Medicare Answers: Inpatient vs. Outpatient

  • Originally published March 4, 2013 , last updated December 23, 2014
  • Medicare
Medicare Answers: Inpatient vs. Outpatient

If you have a Medicare question you’d like answered, you can leave it in the comments section below, or you can e-mail it to

This week’s question deals with Medicare rules for inpatients and outpatients.

Lynn asks,

When a person goes into the hospital, Medicare will only cover the rehab when there has been 3 nights in the hospital as an inpatient. Who is the decision maker on when a person is inpatient versus outpatient? The doctor? The executive board hired by the hospital? Which one has the final say?


You pose an interesting question as this decision can affect a Medicare Beneficiary’s out-of-pocket expense. Even if you stay in the hospital overnight, you might still be considered an “outpatient.” Your hospital status (whether the hospital considers you an “inpatient” or “outpatient”) affects how much you pay for hospital services (like X-rays, drugs, and lab tests) and may also affect whether Medicare will cover care in a skilled nursing facility (SNF) or rehabilitation.

  • You’re an inpatient starting the day you’re formally admitted to the hospital with a doctor’s order. The day before you’re discharged is your last inpatient day.
  • You’re an outpatient if you’re getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays, and the doctor hasn’t written an order to admit you to the hospital as an inpatient.

In these cases, you’re an outpatient even if you spend the night at the hospital. So here is your answer: the doctor has full control of your status. Observation services are hospital outpatient services given to help the doctor decide if the patient needs to be admitted as an inpatient or can be discharged. Observation services may be given in the Emergency Department (ED) or another area of the hospital. If your client is in the hospital more than a few hours, they should always ask their doctor or the hospital staff if they are an inpatient or an outpatient. If your doctor writes an order for you to be admitted as an inpatient and the hospital later tells you they’re changing your hospital status to outpatient, your doctor must agree and the hospital must tell you in writing while you’re still a hospital patient.

Now you asked about rehab, I guess I don’t know what kind but I will take a stab at it. You are right if the rehab is in a Skilled Nursing Facility, you have to have a three-day hospital stay. You used the words “nights” which is a good way to explain as the day of discharge for a hospital cannot be counted in the 3 days. Skilled care is health care given when you need skilled nursing or rehabilitation. Keep in mind the doctor is in complete control of this as there has to be a plan of care submitted by the doctor. Also this same plan has to be submitted for outpatient rehab services.

You can get outpatient therapy from any of these health care professionals including physical therapists, speech-language pathologists, and occupational therapists. Doctors and other health care professionals like nurse practitioners, clinical nurse specialists, and physician assistants may also offer PT, SLP, and OT services.

Ultimately it is the patient that might have the most control but they can’t be expected to know all of this. I would advise agents to make their clients aware of the costs associated with both inpatient and outpatient Medicare payments and to tell them to ASK their doctor as he holds the keys. And some think it is easy being a Medicare Supplement salesman. NOT ON YOUR LIFE! Oh and for you Medicare Advantage agents, better check the plan itself because all of my chatter is about original Medicare.