Hospital Observation Services

August 28th, 2013 - Dorothy Steed
Categories:   Audits/Auditing   Billing   Claims   Coding   Collections  
0 Votes - Sign in to vote or comment.

Hospital observation services are considered outpatient services.  They are typically used when a period of time is needed to evaluate the progress or regression.  This may include effectiveness of medication/ infusions, results of diagnostic results or other reasons deemed as medically necessary. This period of time will be used to determine whether the patient needs inpatient admission, transfer to another facility, or may be discharged.  It is not appropriate for observation to be used as a routine post operative extended recovery time.  Observation is not determined by any specific unit or bed, but is based upon the physician order.

Several rules apply to observation services.  This is where you will need to be very familiar with your payer's requirements for time and reimbursement.

Medicare will allow 48 hours in observation, or until all ordered interventions have been completed.  Example:  IV has been ordered at hour 45, infusion not complete until hour 49.  Many managed care payers will only cover observation up to 23 hours.  Observation time must be documented in the medical record.  Time begins with the patient's admission to an observation bed.  It is generally expected that observation time will be at least 8 hours.  The patient is typically admitted to observation  through the hospital's emergency department, or by direct admit from a physician office. 

Some common problems with reporting observation services are:  Case management should follow these patients closely and be in contact with the physician as the time deadline approaches.  If the observation status needs to be converted to inpatient, the physician should issue a new order that reflects the status change.  If the patient remains for, say 4-5 days, with no order change, the hospital will likely lose the revenue for time over 48 hours for Medicare patients.  Managed care contracts should state specifically how claims will be reimbursed when both emergency department charges (revenue code 450), and observation charges (revenue code 762) appear on the claim.  Unless this is clearly defined in the contract, the payer will often default to emergency services payment rather than the observation payment rate. 

Keep in mind that Medicare patients who do not have Part B coverage will not have the observation service covered.  This is not an inpatient stay unless the physician specifically changes the order to inpatient status. 

 

###

Questions, comments?

If you have questions or comments about this article please contact us.  Comments that provide additional related information may be added here by our Editors.


Latest articles:  (any category)

Delving Into the 360 Assessment Fraud Complaint
November 17th, 2021 - Jessica Hocker, CPC, CPB
The Department of Justice is pursuing claims of healthcare fraud against Cigna Health-Spring Medicare Advantage plan based on how they used data from their 360 Program in 2012. A review of the allegations may help other payers avoid similar accusations.
Lessons Learned from a RADV Audit Report
November 16th, 2021 - Aimee Wilcox, CPMA, CCS-P, CST, MA, MT, Director of Content
If given an opportunity to know ahead of time the questions that would be asked of you in an upcoming interview or quiz, it is likely the outcome would be significantly better than if you were surprised by the questions. This same concept may be applied to audits of risk ...
Changes in RPM for 2021! Now, Wait for it... New RTM Codes for 2022
November 11th, 2021 - Christine Woolstenhulme, QCC, QMCS, CPC, CMRS
Remote physiologic monitoring and clinical data monitoring is a relatively new concept thriving and growing as an essential component for telehealth services. According to global consumer trends, a company called Dynata reported, "Among the 39% of people who consulted a healthcare professional, two-thirds used telemedicine, many of them for the first time ...
Reporting and Auditing Drug Testing Services
November 9th, 2021 - Aimee Wilcox CPMA, CCS-P, CST, MA, MT
Drug testing is a common medical service used to manage prescription medications, verify someone is not taking illegal substances or too much of a prescribed substance, and monitor for toxicity and therapeutic dosing. It is customary for patients in treatment programs for chronic pain management or substance use disorders (SUD) to undergo random urine drug testing (UDT) or urine drug screening (UDS) as part of their individual treatment plan. Drug testing is regulated by federal and state laws (e.g., OSHA, CLIA), which must be carefully adhered to.
Understanding ASCs and APCs: Indicators and Place of Service
October 28th, 2021 - Christine Woolstenhulme, QCC, QMCS, CPC, CMRS
The decision regarding the most appropriate care setting for a given surgical procedure is determined by the physician based on the patient's individual clinical needs and preferences. Of course, there is a difference in reimbursement, and the billing depends on where the procedure took place, such as an office setting, inpatient ...
Are You Keeping up with the Official ICD-10-CM Guideline Changes for COVID-19?
October 25th, 2021 - Wyn Staheli, Director of Research
The COVID-19 public health emergency (PHE) has made it interesting and challenging for organizations to keep an eye on the evolving changes to the ICD-10-CM Official Guidelines for Coding and Reporting. Have you been keeping up with these changes?
Is Your Organization Ready to Deal with Provider Relief Fund (PRF) Audit Contractors?
October 15th, 2021 - Aimee Wilcox, CPMA, CCS-P, CST, MA, MT, Director of Content
Audits are currently underway to verify the monies distributed through the CARES Act were warranted and properly used by those organizations that received them. The federal government has contracted with financial institutions such as KPMG and PricewaterhouseCoopers, among others, to perform these audits referred to as Provider Relief Fund (PRF) audit contractors, funded with monies from the very same program. There were four phases of funding disbursements with phase 1 audits beginning in September. How ready are you to be audited?



Home About Contact Terms Privacy

innoviHealth® - 62 E 300 North, Spanish Fork, UT 84660 - Phone 801-770-4203 (9-5 Mountain)

Copyright © 2000-2021 innoviHealth Systems®, Inc. - CPT® copyright American Medical Association