payment possibilities and post-discharge services (example: SNF)
Does the patient have any secondary insurance?
Certain plans may cover the copayment

7. Two Midnight Rule
Will the patient’s care going to equal or exceed two midnights?
The 2-midnight clock starts with delivery of hospital services – often in the ED, sometimes at another hospital
Does the admitting physician expect the patient will require hospital services for two midnights of more?
Just placing the Inpatient order is not enough. Documentation of the assessment and treatment plan must support expectation of a 2-midnight stay.
Expectation of LOS should be reasonable for the diagnosis or workup.
BJC uses a third party group of physicians called Versalus to advise and assist.

8. Two-Midnight rule continued….
Is the case medically appropriate for an Inpatient status?
The status should not be changed to Inpatient due only to social, convenience or Medicare benefit considerations (e.g., SNF eligibility following three inpatient days).
CMS Exceptions to one day inpatient stays: Death, transfer, AMA, hospice, unexpected clinical improvement, new-onset mechanical ventilation, IP-Only list

9. Inpatient
Does the admitting physician expect that the patient will require hospital services for two midnights or more?
Hospital Services include any therapeutic or diagnostic modalities used to assess for, evaluate or treat a medical condition in the hospital.
Billed by Medicare Part A.
Medicare Part A requires three consecutive inpatient midnights before the patient can be discharged to SNF.
Some Managed Care plans will approve SNF regardless of the status

10. Discharge Planning
Recap of rules surrounding discharges and OBS vs IP status….
Other considerations:
Patients that are Observation and do not meet inpatient criteria but still want to be discharged to a post-acute care facility will be required to pay out of pocket
Recap the effects of OBS and IP discharges….

11. Questions?
Thank you for your attention!