Observation Care
This content is for informational purposes only. For medical advice or diagnosis, consult a healthcare professional. In case of an emergency, immediately call 911.
Observation care is a hospital-based outpatient service that includes short-term monitoring, assessment, and treatment, provided to determine whether a patient requires formal inpatient admission or can be safely discharged.
Observation Status Definition
- Duration: Observation care is a short-term service. The decision on whether formal inpatient admission is needed is typically made within 24 to 48 hours.
- Transition to Inpatient: If the medical condition worsens or requires long-term care, the status may convert to formal inpatient admission.
- Impact on Follow-up: Time spent in observation status does not count toward the 3-consecutive-day inpatient stay requirement for Medicare coverage of skilled nursing facility (SNF) or rehabilitation facility care.
Coverage & Benefits
Medicare Part B
- Coverage: Observation care is classified as an outpatient service and is covered under Medicare Part B.
- Medicare Outpatient Observation Notice: Hospitals are required to provide a formal notice to Medicare beneficiaries who have been in observation status for more than 24 hours, informing them that they are being treated as an outpatient.
- Patient Cost: After meeting the Part B deductible ($283 in 2026), patients are responsible for 20% coinsurance for each of the following: the ER visit copayment, ancillary emergency services (such as X-rays, CT scans, and EKGs), and physician services based on the Medicare-approved amount. Part B coinsurance may be covered through a Medigap plan.
- Prescription Drug Coverage: Prescription drugs taken during an ER visit or observation stay — including your regular medications — are not covered under Medicare Part B. They are covered under your Part D plan. If the hospital pharmacy is out-of-network for your Part D plan, you may need to pay the full cost upfront and then submit a claim for reimbursement.
* Copayments for ancillary emergency services will not exceed the Part A inpatient deductible ($1,736 in 2026) per service. However, receiving multiple services simultaneously may lead to the combined copayment amounts exceeding this limit.
* Original Medicare (Part A and Part B) generally does not cover emergency services received outside the United States, with limited exceptions.
Medicare Advantage (Part C)
- Coverage: Observation care is classified as an outpatient service under Medicare Advantage as well.
- Medicare Outpatient Observation Notice: Hospitals are required to provide a formal notice to Medicare Advantage beneficiaries in observation status.
- Skilled Nursing Facility Eligibility: Time spent in observation status does not count toward the 3-day inpatient stay requirement for SNF benefits. However, many Medicare Advantage plans waive this 3-day requirement. Check your healthcare plan for details.
- Patient Cost: Outpatient copayments apply instead of an inpatient deductible. Separate copayments may apply for individual services such as tests or medications, but the copayment for any single service typically does not exceed the inpatient deductible.
*Coverage and cost vary by plan—always review your plan details.
Medicaid (NJ FamilyCare)
- Coverage: NJ FamilyCare covers observation care when it is determined to be medically necessary to evaluate a patient’s condition.
- Patient Cost: For most eligible NJ FamilyCare members, there is little to no copayment for observation care provided at a participating hospital.
- Prior Authorization: Emergency observation typically does not require upfront approval, but the facility must follow standard notification protocols.
Private Insurance
- Coverage: Most private insurance plans cover observation care as an outpatient service.
- In-Network vs. Out-of-Network: Under the federal No Surprise Act and New Jersey’s Consumer Protection Act, patients in New Jersey receive in-network rates for observation care even if the facility is out-of-network.
* In-Network refers to hospitals, physicians, and providers (including doctors, nurse practitioners, and physical therapists) who have a contracted agreement with your insurance plan.
* Out-of-Network providers do not have a contract with your insurer, which can result in significantly higher out-of-pocket costs.
Cost Sharing by Insurance Type (2026)
Hospitals and Providers Search
Observation Care (Emergency Room) Providers in Bergen County
The following are non-emergency contacts. In case of an emergency, immediately call 911.
Resources
