Pediatric Coding Alert

To avoid denials for observation services, pediatricians should concentrate on documentation that reflects the hospital's records, not the diagnosis.

Make sure documentation is consistent with the hospital's records. The physician's order should state, "Admit to observation status," says Kathy Pride, CPC, CCS-P, coding supervisor for the Martin Memorial Medical Group, a 57-physician group practice in Stuart, Fla. File the claim with a place-of-service indicator "22" for outpatient hospital. The record should also reflect any status changes to show clearly where each E/M service took place. Clear documentation will support correct coding and should eliminate payer denials for incorrect place of service.

Additionally, the diagnosis does not affect physician payment, Pride says. The hospital may not receive reimbursement for certain diagnoses that CMS deems inappropriate for observation status, but the diagnosis does not matter for physician work.

Note: Hospitals previously received more money for patients in observation status than in inpatient, which made observation admission enticing to hospitals. To correct this discrepancy, CMS limited the observation diagnoses for which hospitals could receive reimbursement.

CMS is collecting data on how often physicians admit patients with particular diagnoses to observation status. It will use this data to determine reimbursement, so accurate reporting is crucial to ensure future payment. Remember, the physician determines whether the patient should be admitted to observation or admittance, and the hospital must follow the doctor's orders, Pride stresses.