NPR, September 4, 2013

If you're on Medicare and you're in the hospital for a few days, you may think you're an inpatient. The hospital may have other ideas. Increasingly, hospitals are placing older patients on "observation status". They may be there for days, but technically they're still outpatients. This is a big deal for someone on Medicare because followup treatment in a nursing home isn't covered unless someone has been an inpatient for at least three days. That's leaving some seniors on the hook for thousands of dollars in nursing home bills. One of them is 74-year-old Rosalie Winkworth of Dunellen, N.J. She went to the hospital in February for the same reason that many older frail people do: she fell.
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