All hospitals must now give Medicare recipients notice when they are in the hospital under observation status. The law was intended to prevent surprises after a Medicare beneficiary spends days in a hospital under “observation” and is then admitted to a nursing home. This is important because Medicare covers nursing home stays entirely for the first 20 days, but only if the patient was first admitted to a hospital as an inpatient for at least three days. Many beneficiaries are being transferred to nursing homes only to find that because they were hospital outpatients all along, they must pick up the tab for the subsequent nursing home stay — Medicare will pay none of it. Also, if you do not have Medicare Part B, you may end up having to pay the full hospital bill.
The use of observation status by hospitals is increasing and you need to be aware of this and fight it. The Center for Medicare Advocacy has great information and a toolkit to assist you with this. I strongly advise you review the information on their site devoted to this topic. http://www.medicareadvocacy.org/medicare-hospital-outpatient-observation-status-toolkit/