Think you understand the difference between "inpatient" and "outpatient?" Think again.

From an eye-opening op-ed column in the Chicago Tribune's Business section:

If you find yourself in a hospital for more than a few hours, make sure you find out if you have been admitted for inpatient care or if you are merely considered an outpatient under what is called "observation care."

If you haven't been admitted to the hospital, the costs you may have to pay out of pocket for medical services and drugs could be considerable. You could also be denied Medicare coverage for follow-up nursing care.

Patients getting emergency department services, observation services, outpatient surgery, lab tests or X-rays, but for whom the doctor hasn't written an order of admission, are considered outpatients even if they spend the night. Even if you stay in the hospital for a few days, don't assume you have been admitted. Ask about your status!

Why are hospitals doing this? In November 2010, the American Hospital Association warned that changes in policy by the federal Centers for Medicare and Medicaid Services "are causing hospitals to place patients in observation status for more than 48 hours instead of admitting them."

The most unpleasant surprise for non-admitted patients is the cost of drugs. Susan Jaffe of Kaiser Health News recently documented examples of patients charged much more for common drugs than they would have paid at a local pharmacy. A patient in Boca Raton, Fla., for instance, was charged $71 for a blood pressure pill for which her neighborhood pharmacy charges 16 cents...

Naturally, an emergency patient isn't thinking about hospital status. However, being an inpatient can mean significant savings to you. So you should ask your doctor to see that you are admitted. In addition, do not hesitate to ask your insurer for assistance in appeals if you believe that the bill you received is incorrect.

More at the source, where there are several relevant links to Medicare resources.  If you or any of your family are likely to be admitted to a hospital, it may be financially very important to you to understand the difference between "observation care" and "admission." I think understanding the details isn't necessary - just knowing that sleeping overnight in the hospital doesn't necessarily mean you're an "inpatient."

This will be of interest only to readers in the United States.  Those of you from other countries probably don't have to worry about this kind of administrative b*llshit.

Addendum:  Reposted from 2012 to add these observations about the deceptive practice of "observation stays" -

Such patients generally have conditions less serious than those requiring admission, but they can remain in the hospital for days, on the same floor as admitted patients. Afterward, they potentially face greater out-of-pocket costs through Medicare and an inability to qualify for nursing home coverage...

...more than 10 percent of stays at [University of Wisconsin] Hospital are observation stays. Nearly 17 percent of the observation stays last more than 48 hours, which Medicare says is supposed to happen in “only rare and exceptional cases.”

Brown University researchers and others say the trend could be fueled by Medicare’s relatively recent fines against hospitals with too many readmissions, or admissions within 30 days of previous ones. If the first stay is an observation, an admission within 30 days won’t be penalized.

More details at the Wisconsin State Journal.