Knowledge base

Observation Services Fraud

Observation care is ongoing short-term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. Observation status is commonly assigned to patients with unexpectedly prolonged recovery after surgery and to patients who present to the emergency department and who then require a significant period of treatment or monitoring before a decision is made concerning their next placement. Separate payment is available for observation care in some circumstances but not all, and fraud occurs where the hospital fraudulently treats the observation care as separately billable. On example of non-billable observation care is for patients who are transferred from the hospital’s own outpatient department into observation.

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