Observation versus inpatient status

by  Codapedia
July 29th, 2016

Physicians are often confused about whether to bill for observation status or inpatient status for patients admitted to the hospital.  There are specific rules in the Medicare Claims Processing Manual, but sometimes the question is: what is the status of the patient?

Commercial carriers have long rejected claims when the bill submitted by the hospital used one status and the bill submitted by the physician had the other status.  Now that Medicare is using MACs to process both Part A and Part B claims, we can expect denials from them, as well, in this situation.

According to Medicare rules, "observation begins and ends with the physician."  That is, the physician determines the the status of the patient. In fact, often, it is the Case Managers who are familiar with the requirements for observation versus inpatient status on the facility side, who talk to the doctor about what the status should be.  Why does it matter?  From the physician perspective, it matters very little.  The physician is paid about the same amount for an inpatient or observation service.  For the hospital, it matters a lot.

What should the practice do?  Check with the hospital accounting office if there is any question as to the status of the patient.


Observation versus inpatient status. (2016, July 29). Find-A-Code Articles. Retrieved from https://www.findacode.com/articles/observation-versus-inpatient-status-28160.html

© InnoviHealth Systems Inc

Article Tags  (click on a tag to see related articles)

Publish this Article on your Website, Blog or Newsletter

This article is available for publishing on websites, blogs, and newsletters. The article must be published in its entirety - all links must be active. If you would like to publish this article, please contact us and let us know where you will be publishing it. The easiest way to get the text of the article is to highlight and copy. Or use your browser's "View Source" option to capture the HTML formatted code.

If you would like a specific article written on a medical coding and billing topic, please Contact Us.


innoviHealth Systems, Inc.
62 East 300 North
Spanish Fork, UT 84660
Phone: 801-770-4203 (9-5 Mountain)
free demo
request yours today
for any budget
sign IN
welcome back!

Thank you for choosing Find-A-Code, please Sign In to remove ads.