Am I an Inpatient or Outpatient? Information to Know When Having a Hospital Stay!


Dear Toni,

My husband recently had an issue when he fell from a ladder and shattered his hip and broke his right leg. After having emergency surgery, Jim is having a stay in a skilled nursing facility for his rehab to learn now to walk on his repaired hip.

           I cannot remember specifics about a Medicare skilled nursing rule you discussed in your “Confused about Medicare” Zoom webinar. I know some of the Medicare hospital rules are puzzling.

A friend recently had a skilled nursing stay and was billed more than expected because she did not have the right amount of time as an inpatient. Please explain what I should be aware of for Jim’s skilled nursing stay. Thanks, Terry from Bellaire, TX   

Hi Terry: 

The Medicare rule is explained in the section of the Medicare & You handbook titled, “Am I an Inpatient or Outpatient?” One must learn that a stay in the hospital does not always mean you are an inpatient and that you qualify for Medicare Part A skilled nursing facility care or you may have to pay 100% out of your own pocket.

This Medicare Outpatient Observation Notice (MOON) went into effect a few years ago and applies to those with an Original Medicare hospital stay. It does not apply to those with Medicare Advantage plans.

The MOON rule is explained in more detail in the Medicare & You. The handbook states …. “Staying overnight in a hospital doesn’t always mean you’re an inpatient. You only become an inpatient when a hospital formally admits you as an inpatient, after a doctor orders it. You’re still an outpatient if you haven’t been formally admitted as an inpatient, even if you’re getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays. You or a family member should always ask if you’re an inpatient or an outpatient each day during your stay, since it affects what you pay and can affect whether you’ll qualify for Part A coverage in a skilled nursing facility.”

Terry, be sure that Jim or any family member on Original Medicare who is having a hospital stay is provided the MOON (Medicare Outpatient Observation Notice) in written form that is signed and dated with an oral explanation from the facility no later than 36 hours from the time the Medicare patient begins receiving outpatient observation services. This time limit is considered the new two midnight stay observation policy.

Do not forget that the first 2 day of a hospital stay is considered outpatient with a MOON notice.  Some may have to pay 100% of their skilled/rehab facility stay, if they have not been formally admitted as an inpatient with at least 3-day hospital stay with 4th day discharged.

Chapter 2 of the Medicare Survival Guide Advanced edition explains Medicare’s Moon notice and skilled nursing 3-day rule in easy-to-understand terms. Below is what you, your family members or caregivers need to know when having a hospital stay:

• Remember the MOON rule applies to those on “Original Medicare” and not Medicare Advantage plans. MA Plans have their own rules regarding inpatient/outpatient services.

• Discuss the hospital procedure with your physician/surgeon regarding whether this will be an inpatient or outpatient stay.

• You or a family member should ask every day if you or your loved one is an outpatient or an inpatient that has been “formally admitted”.

Toni King is an author of Medicare Survival Guide Advanced edition and columnist of Medicare issues. For a Medicare checkup, email or call 832/519-8664 to have your Medicare question answered.

You can now visit to listen to her Medicare Moments podcast and get other information for boomer/seniors.