Medicare Inpatient vs Observation: Getting the status right


By Christine Stallkamp, MD, Medical Director, Urgent Care Services, and Lead Physician, Utilization Management


Main Line Health has enlisted the support of Versalus Health, a Medicare consulting group, to help the Utilization Management Team guide the Medical Staff through the intricacies of determining Medicare Inpatient versus Observation status.  Getting the patient’s status right is imperative. As you may know, Medicare, by law, is required to pay providers and hospitals up front, but then is allowed to audit later, which can result in large monetary retractions.  Not only is there audit risk, but getting the status right for the patient is crucial due to the potential financial impact of co-pays and deductibles. 


To that end, the Utilization Management Team is actively managing all Medicare observation patients, so that any observation patient who requires hospital care for two midnights will be upgraded to Inpatient level of care. Our Utilization Management physicians review a list of Medicare observation patients at all four hospitals twice a day, and will request an “admit to inpatient” order when it is clear that an observation patient is staying in the hospital for a second midnight.  Please note that this does not apply to Managed Medicare patients, as they must follow the guidelines of their commercial insurer. 

What is hospital care? It is evaluating, monitoring or treating the patient’s problems.  If the patient has been admitted to the hospital strictly for “placement” in a nursing home or SNF, then this is not hospital care, and the patient should remain in observation.  In order to prove that your patient needs hospital care, you must adequately document what you are evaluating, monitoring or treating.   

The Utilization Management physicians are available to help you, 7 days per week, via our group email


This entry was posted in Clinician News and tagged . Bookmark the permalink.

Leave a Reply

Your email address will not be published.