Learn the Limits of Facility Observation Coding -- or Pay the Price

Hint: Medicare requires an 8-hour minimum for payment
Under CMS rules, your facility can gain APC payment for observation services, but you’re going to have to meet five vital criteria before you can expect Medicare to show you the money.

Criterion 1: Don’t Limit Your Dx Choices

Beginning Jan. 1, 2008, an outpatient facility no longer need limit observation services to those patients with chest pain, congestive heart failure (CHF) and asthma. As outlined in the 2008 OPPS Final Rule, CMS will now allow you to report observation services for any disorder, as long as the service is medically necessary and meets all other requirements of an observation service, says Sarah L. Goodman, MBA, CPC-H, CCP, president of SLG Inc. in Raleigh, N.C.
"We recognize that observation care can be a major component service when provided to patients with clinical conditions other than congestive heart pain, chest pain and asthma for which separate observation payment may ... be provided [prior to 2008] under the OPPS," CMS states in the final rule. As such, "We will not require a qualifying diagnosis for composite APC payment," the agency says.

Criterion 2: Meet 8-Hour Limit

One important requirement that has not changed for 2008 is that you may receive separate payment only for those observation services lasting eight or more hours.
In other words: Documentation must support coding of at least eight units of G0378 (Hospital observation service, per hour).
Observation time begins when the patient is placed in an observation bed under a physician’s orders. You should round to the nearest hour when calculating observation time. Observation time ends when the physician either discharges the patient or admits the patient as an inpatient. As in all cases when time is an issue, exact, documented "start and stop" times are best.
Observation time may include medically necessary services and follow-up care that the physician provides after the time that he writes the discharge order, but before the physician actually discharges the patient. Observation time does not, however, include the time a patient waits in the observation area after treatment (for instance, while waiting for transportation).
If an observation service spans more than one calendar day (for instance, the physician admits the patient to observation at 10 p.m. on Friday and discharges the patient at 6 a.m. on Saturday), you should use the date of admission as the service date.

Criterion 3: Prove Physician Involvement

Your documentation must substantiate that the physician was involved with patient care during the entire period for the service to qualify as a [...]

- Published on 2008-03-14