Inpatient vs. Observation Medicare Coverage Conditions and Definitions

Transcription

1 Inpatient vs. Observation Medicare Coverage Conditions and Definitions Presented by: Deborah K. Hale CCS, President-CEO Inpatient versus Outpatient Compliance Initiatives Protect the Medicare beneficiary trust fund Many short stays do not require admission Care is the same but reimbursement is different

2 Reimbursement is Different INPATIENT: CHF $5,500 (HSR $5,300) OBSERVATION: Hr. Stay $ (Approx) Identify Appropriate Patients Separately Payable Observation Chest Pain APC 339 Asthma $442 CHF Other Observation Diagnoses??? - Gastroenteritis No Separate - Dehydration Payment - Abdominal Pain Patient Out of Pocket is Different INPATIENT DEDUCTIBLE $ (If no admissions in last 60 days) OBSERVATION??? Deductible (per year) $ Coinsurance for each payable service + Self Administered Drugs Critical Access 20% of Charges Coinsurance

3 Compliance Initiatives QIO One Day Stay Initiative OIG Investigations Observation CERT Studies Recovery Audit Contractors (RAC) Inpatient Services Defined An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services Medicare Benefit Policy Manual Chapter 1 Inpatient Services Defined (cont d) Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed. Medicare Benefit Policy Manual Chapter 1

4 Inpatient Services Defined (cont d)..even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight. Medicare Benefit Policy Manual Chapter 1 Inpatient Services Defined Physicians should use a 24-hour period as a benchmark, i.e., they should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis. Medicare Benefit Policy Manual Chapter 1 Inpatient Services Defined (cont d) The physician or other practitioner responsible for a patient's care at the hospital is also responsible for deciding whether the patient should be admitted as an inpatient Medicare Benefit Policy Manual Chapter 1

5 Physician Order Admit as Inpatient Admit to Observation (OBS) Status Conversion from Obs to Admit-Admit Date is the date the Admit order was written Inpatient Services Defined (cont d) The decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors; Medicare Benefit Policy Manual Chapter 1 Inpatient Services Defined (cont d) Factors include: The patient s medical history and the severity of the signs and symptoms which impact the medical needs of the patient and influence the expected LOS. Medicare Benefit Policy Manual Chapter 1

6 Inpatient Services Defined (cont d) Factors (cont d): The medical predictability of something adverse happening to the patient The need for diagnostic studies that appropriately are outpatient services (i.e., their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more) to assist in assessing whether the patient should be admitted; and Inpatient Services Defined (cont d) Factors (cont d): The availability of diagnostic procedures at the time when and at the location where the patient presents Medicare Benefit Policy Manual Chapter 1 Inpatient Services Defined (cont d) Admissions are not covered or noncovered solely on the basis of the length of time the patient actually spends in the hospital Medicare Benefit Policy Manual, Chapter 1

7 OPPS Inpatient Only List Procedures remaining on the inpatient only list are those that require inpatient care because of the invasive nature of the procedure, the need for post operative care, or the underlying physical condition of the patient would require the surgery. The order for inpatient admission must be recorded prior to the surgery Federal Register OPPS Final Rules April 7, 2000 CMS Rules Inpatient only does not necessarily preclude the procedure from being performed in the outpatient setting only that Medicare will not make payment. Federal Register, April 7, 2000 CMS Rules This unfortunately leaves the beneficiary liable for payment if the procedure is performed in the outpatient setting. POOR POLICY ON THE HOSPITAL S PART Federal Register, April 7, 2000

8 OPPS Inpatient Only List The inpatient list specifies those services that are only paid when provided in an inpatient setting because of the Nature of the procedure, Need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged, or Underlying physical condition of the patient. April 7, 2000 Final Rules (65 FR 18455) OPPS Inpatient Only List Later the following criteria were added: Most outpatient departments are equipped to provide the services to the Medicare population. The simplest procedure described by the code may be performed in most outpatient departments. The procedure is related to codes that we have already removed from the inpatient list. November 30, 2001 Final Rule (66 FR 59856) OPPS Inpatient Only List We have determined that the procedure is being performed in numerous hospitals on an outpatient basis; or We have determined that the procedure can be appropriately and safely performed in an ASC and is on the list of approved ASC procedures or proposed by us for addition to the ASC list. November 1, 2002 final rule (67 FR 66741),

9 OIG Work Plan Inpatient Only Services Performed in an Outpatient Setting We will determine if Medicare payments are appropriately denied for inpatient only and related services performed in an outpatient setting and assess the extent to which Medicare beneficiaries are held liable for denied inpatient claims for these services. The BBA and the Balanced Budget Refinement Act of 1999 established and refined the Hospital Outpatient Prospective Payment System which went into effect August 1, We will also assess whether CMS computer edits required to implement the outpatient prospective payment were implemented. Inpatient Procedure Performed in the OP Setting Patient Expired Submit claim for all services furnished Add CA Modifier on the line with the HCPCS code All services on the claim that have same date of service will be paid under APC 375 with a payment of $2, Includes payment for procedure and ancillary services. Inpatient Procedure Performed in the OP Setting Patient Expired OPPS Proposed Rules for APC 375 Ancillary OP Services When Patient Expires $4,675 National Unadjusted Payment CMS 1392 Proposed OPPS Rules 2008 August 2, 2007

10 Bill Inpatient Claim Even Though They patient expired after admit order written but before transferred to ICU Inpatient Only Procedure ordered as inpatient but discharged following recovery room Filing a Claim without a Room Charge Medlearn Matters July 1, 2006 Change Request (CR) 4202 revises the Medicare Claims Processing Manual (Publication , Chapter 3, Section ) Directs that a patient of a hospital is considered an inpatient upon issuance of written doctors orders to that effect. If a patient either dies or is discharged prior to being assigned and/or occupying a room, a hospital may enter an appropriate room and board charge on the claim. Hospitals are not required to enter a room and board charge, but failure to do so may have a minimal impact on future DRG weight calculations. Filing a Claim without a Room Charge Medlearn Matters July 1, 2006 CR 4202 instructs your intermediary to pay inpatient hospital claims with room and board charges for a patient who has either died or is discharged prior to being assigned and/or occupying a room, and not deny claims if the hospital does not submit a room and board charge for a patient who has either died or is discharged prior to being assigned and/or occupying a room.

11 Outpatient Services Defined (cont d) Renal Dialysis Renal dialysis treatments are usually covered only as outpatient services but may under certain circumstances be covered as inpatient services depending on the patient's condition Outpatient Services Defined Minor Surgery or Other Treatment When patients with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for only a few hours (less than 24), they are considered outpatients for coverage purposes regardless of: the hour they came to the hospital, whether they used a bed, and whether they remained in the hospital past midnight. Outpatient (APC) List Procedures Examples Lap Cholecystecomy Appendectomy Inguinal Hernia Repair Mastectomy Hysterectomy Pacemaker Coronary Stent

12 Inpatient Vs Outpatient The fact that the procedure is in an APC group should not be construed to mean that the procedure may only be performed in an outpatient setting. September Federal Register April Federal Register Inpatient Vs Outpatient We (CMS) expect that when these (APC LIST PROCEDURES) are performed in the outpatient setting, they will be only the simplest, least intense cases September 8, 1998 Federal Register April 7, 2000 Federal Register Inpatient Vs Outpatient In every case, we expect the surgeon and the hospital to assess the risk to the individual patient and to act in that patient s best interest September 8, 1998 Federal Register April 7, 2000 Federal Register

13 Criteria at Admission For patients admitted following OP surgery medical necessity for admission (SI / IS criteria) should be present at the time the patient is converted to inpatient status. Source Data: Medicare Claims Processing Manual Chapter 3 Inpatient Hospital Billing 40.3 Outpatient Services Treated as Inpatient Services 72 Hour Rule 3 Day Payment Window Diagnostic services are combined regardless of the diagnosis. Lab, radiology/imaging, pulmonary function, EKG, stress test, echocardiogram, heart cath, etc. Medicare Claims Processing Manual, Chapter 3, Section 40.3

14 For Example: JULY SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY Admit as IP OP diagnostic services provided Sunday Wednesday would be included with inpatient claim. Nondiagnostic (Therapeutic) Services That are related to a patient's hospital admission and that are provided to the patient during the 3 days immediately preceding and including the date of the patient's admission are deemed to be inpatient services and are included in the inpatient payment. RELATED Nondiagnostic (Therapeutic) Preadmission Services Related to the admission only when there is an exact match (for all digits) between the ICD-9-CM principal diagnosis code assigned for both the preadmission services and the inpatient stay. The hospital may bill nondiagnostic preadmission services to Part B as outpatient services only if they are not related to the admission

15 Admission Following OP Surgery 10/1/06 OP Lap Cholecystectomy Monitored postop for respiratory difficulty Subsequent admission to inpatient for EXACERBATION OF COPD Principal = Exacerbation of COPD DRG 88 Nondiagnostic Lap Cholecystectomy charges filed on OP Claim Observation Observation Medicare Commercial Medicaid CMS Guidelines Milliman/ InterQual Very limited Medicaid State specific rules and payment provisions a) strictly limited to 23 / 59 b) role admission date back c) limited payments Go to the payer source to determine rules Implement internal systems to deal with the different state requirements

16 Review Managed Care Contracts Be sure you have reasonable observation rates and in your contracts Determine whether your MCOs require a pre-cert for admission to observation Set up a system, if necessary, to precert a conversion to inpatient. Observation History Federal Register, November 1, 2002, (67FR66794) Detailed discussion of the clinical and payment history of observation services 1983-August 2000 Cost based payments (OPPS) Packaged service with no additional payment 2002-December 07 Separate payment for observation Chest Pain, CHF, Asthma only Rate of Increase Observation Claims

17 Observation Services Defined Well defined set of specific, clinically appropriate services which include: Ongoing short term treatment Assessment, and Reassessment Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Observation Services Defined (cont d).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. Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Observation Services Defined (cont d) Observation status is commonly assigned 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 admission or discharge. Medicare Benefit Policy Manual Chapter 6; 20.5 ( )

18 Covered Observation Services At least 8 hours and in the majority of cases. usually less than 24 hours In only rare and exceptional cases more than 48 hours. Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Covered Observation Services All hospital observation services, regardless of duration, that are medically reasonable and necessary are covered by Medicare. Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Medicare Claims Processing Manual Observation time must be documented in the medical record. The first hour of observation is the time of admission to an observation bed See Nurses Notes Observation ends when all clinical or medical interventions have been completed, including follow-up care furnished by hospital staff and physicians that may take place after a physician has ordered the patient released or admitted as an inpatient.

19 Medicare Claims Processing Manual We do not expect reported observation time to include the time the patient remains in the observation area after treatment is finished for reasons that include waiting for transportation home. Physician Evaluation The beneficiary must be in the care of a physician during the period of observation, as documented in the medical record by admission, discharge, and other appropriate progress notes that are timed, written, and signed by the physician. Non-Covered Observation Services which are not reasonable or necessary for the diagnosis or treatment of the patient Medicare Benefit Policy Manual Chapter 6; 20.5 ( )

20 Non-Covered Observation (cont d) Services provided for the convenience of - patient - patient s family - physician Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Non-Covered Observation (cont d) Services which are part of another Part B service such as: - recovery room - pre-procedure prep - chemotherapy Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Let's hope there are no post-op problems, it complicates the billing."

21 Non-Covered Observation (cont d) Services that are covered under Part A, such as a medically appropriate inpatient admission Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Advanced Beneficiary Notice If a hospital intends to place or retain a beneficiary in observation for a noncovered service, it must give the beneficiary proper written advance notice of non-coverage under limitation of liability procedures. Medicare Benefit Policy Manual Chapter 6; 20.5 ( ) Think about it Before giving an ABN, consider. Is the observation service packaged or non covered???

22 MEDICARE PATIENTS Observation or Inpatient Admission? Yes Yes Can the patient's condition be evaluated/treated w /in 24 hours and/or is rapid improvement of the patient's condition anticipated w /in 24 hours? Observation is appropriate Inpatient admission is appropriate. No Does the patient's condition require treatment/further evaluation that can ONLY be provided in a hospital setting (i.e. inpatient or observation)?* Unsure No Alternate level of care is appropriate (outpatient, home health care, extended care facility). *The decision to admit a patient as an inpatient requires complex medical judgment including consideration of the patient's medical history and current medical needs, the Additional time is needed to medical predictability of something adverse happening to the determine if inpatient admission is patient, and the availa medically necessary; observation is appropriate. OIG Supplemental Compliance Program Guidance for Hospitals Improperly billing for observation services Billing for observation services in situations that do not satisfy the requirements is inappropriate and may result in hospital liability. Hospital s should develop and become familiar with, CMS s detailed policies for the submission of claims for observation services. Under Use of Observation Impact High risk of Compliance Issue One Day Stay Project by CMS - Necessity of Admission

23 Over Use of Observation Impact Loss of 3 day qualifying stay for SNF Very low Medicare payment to the hospital for services provided Outlier Payments Triggering Investigation Higher out of pocket expense to the patient Increased average LOS and cost in public report cards Q & A 1. Would it be permissible for a hospital to routinely care for all patients in outpatient observation prior to making a decision about their need for inpatient admission? Q & A 1. A: No. Hospitals should not routinely default to outpatient observation status. The status should be determined for each patient based on his/her particular condition and needs. Outpatient observation should be used when a physician needs additional time to evaluate the patient and determine the need for inpatient admission or when the physician has reason to believe that the patient will respond to treatment within 24 hours.

24 Q & A 2. When should observation orders be written? Q & A 2. A: Physician orders for outpatient observation must be written prior to the initiation of observation services. Orders may not be backdated. Q & A 3. If a hospital determines within a short period of time after admitting a patient that although the patient was acute on admission, he or she has responded rapidly to treatment and is no longer acute, should the hospital bill the stay as an outpatient observation in order to prevent denial of a short stay/medically unnecessary admission?

25 Q & A 3. A: No. Hospitals, Peer Review Organizations, etc., should not apply "hindsight" in determining medical necessity of admission. If, in the judgment of the admitting physician, a patient has an acute condition that requires treatment in an inpatient setting at the time of admission, the physician should document this in the medical record. If the patient should respond more rapidly to treatment than was anticipated, this should also be documented. The medical record documentation will allow an outside reviewer to determine what the physician was thinking at the time of admission and understand that medical necessity for inpatient admission was present. Q & A 4. If an intern admits a patient as an inpatient and then the staff attending physician determines that the patient should be cared for in outpatient observation, can the attending physician change the order from inpatient admission to outpatient observation, and can the case then be billed as an observation case? Q & A 4. A: No. If interns at a hospital have privileges to admit patients, and there is a question about medical necessity, the order for the admission should be clarified with the intern at the time of admission. If the patient has already been admitted, and medical necessity was not present at the time of admission. See the answer to previous question for more details. If interns do not have the privilege to admit patients, they should not be allowed to write admission orders and the hospital should not accept admission orders from them.

26 Q & A 5. If a physician writes a clear admission or outpatient observation order and the patient is receiving the level of care ordered, but an error by business office or other staff results in an incorrect level of care designation being noted in the billing system, can this type of clerical transcription or designation error be corrected? Q & A 5. A: Yes. A clerical error that involves only an incorrect level of care status being assigned, not a problem with the physician's order or the level of care the patient is receiving, can be corrected so that it is in alignment with the patient's status as ordered by the physician. This type of error correction should be documented and tracked in an administrative system to determine if patterns to the occurrences can be identified and processes corrected to prevent a recurrence. Q & A 6. If a physician orders (verbally or by telephone) a patient to be treated in observation, but the hospital staff transcribes the order incorrectly, indicating that the patient is an inpatient, can the hospital correct this?

27 Q & A 6. A: Yes. The hospital can correct this situation because this is a clerical-type error, not a problem with the physician order or the level of care the patient is receiving. TMF expects the admitting physician to enter a clarification/correction note or order in the medical record in a timely fashion, normally within one working day. The physician should sign and date this note/order. The patient status may not be "corrected" after the patient is discharged. Again, hospitals are encouraged to monitor these types of situations to determine if processes can be put in place to eliminate them. Q & A 7. Is a physician actually required to write an inpatient admission order when a patient is progressed from outpatient observation to inpatient admission? Q & A 7. A: Yes. The hospital cannot bill an inpatient admission without a physician order. The order must clearly indicate the level of care required, and documentation in the medical record must support medical necessity of the inpatient admission.

28 Q & A 8.The patient meets screening criteria at the time of presentation to the hospital and the patient was placed in observation. Twentyfour hours later, the patient was converted to an inpatient admission and did not meet screening criteria at that time. Can screening criteria that was met during the observation part of the hospital stay be used to approve the admission? Q & A 8. No. The patient must require an inpatient level of care at the time the patient was admitted as an inpatient. This means that at the time the patient is admitted as an inpatient, they must have a condition that requires treatment that can be safely provided only in the inpatient setting. Q & A 9. Initially the patient was placed in observation. Can the attending physician at a later date write an order to make this an inpatient admission from the date the patient was placed in observation?

29 Q & A 9. A. No. Patient status cannot be changed retrospectively. The physician is responsible for determining the level of services required for patients when they arrive at a hospital. Q & A 10. Is there a time limit/frame for getting clarification from the physician regarding the admission status if he only writes admit or admit to the floor? Can this type of order be clarified after it is written? Q & A 10. A. If the physician writes "admit" or "admit to the floor," this is interpreted as an order for inpatient care. The physician is responsible for determining the level of services required for patients when they arrive at a hospital. If clarification is needed, it should be obtained at the time the order is written.

30 Utilization Review Committee (cont d) See Medicare Conditions of Participation Section Other members may be practitioners as specified in (other medical staff members such as dentists, chiropractors, podiatrist, psychologist, etc.) Utilization Review Committee See Medicare Conditions of Participation Section Two or more practitioners (doctors of medicine or osteopathy) with no financial interest or responsibility for care of the patient being reviewed UR Committee Effectiveness Data Driven Performance Improvement Model Action taken Evaluate Effectiveness of Action

31 DRG HPMP DRGs Targeted One-Day Stay Project Narrative 127 Heart failure and shock 143 Chest pain 182/183 Miscellaneous Gastrointestinal Disorders with/without complication/comorbidity (Esophagitis, gastroenteritis and gastritis) 296/297 Miscellaneous Nutritional and Metabolic Disorders with/without complication/comorbidity (dehydration, electrolyte imbalances, malnutrition) ST PEPPER (2007) DRG Misc GI Disorders 2007 Excludes Obs first IP Admissions Strategies for Compliance Transmittal 299, September 10, 2004 Bill condition code 44 on the UB-92 (131 bill type) Effective October 12, 2004 when.. Inpatient admission does not meet admission criteria.

32 Transmittal 299 ( ) Inpatient admission changed to outpatient - For use on outpatient claims only, when the physician ordered inpatient services, but upon internal review performed before the claim was originally submitted, the hospital determined the services did not meet it s inpatient criteria. Transmittal 299 ( ) UR Committee determines patient does not meet inpatient status may change the patient s status to outpatient provided the following conditions are met: Change in patient status is made prior to discharge or release while the beneficiary is still a patient in the hospital The hospital has not submitted a claim for inpatient admission Transmittal 299 ( ) A physician concurs with the utilization review committee s decision; and The physician s concurrence with the utilization review committee s decision is documented in the patient s medical record.

33 Medlearn Matters Clarification Transmittal 299 Scenario 1 (Hospitalized patient) A. Case does not meet admission criteria and the attending physician agrees to change to outpatient. B. One physician member of the UR Committee agrees with the attending physician and the status is changed with medical record documentation of process. MLM Clarification SE0622 (March 2006) Medlearn Matters Clarification Transmittal 299 Scenario 2 (Hospitalized patient) A. Case does not meet admission criteria and the attending physician does not agree to change to outpatient. B. Two physician members of the UR Committee must agree on correct status and the status is changed with medical record documentation of process. Attending must be able to express views to UR physicians. MLM Clarification SE0622 (March 2006) Medlearn Matters Clarification Transmittal 299 Must be done while patient is still hospitalized as beneficiary has a right to know financial impact of this decision..»good Luck!!!! MLM Clarification SE0622 (March 2006)

34 Medlearn Matters Clarification Transmittal 299 When the condition code 44 process is correctly applied and the admission is determined to be not medically necessary, the hospital may file a 13x/85x bill type to receive payment for medically necessary Part B services that were furnished to the beneficiary. MLM Clarification SE0622 (March 2006) Provider Liable Claim QIO and/or UR Committee: Admission deemed unnecessary after patient discharge. Following submission of Inpatient Claim file a Provider Liable Claim (121 bill type) for Part B services only. See Medicare Benefit Policy Manual, Chapter 6, Section 10 Billable Outpatient Services when Admission is Unnecessary Admissions Post Discharge Diagnostic x-rays Diagnostic lab tests Other Diagnostic Tests Radiation Therapy and materials Surgical dressings, and splints, casts, and other devices used for reduction of fractures and dislocations; Prosthetic devices (other than dental) Leg, arm, back, and neck braces, trusses, and artificial legs, arms, and eyes including adjustments, repairs, and replacements Outpatient physical therapy, outpatient speech pathology services, and outpatient occupational therapy Etc.

35 Strategies for Compliance CASE MANAGEMENT PROTOCOL! EXPANDING????? ST PEPPER Florida Hospital One-Day Stay Excluding Transfers, % of All Discharges Excl Transfers 20.0% 18.0% 16.0% 14.0% Hospital Percentage 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Q2 FY 2005 Q3 FY 2005 Q4 FY 2005 Q1 FY 2006 Yearly and Quarterly Data Hospital Statew ide: 90th Percentile Statew ide: 75th Percentile Statew ide: Median Statew ide: 10th Percentile Observation or Inpatient Do not substitute observation for medically appropriate inpatient admissions!!

36 Strategies for Coping Managing the Doors Strategies for Coping Point of Entry Review Pre-op screening process for elective surgery (Inpatient Only List) (Experimental Procedures) (Inpatient vs Outpatient Admission) Case Management in the ED Observation Billing OPPS Proposed Rules for 2008 Proposed Rules: Federal Register, CMS 1392 P August 2, 2007 Final Rules: Federal Register, November???2008

37 June 2006 Institute of Medicine "Hospital-Based Emergency Care: At the Breaking Point, " Encourages hospitals to apply tools to improve the flow of patients through EDs, including developing clinical decisions units where observation care is provided. June 2006 Institute of Medicine The IOM's Committee on the Future of Emergency Care in the United States Health System recommended that CMS remove the current limitations on the medical conditions that are eligible for separate observation care payment in order to encourage the development of such observation units. Reimbursement Changes for 2008 Proposed OPPS Rules for 2008 CMS 1392 P Federal Register August 2, 2007 Change payment structure for Observation Packaged into Emergency Department

38 Rate of Increase Observation Claims Identify Appropriate Patients NO Separately Payable Observation ALL Observation Billable - No Hour Minimum - Must follow CMS Guidelines for Covered Observation Use CMS Rationale We are concerned that current criteria for observation services may provide disincentives for efficiency (i.e. 8 hour rule) By packaging payment for all observation services, regardless of their duration, we would provide incentives for more efficient decision making.

39 Observation Direct Admits to Observation Status HCPCS code G0379 (Direct admission of patient for hospital observation care) is assigned to status indicator "Q" and assigns to APC 604 $53.38 (Unadjusted) Addendum B to this proposed rule because we are proposing that it receive separate payment only if it is billed on the same date of service as HCPCS code G0378 (Hospital observation service, per hour), without any services with status indicator "T" or "V," or Critical Care (APC 0617). Proposed Rule No Longer Requires Minimum number of hours (report all) Diagnosis of chest pain CHF or asthma Relationship to visit, procedure APC

40 Billing Observation Hours Observation time must be documented in the medical record. The first hour of observation is the time of admission to an observation bed See Nurse s Notes Observation ends when all clinical or medical interventions have been completed, including follow-up care furnished by hospital staff and physicians that may take place after a physician has ordered the patient released or admitted as an inpatient. Proposed Rules --- Continues to require Physician Evaluation a. The beneficiary must be in the care of a physician during the period of observation, as documented in the medical record by admission, discharge, and other appropriate progress notes that are timed, written, and signed by the physician. b. The medical record must include documentation that the physician explicitly assessed patient risk to determine that the beneficiary would benefit from observation care. Proposed Rule Warning We expect to carefully monitor any changes in billing practices on a service-specific and hospital-specific basis to determine whether there is reason to request that QIOs review the quality of care furnished or to request that Program Safeguard Contractors review the claims against the medical record.

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