Observation care is meant to apply to patients who aren’t sick enough to be admitted to inpatient wards but who aren’t well enough to be sent home without extra testing, monitoring and oversight. A good example: People with chest pain who aren’t clearly having a heart attack but who appear in considerable distress.
Deeper dive
The problem is that hospitals have been keeping some patients in observation care well beyond the 24- to 48-hour period typically recommended by Medicare. (Fear of audits and withheld payments is one motivation, and fear of being penalized for readmissions is another.) In some cases, patients have stayed in hospitals for a week or longer, only to learn after the fact that they were considered an “observation” patient, not an inpatient.
This matters because seniors don’t qualify under Medicare for post-acute skilled nursing care unless they’ve been admitted to the hospital for at least three days. Also, seniors in observation care pay more for some drugs, and incur other extra, unwanted expenses.
The Center for Medicare Advocacy, was among the patient rights groups pursuing a nationwide class action lawsuit that seeks to establish a way to appeal placement on observation status to Medicare (the case is currently known as Alexander v. Azar, 3:11-cv-1703, U.S. District Court, Connecticut). Another helpful resource is an FAQ from Kaiser Health News on this topic. The Society of Hospital Medicine’s white paper provides the physician’s perspective.