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Tips for billing for observation

Tips for billing for observation

Editor’s note: The following is an excerpt from the Observation Services Training Handbook. For more information, visit http://hcmarketplace.com/observation-services-training-handbook?spMailingID=9161804&spUserID=MTMyMzM3ODExMTA3S0&spJobID=960440639&spReportId=OTYwNDQwNjM5S0.

 

Observation hours start accruing not when the patient comes into the hospital, but when the physician writes the order for observation. Observation hours end when all medically neces¬sary services related to observation are complete.

In some cases, this means that you can still bill for time spent completing the patient’s care after the physician writes the discharge order.

For example, a physician comes in to see the patient at 7:30 a.m. and writes the discharge order, which states discharge will occur pending the completion of tasks X, Y, and Z. The nursing staff finishes up those three tasks and the patient is finally ready to leave the hospital at 11 a.m. The hours between 7:30 a.m. and 11 a.m. are potentially billable observation hours because they were used to complete the patient’s medical care.

Observation hours therefore end not with the discharge order but with the completion of medical services.

In addition, because observation services are considered a tempo¬rary period to aid in decision-making, CMS states in the Medicare Benefit Policy Manual that only in rare and exceptional cases should observation services last more than 48 hours.

If a case reaches the 48-hour mark and the physician still hasn’t made a decision to discharge or admit the patient for inpatient care due to instability or risk of an adverse event if discharged, nor has any documentation made a compelling case for the need to continue observation, the services no longer meet the defini¬tion of observation care and the hospital should not bill for future hours. Hospitals should also not report observation hours after the physician has decided to send the patient home or to a lower level of care if the patient is receiving no active treatment and is just in a holding pattern until he or she moves to the next level of care or goes home.

Coding for comprehensive observation services

The 2016 outpatient prospective payment system final rule implemented changes for coding and billing for observation services. Among the changes made by CMS was the creation of a new Comprehensive Ambulatory Payment Classification for comprehensive observation services (CMS, CMS Finalizes Hospital Outpatient and Ambulatory Surgical Center Policy and Payment Changes, 2015).

Specifically, hospitals will now bill all qualifying extended assessment and management encounters, including observation services, through the newly created comprehensive observation services C-APC code 8011. A new status indicator, J2, was also created to specify that more than one service was provided (80 Federal Register 130, 2015).

CMS now requires hospitals to bundle services provided and previously billed separately?services such as level 3 ED visits, IV infusions, echocardiograms, speech therapy, and similar services. CMS pays a flat rate for the comprehensive observation services, which includes the bundled services.

Hospital staff should bill all hours of observation for a single encounter on one line under revenue code 0762. If the hospital provided observation care to a patient over multiple days, the date of service should be the date that observation care began. Although one rate is now paid for comprehensive observation ser¬vices, HCPCS code G0378 is still used to bill observation services by the hour. When using this code, the organization should round to the nearest hour. For example, eight hours and 20 minutes in observation would round to eight hours, whereas nine hours and 40 minutes would round up to 10 hours. If the hospital provided observation care to a patient over multiple days, the date of ser¬vice should be the date that observation care began.

The second HCPCS level II code for observation is G0379. This code is used for a direct admission or referral for observation care from a physician in the community. Note that this code is not used if an ER physician or a physician from a provider-based department or clinic makes the referral. This code previously allowed hospitals to bill for costs associated with the visit, including registration and collecting clinical information about the patient, but costs are now bundled with the payment for the comprehensive observation services.

HCPro.com – HIM Briefings