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bservation Guidelines

bservation Guidelines. Module 2 Medicare Rules. Observation.

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bservation Guidelines

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  1. bservation Guidelines Module 2 Medicare Rules

  2. Observation • In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. Medicare Claims Processing Manual Chapter 4 – Section 290.1

  3. Physician Documentation • The physician order must state: • “Admit to observation” and the reason for the admission

  4. Physician Documentation • Beneficiary must be in care of physician during period of observation, as documented in medical record by admission, discharge, AND other appropriate progress notes that are timed, written and signed by the physician.

  5. Physician Documentation • The medical record must include documentation that the physician assessed patient risk to determine that the patient would benefit from observation care.

  6. How do you count hours? • Time begins with the beneficiary’s admission to an observation bed. • Time ends when all clinical or medical interventions have been completed. • Observation time must be documented in the medical record.

  7. How do you count OBS hours? • Develop a uniform process which is documented in a consistent manner and location in the medical record. • Documentation should be unique to observation patients and recorded by staff providing observation services.

  8. Distinct Part v. Commingled • Observation services may be performed in an acute care hospital bed that is commingled or mixed with other beds of the hospital. • The hospital may have a separate observation unit which segregates observation patients from inpatients.

  9. Self-administered drugs • Excluded from Medicare coverage • Medicare does not expect to be billed for non-covered self-administered drugs given in the outpatient setting. • Patient liable for cost

  10. Patient Status – IP or OP • A patient’s status (inpatient or outpatient) must be established before discharge. • Perform concurrent review and determinations of patient status based on medical necessity criteria and prudent medical judgment. • Issue Advance Beneficiary Notice (ABN) to outpatients to inform them that they will be liable for payment of non-covered services under Medicare Part B.

  11. What if patient is admitted as an inpatient? • Admission must be medically necessary based on inpatient-qualifying criteria (i.e. InterQual). • Combine observation charges with inpatient charges (OPPS hospitals ONLY).

  12. Change in Status – IP to OBS • Condition code 44 should be reported when a beneficiary’s status was changed from inpatient to outpatient. • Condition Code 44 is for use on outpatient claims only, when the physician ordered inpatient services, but upon internal review performed before the claim was initially submitted, the hospital determined the services did not meet inpatient criteria. CMS Transmittal 299

  13. Change in Status – IP to OBS • There are four conditions you must meet for the hospital to submit an outpatient claim after changing certification from inpatient to observation: • 1. The change in patient status from inpatient to outpatient is made prior to discharge or release, while the beneficiary is still a hospital patient. • 2. The hospital has not submitted a claim to Medicare for the inpatient admission . CMS Transmittal 299

  14. Change in Status – IP to OBS • 3. A physician concurs with the utilization review committee’s decision. • 4. The physician’s concurrence with the utilization review committee’s decision is documented in the patient’s medical record. CMS Transmittal 299

  15. APC / PPS Hospitals

  16. Observation Services • Observation services should be reported using G codes: • G0378 (Hospital observation services, per hour) • G0379 (Direct admission of patient for hospital observation care) • Report observation charges using 762 revenue code

  17. Observation Services • For CY2008 CMS has made significant changes in how it will pay for observation services. • G0378 will always be packaged (“N” SI), • either into 1 of 2 new composite APCs or, • if composite criteria are not met, packaged into payment for the major services on the claim.

  18. Observation Services • CMS states “observation services are ideal for packaging because they are always provided as a supportive service in conjunction with other independent separately payable hospital outpatient services such as an ED visit, surgical procedure, or another separately payable service”

  19. Observation Services • Two new composite APCs describe an extended encounter for care provided to a patient: • APC 8002 (Level I Extended Assessment and Management Composite) • Nat’l payment rate = $351.04 • APC 8003 (Level II Extended Assessment and Management Composite) • Nat’l payment rate = $638.66

  20. Composite 8002 1) 8 or more units of HCPCS code G0378 are billed-- ● On the same day as HCPCS code G0379; or ● On the same day or the day after CPT codes 99205 or 99215 and; 2) There is no service with SI=T on the claim on the same date of service or 1 day earlier than G0378 Composite 8003 1) 8 or more units of HCPCS code G0378 are billed on the same date of service or the date of service after 99284, 99285 or 99291 and; 2) There is no service with SI=T on the claim on the same date of service or 1 day earlier than G0378 Criteria for Composite Payment

  21. Observation Services • There is no limitation on diagnosis for payment of these composite APCs. • Composite payments will not be made when observation services are reported in association with a surgical procedure (status indicator T) or if observation hours reported are less than 8.

  22. Observation Services • The OCE (Outpatient Code Editor) will evaluate every claim received to determine if payment through a composite APC is appropriate. • If payment through a composite APC is inappropriate, the OCE, in conjunction with the OPPS Pricer, will determine the appropriate status indicator, APC, and payment for every code on a claim.

  23. Ancillary Services • Charge separately for infusions and injections administered in observation. • Assign revenue code 760 • Report separately any laboratory, radiology, etc. services under the appropriate revenue codes. Transmittal 787

  24. Ancillary Services • For CY 2008, hospitals are reminded to use the full set of drug administration CPT codes when billing for drug administration services provided in the hospital outpatient department. • CPT codes 90760-90761 (Hydration) • CPT codes 90765-90779 (Therapeutic, Prophylactic, and Diagnostic Injections and Infusions)

  25. Ancillary Services • Report all drug administration services, regardless of whether they are separately paid or are packaged. • Hospitals are expected to report all drug administration CPT codes in a manner consistent with their descriptors.

  26. Critical Access Hospitals

  27. Observation in CAH • Falls under Part B (outpatient) services – coinsurance applies • Requires written notice of non-coverage to beneficiary (ABN) prior to stay OBS beds count as part of 25 maximum bed count

  28. Observation in CAH • 72 hour rule does not apply to CAHs. • Provider can combine ER and OBS charges on same UB if provided on the same date. • If services provided on different dates, combine the services and utilize a date range in FL6 OR • Bill on two separate UBs • IP services are billed on separate UB

  29. Observation in CAH • CMS clarified in its Medicare Claims Processing Manual (Section 30.1.1), that CAHs: • Are exempt from the 1 and 3 day payment window provisions • Do not bundle OP services provided prior to inpatient admission on the inpatient bill • OP services must be billed as OP, and on a separate bill (85x TOB) from IP services • Outpatient services rendered on the date of admission to an inpatient setting are still billed and paid separately as outpatient services in a CAH

  30. Observation in CAH • Medicare pays 100% of costs for observation.

  31. Self-administered drugs • Excluded from Medicare coverage • Medicare does not expect to be billed for non-covered self-administered drugs given in the outpatient setting. • Patient liable for cost

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