The Importance of an Emergency Room Classification in Order to be Medicare Covered

HNWElder Care Law, Elder Law

  • Emergency room doctors are agents of Medicare
  • Medicare regulations require you to be admitted to the hospital for expanded benefits
  • This article discusses and explains the importance of the emergency room admission process

Emergency Room Admission StatusWhat happens when you are hospitalized in an emergency room setting?  The attending physician will read the reports of the admission nurses on staff, along with any emergency personnel who attended to you, and decide how to proceed with your chief complaint(s).  If the attending physician believes inpatient admission is necessary, they will sign an order admitting you into the hospital as an inpatient.  If not, they will classify you as an outpatient on “observation status.”  How is the decision made?

Medicare has a rule of thumb in its regulations to guide physicians on what is appropriate.  It is called the “two-midnight” rule.  It states that if the physician forms a medical opinion that your care will require a stay at the hospital that crosses two midnights, in other words, requires you to stay overnight at the hospital for two nights, an inpatient admission order is generally appropriate.  Notice I said, “Generally”, the regulations do not guarantee that if your care does exceed two midnights you are automatically admitted as an inpatient.  It simply is guidance for a physician when making an inpatient determination, and the regulations allow the physician to use other medical factors such as your medical history, the severity of the situation, and the risk for further adverse medical consequences to guide his or her decision in admitting as an inpatient versus continuing your classification as an outpatient “in observation status”.

Why is Your Hospital Emergency Room Admission Status So important

If you are admitted as an in-patient, your care is billed under Medicare Part A, which pays for the visit minus a deductible.  If you are admitted as an outpatient in observation status, your care is billed under Medicare Part B (assuming you pay for Part B coverage), which pays for the visit minus a copayment and a percentage of the costs incurred (although if you have supplemental insurance this cost will likely be picked up for you).  The key point lies not which part of Medicare pays your bill, rather it is extremely critical to determine coverage for time spent at a skilled nursing facility, which is often the landing place after a visit to the hospital for rehabilitation especially for the elderly.  You are allowed a benefit period of 100 days in rehabilitation after hospitalization in one of these facilities under Medicare A should you need to enter one.  But you do not have access to this benefit if you were hospitalized as a patient in “observation status”.  You must have had a three-day inpatient hospitalization prior to entering a skilled nursing facility to qualify for the 100 day benefit.  The three days commences from the date the physician signs the inpatient admission order, and does not include the day you are discharged from the hospital.

It is the exorbitant cost of skilled nursing care that is triggering Medicare to watch the hospital to ensure that patients are being admitted properly.  Sometimes, a hospital, out of fear of an incorrect classification with no payment from Medicare, will reverse a physician’s inpatient admission decision and reclassify the person as an outpatient in observation status.  This is why it is critical to know the admission classification.  If you or your loved one is classified as observation status and know that a rehabilitation facility is in your future, you must be certain the attending physician reclassifies you as inpatient, and if not, what options you have to get coverage for a stay at a rehabilitation facility.

Medicare requires hospitals to inform their patients on whether they have been placed in observation status and they must have you sign a notice stating this disclosure.  This notice is called the Medicare Outpatient Observation Notice (MOON).  It states that you are in observation, why you are not inpatient and that your stay will be covered under Medicare Part B.  It will also disclose any out-of-pocket costs you may incur during your stay at the hospital, and that any stay at a skilled nursing facility will not be covered under Medicare.  If you do not get one of these, find out why you did not get one.  If you do not recall signing one, ask when the notice was signed and what physical/mental condition you were in when you signed the notice.  You must be alert and oriented when signing the MOON.  In a similar fashion, a skilled nursing facility must alert you when you will be private paying for a facility and not receiving coverage for it under Medicare.

It is critical to be aware of your admission status, as the financial consequences can be severe.  If you or a loved one need assistance fighting an observation status classification or are unsure of how to deal with the hospital and Medicare moving forward, and need an experienced Medicare appeal attorney on your side, and we are here to help you.

To discuss your NJ Medicare appeal matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

By Frederick P. Niemann, Esq., of Hanlon Niemann & Wright, a Freehold Township, Monmouth County Denial of Medicare Coverage Appeal Attorney

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