Medicare patients must beware 'observation' status in hospitals

People on Medicare who spend one or two nights in the hospital are finding out, and often too late, that they weren't really "admitted" to the hospital. This can be a costly discovery. Even though they were in a bed in a hospital room, the hospital may have categorized them as being there for "observation," rather than being formally "admitted." But patients being "observed" might face some unpleasant surprises when they leave the hospital. For example, Medicare might not pay the tab for a rehab facility or a nursing home, even if a physician releases the patient to an outside facility to recover from a fall or stroke.