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Outpatient vs. Inpatient Care

Whether you’re shopping for health insurance or trying to navigate your existing coverage, you’ll likely come across the terms outpatient and inpatient. These terms refer to the way a person receives healthcare.

Generally, inpatient refers to care that’s provided when you’ve been formally admitted to the hospital. Outpatient refers to care that does not require hospitalization, including routine doctor and specialist visits.

Keep reading for more details about inpatient and outpatient care, including which procedures fall under each category and what that means for your health insurance coverage.

Inpatient vs. Outpatient at a Glance

Medical attention
Minor or routine
Major or life threatening
Doctor’s office or urgent care clinic
Same day
Overnight (or longer)
Generally less
Generally more

It’s important to understand the difference between inpatient and outpatient care for insurance purposes. Some health insurance plans have different cost-sharing rules for inpatient vs. outpatient care. For example, inpatient care may have higher copays than outpatient care. That means the classification affects how much you pay for the care you receive.

In some cases, the distinction between inpatient and outpatient care affects your coverage for additional services. For example, those with Medicare can only receive coverage for short-term nursing care after a hospital stay if they were considered an inpatient.

What Does Outpatient Mean?

An outpatient is a person who visits a healthcare facility for diagnosis or treatment and then goes home the same day. Outpatient care is provided in a wide range of settings, including doctors offices, urgent care centers, and ambulatory surgical centers.

In a hospital setting, outpatient typically — but not always — refers to patients who do not need to stay overnight after their procedure.

Common Outpatient Procedures and Services

Outpatient care refers to a wide range of medical procedures and services you receive without needing to stay in the hospital. Some common examples include:

  • Doctor visits: Routine doctor appointments include those where patients receive preventive care or get treatment for chronic illnesses.
  • Urgent care visits: Same-day medical treatments for injuries and illnesses like strep throat or a cut that needs stitches.
  • Minor surgeries: Two-thirds of surgeries are done on an outpatient basis, including routine procedures like tonsillectomies and mole removals.
  • Gynecological care: This includes services provided in an obstetrician-gynecologist (OB-GYN) office, such as pap smears or IUD insertion.
  • Diagnostic imaging: Outpatient imaging tests include X-rays, MRIs, CT scans, and ultrasounds.
  • Cancer treatment: Both chemotherapy and radiation therapy are typically done on an outpatient basis.

What Does Inpatient Mean?

An inpatient is someone formally admitted to a hospital and stays overnight or longer. Inpatient care can be provided in various areas throughout a hospital, including general medical wards, intensive care units, psychiatric units, and maternity units. 

The term inpatient is also used to describe someone staying overnight or longer in certain non-hospital facilities. For example, you could be an inpatient in a rehabilitation center or psychiatric facility.

Common Inpatient Procedures and Services

A person may be admitted to a hospital for a wide range of health conditions. Some of the more common procedures and services are:

  • Major surgeries: Complex or high-risk surgical procedures, such as open-heart surgeries, are performed on an inpatient basis.
  • Emergency care: People who visit the emergency room for life-threatening conditions like serious accidents or anaphylaxis will likely be admitted.
  • Childbirth: Childbirth is consistently ranked as the most common cause of hospitalization.
  • Life support: Life support helps patients whose organs are not working properly, such as providing ventilation for a person with severe pneumonia.
  • Rehabilitation: Intensive inpatient rehabilitation helps people regain function after a stroke, spinal cord injury, or other serious incident.
  • Psychiatric care: People who are experiencing severe mental health difficulties may be admitted to a facility for intensive treatment.

The ‘Under Observation’ Status 

Observation care is a widely used patient status in hospitals. People under observation stay in the hospital overnight or longer while their doctor decides whether they need inpatient care or can be sent home. Despite the overnight stay in the hospital, observation care is considered outpatient care.

Typically, doctors use observation status for patients who need short-term treatment in the hospital (less than 48 hours). That could include people who experience complications after a same-day surgery and need to stay overnight. Observation status is also used for patients with unexplained symptoms, like chest pain, breathing problems, or a fever. 

How Observation Status Affects Insurance

Since observation stays in a hospital are billed as outpatient services, this status can affect how insurance pays for the stay. Some health insurance plans set different cost-sharing requirements for outpatient vs. inpatient care. Check your plan documents to compare your costs for inpatient vs. outpatient services.

This distinction is especially important for people with Medicare. Inpatient stays fall under Medicare Part A, while outpatient or observation stays are covered under Part B. Each part has its own costs that could be impacted. For example, while Part B has a lower deductible, the total copay for outpatient services may be higher than the Part A hospital deductible. That means an observation stay may end up costing more than an inpatient stay.

Why Outpatient Care Generally Costs Less Than Inpatient Care

Outpatient care tends to be much less expensive because it uses fewer resources. It typically does not require an overnight stay in the hospital, which means patients do not pay for the cost of a room, meals, or 24/7 nursing staff. Outpatient care also tends to be used for less complex treatments, resulting in less need for costly anesthesia or post-operative care.

Health insurance plans may set lower cost-sharing requirements for outpatient services than inpatient care, meaning consumers pay less out of pocket. They also cover various outpatient preventive care services to help plan members stay healthy and avoid costly care. 

All in All 

Health insurance offers coverage for both inpatient and outpatient services, though your out-of-pocket costs may vary depending on the care classification. Check your plan documents for details about costs for various services.

Understanding outpatient vs. inpatient care is especially important for people with Medicare, since the program covers inpatient and outpatient services through separate parts, with separate deductibles and coinsurance rules.

It can be hard to tell if you’re receiving inpatient or outpatient care in a hospital. Do not hesitate to ask your doctor for an update on your patient status.

Frequently Asked Questions 

The length of stay is a key factor used to distinguish inpatient and outpatient stays. Generally, if a person is admitted to the hospital and spends at least one night there, they’re considered an inpatient. People who spend a portion of the day in the hospital, but go home at the end of the day, are considered outpatients. 

However, spending the night in the hospital does not always mean you’re an inpatient. For example, an emergency room patient may be kept overnight for observation without being formally admitted. They’re still an outpatient. 

Inpatient care is reserved for people with complex or serious health conditions that require 24-hour access to a care team. Major surgeries, like open-heart procedures and organ transplants, are provided on an inpatient basis. 

Outpatient care, on the other hand, is for people whose minor or routine health care needs can be met without a hospital admission. For example, routine doctor visits for preventive care and minor surgical procedures are provided in outpatient settings.

The choice of inpatient vs. outpatient care is determined based on medical need, so it’s typically not possible to choose one over the other. For people with private health insurance, the care classification may not make much of a difference.

In Medicare, the care classification affects both costs and eligibility for nursing facility coverage. Patients can advocate for themselves by asking whether they’re under observation or admitted as an inpatient. Those who disagree can ask their doctor to reconsider. Medicare will soon allow some beneficiaries who were classified as under observation to appeal the decision.

Yes. The purpose of keeping a person under observation is to determine whether they need inpatient care or can be safely discharged. At the end of the observation stay, the physician may decide to formally admit the patient for ongoing care. 

It’s also possible for a patient’s status to change from inpatient to under observation during the stay. That can happen if the hospital determines the patient did not meet the criteria for an inpatient admission. 

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