Why Hospital Patients Increasingly Face a Pricey Surprise

Under observation

A medical status of "under observation" is saving money for hospitals and insurance companies, but often costs patients more, particularly for older patients and people on Medicare.
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my husband was seen in the Emergency room with chest pain, the doctor wanted him to say, and I asked specifically "will this be an admission or an observation", because my daughter was hit with a medical bill after she was surprised with this new coding. I was told he was being admitted, but guess what came in the mail today? Yup, I'm getting bills because he was only there 72 hours, making it an "observation".



Well, the doctor wasn't lying. Your husband was technically admitted. He was just admitted as an observation, not an "inpatient." Yes, I know, the medical field is awful with that, but unfortunately, the people in the ER (and med floors) have very little power to do anything about that.

Brett (MD)


I am a doctor working at a large urban hospital, and I can tell you from firsthand experience that I am as frustrated about this as my patients. We need to be on the same side! The power is not with the doctor here. Medicare in an attempt to save money actually hires private firms to review discharges and have an outside physician determine if the care I gave was “medically necessary.” If they level of care given in a hospital could be reasonably given in a nursing home, then it’s not “medically necessary.” It doesn’t matter to Medicare if the patient is too sick to go home. Think of the person living alone who broke their leg and needs help getting up and around, needs extra pain medications, and needs rehab. Medicare will not pay for that level of care in a hospital anymore. If I keep you in the hospital longer as an “inpatient,” Medicare increasingly is coming back and telling me that they won’t pay for it. If you thought the bill was high when patients and families were paying 80%, think of what it would be if Medicare pays NONE of it. Thankfully, there is a bill introduced in the senate recently that my help to address this.



I am an ER doctor. This whole Obs vs Admission status is difficult for us as well. But let me say, there are MANY patients that can go home but refuse too. Many elderly patients brought in by the children because they "dont know what to do anymore" and many patients coming in with anxiety driven chest pain that isn't a heart attack. Basically if you are admitted for a symptom (abdominal pain, chest pain) without a diagnosis then your on observation status.
I have told patients that they are well enough to go home but they refuse..... so walla. You status can be upgraded to admission at a later time by the inpatient doctor. BUT it cannot be downgraded per law.



Lori above got it right! If everyone including the law makers were treated to the same as all the rest of the country there would be a change and fast. Also it is understandable that no one will work for nothing but making us pay for all the repeat stabbings and criminal element that fills our emergency rooms thereby denying the paying citizens of care when they need it and they have paid for it where is the justice in passing the uncovered expenses on to the rest? If it werent so there would be a decrease in such abuses medicine is a business like any other. No one works for nothing.



I think that if the politicians who run the country (public servants???) would be required to have the same healthcare benefits as the rest of the country and pay premiums like everyone else then the system would change. This includes the President. After all, they are supposed to be doing what's best for the country and they are in this country too! Hypocrisy is too rampant!

Jim Sajdak


so...shouldn't it be, you spend the night, youre admitted...case closed....I would certainly advocate for this...get rid of any ambiguity



My comment is not specific to patient status, but rather the numerous fees now incurred at Dr and ER visits. I was diagnosed with MS in April 09 which has made medical treatments my new career. It used to be my co-pay covered my visit from my end. Now I receive multiple bills for individual services. My ER co-pay is $50.00 for example. Then I get another $180.00 bill for "attending physician services." How is a Dr not included in my ER co-pay? Who goes to the ER to not see a Dr?



I guess it is too politically incorrect to criticize Medicare.

My post and replies have been removed.




I can't understand why calories have to be listed on fast food but there is no requirements for listing the cost of procedures in the waiting room. It makes sense to know what you are paying before you have it done. A cat scan in one facility cost $1,080.00 while in another it costs $400.00. Why such a huge difference. We as consumers should demand a posting of the costs before we agree to anything, if possible.



It should not surprise anyone that healthcare is a "for profit" enterprise. Bottom line - insurance drives the healthcare industry, not healthcare providers.



Observation is a medical cop out. Physician should be able to decide if a patient is well enough to be sent home out of the emergency room. If the patient is not well enough to go home he should be admitted to hospital. In general the care one receives in "observation" is not as good as in the fully staffed hospital bed. If hospital does not have requirement to that effect in medical staff bylaws there should be an effort to make state laws to that effect.



I take exception to Norman's post. Hospitals are not abusing and deceiving patients. There are strict Medicare guidelines as to whether a patient can be classified as In-Patient or Observation. Hospitals have no control over this. The Hospital Utilization Review RN's try desperately to change the status to In-Patient (especially if patient needs to go to a rehab), but they can't change lab values or test results to make a patient qualify. Medicare needs to change it's rigid standards. I know, I am a hospital Discharge Planner.



This happened to a family member in March. I strongly suggest asking the physician whether or not it is "medically necessary" to admit a patient. If they say "no," you can be sure that the patient is being billed by the hour. An empty bed does not generate any income and they don't care who fills one or how the bill is going to be paid.

John Schoenberg


All politicians and pundits agree that ever rising healthcare costs will bankrupt our country. Is it not obvious that the business model of our healthcare system is criminally flawed. We are in a global economy. How can we compete with European countries where the highest cost for a day in hospital is $800, where here, as your example shows some genius in the hospital billing office comes up with $36,000 for 3 days in "observation"? Don't look to insurance companies for help, they can make a lot more money off $12,000 rooms than off $800 rooms. In all other businesses prices need to be competitive and justifiable. Government is responsible for keeping our country solvent. Obviously, we cannot afford uncontrolled price gauging to continue. If our leaders and our healthcare community don't understand that, but think the problem is Medicare or Obamacare, then we will go broke.

jan brown


To John Shoenberg"s comment " Don't look to insurance companies for help, they can make a lot more money off $12,000 rooms than off $800 rooms" Wrong. Insurance companies get to PAY the bill, NOT profit from it. Insurance Companies must maintain Government regulated Reserves to insure payment of claims. They can"t print money to pay. The Healthcare mess can not be solved by unqualified, un-involved , un-caring POLITICIANS. Government needs to back off and let the Medical Industry Experts sort it out. Also every US citizen including Government should be required to use the same system. ALL LAWS SHOULD APPLY EQUALLY TO THOSE WHO MADE THEM.

Roger Cullen


The definition of observation vs. admission needs adjustment. If a hospital can burn through $36,000 in three days and call that observation, the definition is flawed.



Thanks for this very informative, potential savings. Shocking that health care has become a business whey preys on the most vulnerable at the most vulnerable time.... Angie should organize all those deceived and abused by hospitals to start a class action suit.

Angie's List staff


Hi, Marie! Thanks for your comment!
We have corrected the photo caption online to reflect that Linda Brocato has multiple sclerosis and not muscular dystrophy.

Jean Cavanaugh MD


This is a major issue and very unfair to patients. Physicians have not control over this. I applaud Linda Brocato for pursuing this and you for publishing it.



I am a friend of Linda's. She does not have muscular dystrophy, but Multiple Sclerosis after being poisoned by her mercury dental fillings. In the process of treating her MS with prednisone and other steroid treatments, she has developed severe osteoporosis, which is leading to all these bone breaks. All this misery has happened to Linda because the FDA won't require the American Dental Association to stop promoting, and dentists to stop using mercury in dental products.



The problem is with the Medicare laws. If the doctor admits the patient to inpatient, the patient has to meet certain criteria, no matter what the doctor and hospital want to do. Otherwise, the hospital has to pay the money back and possibly be assessed a fine. Medicare law needs to be changed in this regards.

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I second the original question (still unanswered). Speaking as someone who logged in today to try to find an attorney, I see this category as one that's exactly what I have my Angie's List membership for:

1. It's important that I find a good one
2. I'm not an expert enough to know myself who is a good one
3. The industry is full of advertisements and misinformation
4. I wish I knew what experiences other people have had

I don't care about lawns--I planted mine in clover and don't have to mow it. When I do need to mow I use a rotary Fiskars mower, which is great--or a scythe. That's right--a scythe (the European type, which is smaller, and it's very good exercise). Gas-powered mowers, chemical fertilizers and weed killers--all nasty stuff that gets into everyone's air, soil, and water. I'm sure my neighbor doesn't like my wildflowers, semi-wild pockets of fruit bushes, and unmown areas and yes, dandelions (I have 10 acres) but that's too bad. It's better habitat for wildlife, especially the pollinators on which our food supply depends. I think this obsession with the Great American Lawn is a waste of time and resources. Plant some food instead.

I'm not sure Angie et. al. want you to have a complete answer to this question. By re-subscribing at the Indiana State Fair in 2012, I think I paid $20.00 per year for a multi- year subscription. Maybe even less. At the other extreme--and I hope my memory isn't faulty about this--I think the price, for my area, for ONE year was an outrageous $70.00. And they debited me automatically without warning. I had to opt out of that automatic charge. I like Angie's List, but if some of the companies they monitor behaved the way they do in this respect, they'd be on some sort of Pages of Unhappiness. I'll be interested to see if this comment gets published or censored out of existence.

That's very difficult to answer without seeing the house. As one poster said, the prep is the most important part. On newer homes that don't have a lot of peeling paint, the prep can be very minimal even as low as a couple or a few hundred dollars for the prep labor.

On a 100 year old home with 12 coats of peeling paint on it, then the prep costs can be very high and can easily exceed 50% of the job's labor cost.

A 2100 sq ft two story home could easily cost $1000 just for the labor to prep for the paint job. That number could climb too. Throw in lots of caullking  or window glazing, and you could be talking a couple or a few hundred dollars more for labor.

Painting that home with one coat of paint and a different color on the trim could run roughly $1000 or more just for labor. Add a second coat  and that could cost close to another $1000 for labor.

For paint, you may need 20 gallons of paint. You can pay from $30-$70 for a gallon of good quality exterior paint. The manufacturer of the paint should be specified in any painting contract. Otherwise, the contractor could bid at a Sherwin-Williams $60 per gallon paint and then paint the house with $35 Valspar and pocket the difference. $25 dollars per gallon times 20 gallons? That's a pretty penny too.

That was the long answer to your question. The short answer is $2000 to $4000 and up, depending upon the amount of prep, the number of coats, the amount of trim, and the paint used.