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Outpatient Observation

If you’re covered by Medicare or insurance, we would like to share important information about observation status and a new policy that might affect your insurance coverage. This is a federal policy that hospitals are required to follow.

We want you to know some important details about the care you receive at Billings Clinic and how your bill could be affected. Depending on the level of care a patient needs, Billings Clinic offers inpatient, outpatient and observation care.

Outpatient Observation

What is outpatient observation?

If your doctor decides to admit you to the hospital your stay will fall into one of two categories: observation outpatient or inpatient.

Observation is an outpatient designation within the hospital which allows your doctor to watch your condition for changes. This gives doctors time to evaluate your condition and decide if you need to stay in the hospital as an inpatient or be discharged. When you are discharged, your care might continue with visits to your doctor’s office.

How is observation different from an inpatient stay?

Our observation stay is billed under outpatient services (Medicare Part B), which includes your hourly room charge. Self-administrable medications are not covered and you may be responsible for medication costs. This is different from an inpatient admission, which is billed under inpatient services (Medicare Part A).

What are self-administrable medications?

Traditional Medicare and some Medicare Advantage plans state that any medication that a patient could take at home is considered self-administrable, including:

  • Medications that are taken by mouth
  • Insulin injections
  • Inhalers

For safety reasons, Billings Clinic does not allow patients to bring home medications into the hospital.

What types of health conditions would make observation appropriate for a patient?

  • Conditions that can typically be treatedwithin 24-48 hours
  • Conditions for which the cause has not yet been determined

What are some examples of these conditions?

Some examples are nausea, vomiting, weakness, stomach pain, headache, kidney stones, fever, dizziness, some breathing problems, and some types of chest pain and back pain.

What if my condition requires acute inpatient care?

If your medical condition and hospital treatment plan support an inpatient hospital stay, your physician will write an order to change you from observation to inpatient.

What if I do not meet the definition/criteria of needing inpatient care?

If it is determined that your condition does not meet your insurance/Medicare’s coverage guidelines for inpatient care, your doctor will be notified. If your care can be provided in a less acute setting (not a hospital setting), we will assist you in the discharge process and in coordinating appropriate follow-up care.

Can I be placed into outpatient observation after undergoing an outpatient surgical procedure?

Only if it is medically necessary. Medicare allows for a four-to six-hour recovery period. The intent of outpatient surgery is to have your surgery and be discharged the same day. However, if you experience a complication after surgery, then your physician may place you into observation to monitor you further.

What type of post-surgical conditions may warrant further evaluation in outpatient observation?

  • Inability to urinate
  • Inability to keep solids or liquids down, requiring IV fluids to avoid dehydration
  • Inability to control pain
  • Unexpected surgical bleeding
  • Unstable vital signs
  • Inability to safely ambulate/walk after spinal anesthesia

What if I want to spend the night after my outpatient surgery? Will Medicare or insurance cover this?

No, Medicare or insurance will only pay if there is a medical condition that warrants post-operative monitoring. If you request to stay over for patient/family convenience, you will be fully responsible for payment.

Does an outpatient observation hospital stay count toward the 3-day inpatient stay required for admission to a skilled care facility under Traditional Medicare?

No. If you require skilled nursing care in a nursing home after you are discharged from the hospital following an outpatient observation stay, you may not qualify for Traditional Medicare’s skilled nursing facility benefit. Outpatient observation days do not meet Traditional Medicare’s qualification for a hospital stay prior to nursing home admission.

Billings Clinic is currently advocating, along with other healthcare organizations, for a Congressional fix to improve the issues with observation status and Medicare. To contact your state senators or representative, visit

Contact Us

Questions about your level of care?
Care Management
(406) 657-4249 or 1-800-332-7156, ext. 4249
8 am to 5 pm, Monday - Friday

Questions regarding your hospital bill?
Patient Financial Services
(406) 238-2250 or 1-800-332-7156, ext. 2250
8 am to 5 pm, Monday - Friday

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