What Are Hospital Medicare Observation Rules?

When someone with Medicare is in the hospital and is considered under observation care, Medicare's rules treat the cost as an outpatient expense even if it lasts for a few days, and this involves the patient having to pay more costs than in the case of an admittance, such as copayments and hospital drug costs, mentions Kaiser Health News. Medicare's rules suggest that the hospital decides within 48 hours whether to admit the patient.

When a patient's condition is not to the extent where his sickness requires a hospital admission but the patient does stay in the hospital for testing and treatment (usually for two days at most), this is considered observation care. Since any medication given is considered under outpatient care, Medicare rules that Part B coverage will apply, so patients typically pay higher fees for their medication than they would if Part A was used. After being released, the patient's Medicare plan won't pay for nursing home care that may be necessary as a follow up, states Kaiser Health News.

Patients concerned about the consequences of observation care should ask the hospital about their status and find out if it can be changed to inpatient, suggests the AARP. Those needing follow-up care at a nursing home can also help save money by finding out if they can get in-home care through Medicare.