Hospital Medical Observation Protocols

When a patient in the emergency room is too ill to be discharged immediately, yet may not be ill enough for hospital admission, he may be placed under "medical observation" for a short time. This separate level of treatment was created in response to health insurance companies questioning the rationale for certain hospital admissions. The basic medical observation protocol is customized by each individual hospital and insurance company to conform to their best practices.

Official Definition of Medical Observation

Medicare defines observation status as "the ongoing short term treatment, assessment, and reassessment ... furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged." Most health insurers use a similar definition.

Health Conditions Often Placed Under Medical Observation

Sam Ho, chief medical officer for United Healthcare, explains that patients reporting kidney stones, dehydration, chest pain, mild trauma or dizziness, among other conditions, are ideal candidates for observation. People visiting the ER with asthma symptoms, abdominal pain or skin infection or who may have had mini-strokes are often triaged to observation as well.

Frequency of Use

Observation care is increasingly used in hospitals, partially due to medical advances that make new treatments available for a larger number of ailments on an outpatient basis, according to Gail Larsen, divisional vice president for provider relations at Blue Cross and Blue Shield of Illinois. In 1998, for example, 32,000 people were taken under observation at hospitals in Illinois, while in 2008, the number had risen to 320,000 -- or 10 times the earlier figure.

Benefits of Medical Observation

Observation helps keep medical costs down by limiting hospital admissions to only those deemed genuinely sick enough to require care. Observation care could cut a patient's hospital bill by one-third, said Dr. Mark Moseley, medical director of the Ohio State University clinical-decision unit. The risk of exposure to infection is reduced because of short-term observational care, as well. Less staff is needed for observation versus inpatient status, and rooms can be saved for the most serious cases. Of course, taking the observational step before admitting helps ensure that the hospital will be paid by the insurer.

Time Limits

Patients may be monitored in the emergency room, on an inpatient floor or in a designated hospital observation unit for a couple of hours or up to two days. Some hospitals and insurers limit observation time to a certain number of hours, at which time the decision should be made to admit or release the patient. Patients in the OSU observation unit stay, on average, 16 hours. About 70 percent of the patients in the unit go home, and the rest are admitted.

Insurance Caveats

In many cases, hospitals are not required to inform patients that they are in observational care, which may lead to confusion about medical billing. When the observation period extends beyond the average number of hours, some patients have found that their insurance company refused payment for treatments, because they were not conducted on an inpatient basis. Patients should ask the hospital for clarification of bills when needed and may need to have bills reprocessed through insurance if errors are suspected.