These patients are a step up from an emergency department patient but not classified as being formally hospitalized. Obviously insurers pay less if the patient is not “formally” hospitalized. This type of care is typically provided to patients who don’t seem well enough to discharge, but clearly aren’t well enough to be admitted.
This is particularly worrisome for Medicare patients. Hospitals billing for an inpatient stay not meeting the program’s standards could be charged with fraud. The observation period is typically about 24 hours. If it goes longer, Medicare may refuse to pay for treatments since they’re not classified as inpatient care. So who gets billed? The patient. And hospitals aren’t required to tell patients that they’re in observational care, which means they have no idea what is being paid for and what they might receive a bill for in the future.
In this age of transparency even if hospitals are not required to tell they should, even in the chaos of the emergency department. And consumers now have one more thing to add to their list to ask their providers. Do ask and demand an answer. Don’t be caught in a black hole.