© 1996-2010 abbey & abbey, consultants, inc. slide # 1 advanced observation services: issues...

© 1996-2010 Abbey & Abbey, Consultants, Inc. Slide # 1

Advanced Observation Services: Issues & Answers

Version 9.6 - 2010Notes © 1999-2010, Abbey & Abbey, Consultants, Inc.

CPT Codes – © 2009-2010 AMA

Presented By:

Duane C. Abbey, Ph.D., CFPAbbey & Abbey, Consultants, Inc.

[email protected] http://www.aaciweb.comhttp://www.APCNow.com http://www.HIPAAMaster.com


Presentation Faculty

Duane C. Abbey, Ph.D., CFP – Dr. Abbey is a healthcare consultant and educator with over 20 years of experience. He has worked with hospitals, clinics, physicians in various specialties, home health agencies and other health care providers.

His primary work is with optimizing reimbursement under various Prospective Payment Systems. He also works extensively with various compliance issues and performs chargemaster reviews along with coding and billing audits.

Dr. Abbey is the President of Abbey & Abbey, Consultants, Inc. A wide range of consulting services is provided across the country including charge master reviews, APC compliance reviews, in-service training, physician training, and coding and billing reviews.

Dr. Abbey is the author of eleven books on health care, including:•“Non-Physician Providers: Guide to Coding, Billing, and Reimbursement”•“Emergency Department: Coding, Billing and Reimbursement”, and •“Chargemasters: Strategies to Ensure Accurate Reimbursement and Compliance”.

His most recent books are:“Compliance for Coding, Billing & Reimbursement A Systematic Approach to Developing a Comprehensive Program”, “Introduction to Healthcare Payment Systems”, and “The Medicare Recovery Audit Contractor Program” are available from the CRC Press a Division of Taylor and Francis.


This workshop and other material provided are designed to provide accurate and authoritative information. The authors, presenters and sponsors have made every reasonable effort to ensure the accuracy of the information provided in this workshop material. However, all appropriate sources should be verified for the correct ICD-9-CM Codes, ICD-10 Diagnosis and Procedure Codes, CPT/HCPCS Codes and Revenue Center Codes. The user is ultimately responsible for correct coding and billing. The author and presenters are not liable and make no guarantee or warranty; either expressed or implied, that the information compiled or presented is error-free. All users need to verify information with the Fiscal Intermediary, Carriers, other third party payers, and the various directives and memorandums issued by CMS, DOJ, OIG and associated state and federal governmental agencies. The user assumes all risk and liability with the use and/or misuse of this information.

Disclaimer


Observation Services – Special TopicsIntroduction

A Workshop Concerning Complex Issues for Observation Services

Presume That Participants Have a Background Relative to Observation Services

• Brief Introductory Material Is Provided In This Presentation So That The Fundamentals of Observation Are Reviewed

Focus and Depth of Discussion on Difficult Topics

• This presentation concentrates on a number of special topics that relate to observation services.

Observation services seems to represent an ongoing issue in which guidance continues to morph over time.

• Whenever CMS provides guidance, additional questions are raised.

• Also, this is a serious compliance area for government auditors as well as the RACs (Recovery Audit Contractors)


Observation Services – Special Topics Objectives

Observation Services - Objectives• To briefly review the observation concept and payment for observation services.•To discuss the Utilization Review Committee involvement in observation services including the UR Physician.•To understand the critical role of physicians and nursing staff in documenting and supporting observation services.•To review various Medicare rules and regulations concerning observation services including counting hours, Condition Code 44, and documentation requirements.•To address the anticipated RAC involvement in observation services.•To review the O’Connor Hospital Ruling from the Medicare Appeals Council.•To understand how to handle short-stay inpatient admissions that should have been observation.•To understand how to audit observation services.•To appreciate special training needs for medical staff.•To review special situation including non-physician practitioners, DRG Pre-Admission Window, and ancillary services provided during observation.


Observation Services – Special Topics Changes for 2010 - Synopsis

November 20, 2009 Federal Register ‘Observation Status’ versus ‘Observation Services’ Composite Payment/Grouping Changes CMS Side-Steps Addressing Other Issues/Questions

APC Update Transmittals Transmittal 1872 – December 11, 2009 I/OCE Update Transmittal 1882 – December 21, 2009 APC Update

• Transmittal 1882 Replaced Transmittal 1871 CMS FAQs – January 2010

# 9973 – Condition Code 44 – Counting Time Back To Beginning of Episode of Care

# 9974 – Infusions and injection during observation – Counting Time Terminology – ‘Admit to Observation’ versus ‘Referral to Observation’

See Transmittal 107, May 22, 2009, MBPM – See also ‘status’. August 3, 2010 Federal Register – ‘Nonsurgical Extended Services’ which

includes observation. Initial supervision followed by general supervision. Other Questions – See physician supervision concerns for inpatients that

are subsequently converted to outpatients through Condition Code 44. New physician supervision rule interpretation – inpatient vs. outpatient.


Observation Services – Special Topics Review - Fundamental Questions

What is Observation? Medicare vs. Private Third-Party Payers

How do we count the hours of observation? Start Time, Stop Time and Intervening Services (Interrupted Services)

What is Condition Code 44? How should we use Condition Code 44? How do we count time (hours) using Condition Code 44? Differences between Medicare and Private Third-Party Payers?

How should we bill for Observation? 8 Hours – Minimum 48 Hours – Maximum Direct Admits

How do we know that we are in compliance? Where do the RACs fit into the Observation picture? Where do physicians fit into the Observation picture? Why is this such a difficult topic? Why do the RACs concentrate on short-stay inpatient admissions? Why are the RACs interested in the DRG Pre-Admission Window?


Observation Services – Special Topics Review - Fundamental Questions

Is observation a ‘bed’ or a ‘status’ or what?

What is observation not?

When does observation start and when does it stop?

So the number of hours is measured from start time to stop time?

Don’t physicians control this whole issue?

How do nurses fit into the observation picture?

What needs to be documented in order to justify payment for observation?

Where, in the hospital, can observation services be provided?

How does the Medicare Program pay for observation services?

What is all this concern about Status Indicator “T” services provided in connection with observation services?

Conceptually, observation is a simple concept. Why do we have all of these coding, billing, documentation, and compliance issues with observation?


Observation Services – Special Topics Basics-ED Observation Flow

Patient PresentsTriage/Preliminary MSE

ED Physician/Attending Physician Assess and

Workup - Full MSE

Decision To HoldSpecial Care

Path

Longer Than24 Hours

Less Than24 Hours

Admit AsInpatient

Admit To Observation

Monitor InObservationAssess For

Inpatient Admit or

Discharge Home

Follow Care PathProtocol

Chest PainCHF

Other


Observation Services – Special Topics Basics-Post OP Surgery Flow

Outpatient Surgical Procedure

Regular RecoveryAnesthesia Use

Special RecoveryConscious Sedation

4-6 HoursRecovery Time

1-3 HoursRecovery Time

UnexpectedOccurrence

Admit ToObservation

Patient ReadyFor Discharge

Discharge Home

Discharge Home

Continue Special

Recovery

Continue Regular

Recovery

YesYes

Yes

No

No

No


Observation Services – Special Topics Observation Log

• Documentation Considerations – Continued•It is highly recommended that an “Observation Log” be maintained for each observation case regardless of the location of service. At a minimum The Observation Log should contain:

Patient’s NamePhysician’s Name(s)Date and Time of AdmissionDate and Time of DischargeCondition(s) Requiring Observation StatusInformation Pointing To Location Of DocumentationNumber Of Hours In Observation StatusNumber Of Units BilledCharges Made For The Observation Services Time/Activities Interrupting Observation Services During StayUtilization Review Notes

Note that some of this information is clinical, while other parts relate to billing. This Observation Log is intended to aid auditing personnel in making assessment about the propriety of the observation services.The process for developing an Observation Log should be carefully documented in a Coding/Billing Policy and Procedure.


Observation Services – Special Topics Payment System Considerations

Coding For Observation Services Physician Professional Billing

Physicians have several different CPT codes thatcan be used to code and bill for observation services. For regular observation services:

CPT=99218/99219/99220 – Admit To ObservationCPT=99217 – Discharge From Observation

For Same Day Admits/DischargesCPT=99234/99235/99236 – Observation or Inpatient

Hospital Service – Admit/Discharge Same Date

Of Service Hospital Facility Billing

RCC=762 – Observation Services Is Used The Units = The number of hours in observation. Charges are by the hour. For APCs to pay, there must be at least 8 units of G0378. G0379 used for direct admits to observation. Composite APCs – 8002 ($381.34) and 8003 ($705.27) E/M Coding Requirements – ED and Clinic Status Indicator “T” Idiosyncrasy


Observation Services – Special Topics Condition Code 44

Observation Compliance Concerns – Continued When can you change the status of a patient from ‘inpatient’ to ‘outpatient’ observation? This is what Condition Code 44 is supposed to handle.Transmittal #299 for publication 100-04, Medicare Claims Processing Manual, dated September 10, 2004. These instructions were effective on October 12, 2004.CMS is indicating that the following criteria must be achieved in order to use Condition Code 44 and thus indicate that a service was moved from an inpatient admission to an outpatient status, typically observation:

The change in patient status from inpatient to outpatient is made prior to discharge or release, while the beneficiary is still a patient of the hospital;The hospital has not submitted a claim to Medicare for the inpatient admission;A physician concurs with the utilization review committee’s decision; andThe physician’s concurrence with the utilization review committee’s decision is documented in the patient’s medical record.



Observation Compliance Concerns – Continued

Note: Transmittal 1803, August 28, 2009 updates and discusses the requirements surrounding utilizing Condition Code 44 for Medicare. The four criteria above remain essentially the same.

The NUBC definition for Condition Code 44:

For use on outpatient claims only, when the physician ordered inpatient services, but upon internal utilization review performed before the claim was originally submitted, the hospital determined that the services did not meet its inpatient criteria.

Exercise: Discuss the differences between the CMS requirements and the NUBC definition for Condition Code 44.

See Utilization Review Committee’s Involvement



For Q&A #9973 the question is:

How should the hospital report observation services when the patient's status is changed from inpatient to outpatient using Condition Code 44? May the hospital report observation services from the beginning of the hospital outpatient encounter?

Answer -

The use of Condition Code 44 pertains to the entire patient encounter, the patient's status, and the hospital bill type submitted. Medicare does not recognize a separate patient status called "observation;" all hospital patients are either inpatients (if they are admitted as inpatients on the order of a physician) or outpatients (registered by the hospital as outpatients). When Condition Code 44 is appropriately used, the hospital reports on the outpatient bill the services that were ordered and provided to the patient for the entire patient encounter. Reporting of individual HCPCS codes on an outpatient claim must be consistent with all applicable instructions and CMS guidance.



Question #9973 – Answer Continued However, in accordance with the general Medicare requirements for

services furnished to beneficiaries and billed to Medicare, even in Condition Code 44 situations, the hospital cannot report hours of observation services using HCPCS code G0378 (Hospital observation service, per hour) for the time period during the hospital encounter prior to a physician's order for observation services. Medicare does not permit retroactive orders or the inference of physician orders. Like all hospital outpatient services, observation services must be ordered by a physician and the reporting requirements specific to observation services are discussed in detail in the Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 290.2.2. The clock time begins at the time that observation services are initiated in accordance with a physician's order.

While hospitals may not report observation services under HCPCS code G0378 for the time period during the hospital encounter prior to a physician's order for observation services, in Condition Code 44 situations, as for all other hospital outpatient encounters, hospitals may include charges on the outpatient claim for the costs of all hospital resources utilized in the care of the patient during the entire encounter.


Observation Services – Special Topics Counting Hours for Observation

Counting Hours – Interrupted Observation

From Chapter 4, §290.2.2 –

• Observation services should not be billed concurrently with diagnostic or therapeutic services for which active monitoring is a part of the procedure (e.g., colonoscopy, chemotherapy). In situations where such a procedure interrupts observation services, hospitals would record for each period of observation services the beginning and ending times during the hospital outpatient encounter and add the length of time for the periods of observation services together to reach the total number of units reported on the claim for the hourly observation services HCPCS code G0378 (Hospital observation service, per hour).

Note that CMS has moved from therapeutic to diagnostic and therapeutic.

Time away from the observation bed is easy, but services provided while the patient is receiving observation services.



The second recent question, from Q&A #9974, is: May a hospital report drug administration services, such as therapeutic

infusions, hydration services, or intravenous injections, furnished during the time period when observation services are being reported?

Answer – The Medicare Claims Processing Manual (Pub 100-4), Chapter 6,

Section 290.2.2 states that "observation” services should not be billed concurrently with diagnostic or therapeutic services for which active monitoring is a part of the procedure (e.g. colonoscopy, chemotherapy)." In situations where such a procedure interrupts observation services and results in two or more distinct periods of observation services, hospitals should record for each period of observation services the beginning and ending times during the hospital outpatient encounter. Hospitals should add the lengths of time for the periods of observation services together to determine the total number of units reported on the claim for the hourly observation services under HCPCS Code G0378 (Hospital observation service, per hour).



Q&A #9974 – Answer Continued The hospital must determine if active monitoring is a part of all or a

portion of the time for the particular drug administration services received by the patient. Whether active monitoring is a part of the drug administration service may depend on the type of drug administration service furnished, the specific drug administered, or the needs of the patient. For example, a complex drug infusion titration to achieve a specified therapeutic response that is reported with HCPCS codes for a therapeutic infusion may require constant active monitoring by hospital staff. On the other hand, the routine infusion of an antibiotic, which may be reported with the same HCPCS codes for a therapeutic infusion, may not require significant active monitoring. For concerns about specific clinical situations, hospitals should check with their Medicare contractors for further information.

If the hospital determines that active monitoring is part of a drug administration service furnished to a particular patient and separately reported, then observation services should not be reported with HCPCS G0378 for that portion of the drug administration time when active monitoring is provided.


Observation Services – Special Topics UR Committee – Interpretive Guidelines

See the State Operations Manual, CMS Publication 100-07 Appendix A is for hospitals and there is a discussion of the Utilization

Review Committee relative to:

• Inpatient Admission, and

• Extended Stay. Correlates with possible use of Condition Code 44

• If the UR Committee determines that the inpatient admission was not appropriate, then a process must be undertaken to address this with the admitting physician or qualified practitioner.

• Who can make this determination? Non-Physician Single UR Physician Two RU Physicians

• “In no case may a non-physician make a final determination that a patient’s stay is not medically necessary or appropriate.” A-0656



UR Committee Determinations – Interpretive Guidelines A-0656

(1) The determination that an admission or continued stay is not medically necessary-

• (i) May be made by one member of the UR committee if the practitioner or practitioners responsible for the care of the patient, as specified of §482.12(c), concur with the determination or fail to present their views when afforded the opportunity; and

• (ii) Must be made by at least two members of the UR committee in all other cases.

(2) Before making a determination that an admission or continued stay is not medically necessary, the UR committee must consult the practitioner or practitioners responsible for the care of the patient, as specified in §482.12(c), and afford the practitioner or practitioners the opportunity to present their views.



(3) If the committee decides that admission to or continued stay in the hospital is not medically necessary, written notification must be given, no later than 2 days after the determination, to the hospital, the patient, and the practitioner or practitioners responsible for the care of the patient, as specified in §482.12(c);

Interpretive Guidelines §482.30(d) When other than a doctor of medicine or osteopathy makes an initial

finding that the written criteria for extended stay are not met, the case must be referred to the committee, or subgroup thereof which contains at least one physician. If the committee or subgroup agrees after reviewing the case that admissions, or extended stay is not medically necessary or appropriate, the attending physician is notified and allowed an opportunity to present his views and any additional information relating to the patient’s needs for admissions or extended stay. When a physician member of the committee performs the initial review instead of a non-physician reviewer, and he finds that admissions or extended stay is not necessary no referral to the committee or subgroup is necessary and he may notify the attending practitioner directly.



Interpretive Guidelines §482.30(d) - Continued

If the attending practitioner does not respond or does not contest the findings of the committee or subgroup or those of the physician who performed the initial review, then the findings are final.

If the attending physician contests the committee or subgroup findings, or if he presents additional information relating to the patient’s need for extended stay, at least one additional physician member of the committee must review the case. If the two physician members determine that the patient’s stay is not medically necessary or appropriate after considering all the evidence, their determination becomes final. Written notification of this decision must be sent to the attending physician, patient (or next of kin), facility administrator, and the single State agency (in the case of Medicaid) no later than 2 days after such final decision and in no event later than 3 working days after the end of the assigned extended stay period.



OK, So What Does This Mean for Condition Code 44?

Need to follow the directives of the Interpretive Guidelines

• How is your UR Committee set up?

• How does it function?

Need to have documentation in place that substantiates adherence to these guidelines.

• How is this being handled with Condition Code 44?

What if a physician simply wants to correct a mistake in the admission status?

• In other words, to use Condition Code 44, must you go through the UR Committee process?

• If there is simply an ‘error correction’, then Condition Code 44 does not need to be used?


Observation Services – Special Topics O’Connor Hospital Ruling

RAC Recoupment of Short Stay Inpatient Admission Case from 2004 working its way through the appeals process.

• Medicare Appeals Council – Decided Not To Change ALJ Ruling

• Next Step – Federal Court Will CMS take this to court? Basic Facts – Short stay inpatient admission that was inappropriate.

• RAC claimed full repayment because service not medically necessary as an inpatient admission.

ALJ Ruling

• Inpatient admission was not justified, BUT observation services were fully justified.

• Ruling directs CMS and Medicare Administrative Contractor to work with hospital to properly develop, file and adjudicate the claim as observation services.

• This ALJ directive is quite different from CMS’s current guidance that indicates that observation can’t be billed until it is ordered.

Will CMs Appeal?

• Whether or not, this ruling is well worth reading with care.



Language from the Ruling (or Non-Ruling)

“In its referral memorandum to the Council, CMS asserts that the ALJ erred as a matter of law by ordering Medicare payment for “the observation and underlying care” provided to the beneficiary because those services are not separately billable under Part A.”

“The Council does not agree that the case contains an error in law. The position advanced by CMS in its memorandum is inconsistent with the guidance set forth in the CMS Manuals.”

“CMS has expressly stated that Part B payment may be made if Part A payment is denied.”



Language from the Ruling (or Non-Ruling)

“In this case, the provider submitted a timely claim for services which was paid under Part A. When the RAC reopened the determination on the initial claim at issue here, it had the same plenary authority to process and adjust the claim as it did when that claim was first presented and paid. The RAC’s revised initial determination states that the beneficiary met the criteria for outpatient observation status.”

“Consistent with the CMS manual provisions discussed above, the contractor shall work with the provider to take whatever actions are necessary to arrange for billing under Part B, and thus, offset any Part A overpayment. The contractor shall issue a new initial determination upon effectuation.”

Question: How does this or could this affect the use of Condition Code 44?

Could the DRG Pre-Admission Window become involved?


Observation Services – Special Topics Physician Supervision – OP vs. IP

A New Compliance Issue – Physician Supervision During CY2008 and CY2009, CMS discussed and provided (clarifying)

guidance concerning physician supervision requirements under the Provider-Based Rule (PBR).

• Starting January 1, 2010, the supervision requirements have been (sort-of) liberalized and mid-levels can meet the requirement.

• As a part of these discussion it appears that outpatient services, even in the hospital, must meet the supervision requirements.

Case Study – The Apex Medical Center is a small rural hospital with a limited number of inpatient beds. At night nursing staff remains in the hospital, but the physician/practitioner may be on call to the hospital and also the ED. A patient has been in the hospital for a day and a half and Utilization Review, along with the physician, determine that the stay should have been observation. The physician writes an order for observation and the charges for the day and a half are charged as outpatient. BUT did Apex meet the physician/practitioner supervision requirement?

• What about post-operative recovery that is provided in an inpatient bed? Could physician/practitioner supervisions be a question?


Observation Services – Special Topics Physician Supervision – Critical Access Hospitals

With all of the changes occurring with the interpretation of ‘physician supervision’, a challenge has arisen with Critical Access Hospitals (CAHs).

We can argue what constitutes ‘qualified’ and how close the practitioner must be, but this new (or newly interpreted) requirement can create new challenges.

Example – Critical Access Hospitals – Patient is in observation. CoPs (Conditions of Participation) only require that a nurse be present at the hospital and thus the new supervisory requirement may not be met.

• CMS’s ‘Fix’ for This Situation Will not enforce this rule for CHAs (March 15, 2010), and Create a new service category – ‘nonsurgical extended

duration’ (infusions, injections, observation)o Does NOT include chemotherapy and blood transfusions.

Direct supervision is required only for the initiation of the service, after the patient is stable, general supervision applies.

o Note: This new proposed guidance appears to apply to all hospitals. See the August 3, 2010 Federal Register. (75 FR 46306-46308)


Observation Services – Special Topics DRG Pre-Admission Window

DRG Pre-Admission Window – Basic Directives See Recent Changes Window – 3 Dates of Service prior to inpatient admission

• 72-Hour Rule is a misnomer Certain services must be rolled into the inpatient billing

• All diagnostic services, and

• Related therapeutic services. Exact Principal to Primary Diagnosis Code Match

Outpatient services provided in the hospital, at provider-based clinics and/or owned and operated clinics (possibly freestanding).

Operational Difficulties Encountered in Addressing the Window Observation Interface to DRG Pre-Admission Window

Are you properly bundling (or not) any observation services and other associated services into the inpatient billing?

If you are incorrectly bundling observation services, then the DRG may be elevated inappropriately.

Note: On June 25, 2010 the SSA was changed so that the definition of ‘related’ is (or will be) much more liberal.


Observation Services – Special Topics Cost Reports

Where Do The Cost Reports Fit Into The Observation Situation?

There are relatively few true cost-based situations. CAHs, FQHCs and a very few other situations are reimbursed for these kinds of services based on costs.

However, hospitals still must prepare and submit cost reports since this data is used to rebase payment system like DRGs and APCs.

Care should be taken to set up the Charge Master correctly with RCC=762. In some cases RCC=760 has also been used which is problematic unless directed specifically by a given third-party payer.

In the next section we will look at compliance issues surrounding observation services. What if a hospital were providing observation services but not billing for these services? Would this skew the cost reporting process? Is this a compliance issue?


Observation Services – Special Topics ABN/HINN Considerations

Where Do ABNs/NEMBs Fit Into The Observation Situation? See the new “-GX” Modifier

ABNs – Advance Beneficiary Notices (Now ABNNs??)

Used when the hospital suspects that the claim may be denied due to lack of medical necessity. Patient is informed in advance and requested to sign the ABN form. Many special considerations in using ABNs including modifiers and special billing requirements. Use is required if the Hospital is to collect from the beneficiary – Hospital should have Known (!)

NEMBs – Notice of Exclusion from Medicare Benefits

Used when the service or item be provided is excluded from Medicare coverage Use is voluntary – Beneficiary is supposed to know what is or is not covered (!)

How do ABNs/NEMBs work with observation?


Observation Services – Special Topics Medical Staff Considerations

Physicians Drive the Entire Observation Process

Physician Must Order

• Establish Standard Notations for Orders

• Still Have the Concept of Inpatient Observation

Physician Must Justify – Clear, Concise, Convincing Documentation

• Medical Necessity Must Be Present

Physician Must Provide Care – How often? Work with nursing staff.

Physician Must Interact with the UR Committee As Appropriate

Medical Staff Organization (MSO)

Establish Observation As Part of Standard Protocols and Care Paths

Ongoing MSO Training

• Review Observation Cases for Problem Areas


Observation Services – Special Topics Auditing

Internal Observation Auditing

Observation involves significant compliance challenges.

Observation is also a difficult area for coding/billing ancillary services such as injections and infusions.

Coding and Billing Team Review each case to make certain properly coded and that the number of hours charged is appropriate.

Utilization Review Review each case in real time to determine the appropriateness of inpatient admissions and observation services.

External Observation Auditing

Observation can be included in routine outpatient and/or inpatient audits.

Special audits can be conducted if volumes appropriately justify.

• Note: Auditors will really like the Observation Log discussed earlier.


1. Sarah is scheduled to have cataract surgery on anoutpatient basis. Due to her nervousness, generalanesthesia is performed. Her surgery is performedat 9:00 a.m. She goes to recovery at 9:45 a.m. She has difficulty in recovery with some cardiac problems. At 11:00 a.m. her physician decidesto admit her to the hospital. At 6:00 p.m. she hascompletely recovered and is asymptomatic. Sheis discharged and sent home with her daughter.Utilization Review indicates that this should betreated as an outpatient observation case as opposed to a hospital admission.

Comments?

Be certain to include possible RAC audit concerns, O’ConnorHospital Ruling and the DRG Pre-Admission Window concerns.

Observation Services – Special Topics Exercises/Case Studies


2. An elderly patient is scheduled for an outpatientsurgery. While an overnight stay is not typicallynecessary for this surgery, the patient is requestingthat he be allowed to stay overnight. The surgery issuccessful with no complications. The patient staysovernight in observation.

Comments? What does the Apex Medical Centerneed to do to protect itself in this situation?




3. It is the middle of Winter. Sarah presents to theED on a cold, snowy night. The ED physician doesan assessment. Sarah appears to be suffering fromthe flu and she is somewhat dehydrated. An IV isstarted. The ED physician calls Dr. Smith, also of theAcme Medical Clinic, and they confer over the phone.The ED physician does not have admitting privileges toobservation status so the paperwork is filled out inDr. Smith’s name. He will see her in the morning.

Comments?



4. Sam has been having some difficulty for severaldays with cough, congestion and fever. He goes to theApex Medical Center’s Urgent Care Clinic onWednesday. Laboratory tests, x-rays and a generalassessment are performed. He is given medicationand sent home. That evening he presents to the ED andis placed in observation. On Thursday afternoon heappears to be much better and he is sent home.However on Friday evening he presents with thesame symptoms only much worse. He is admittedto the hospital.

Comment on the correct way to bill for these services.


5. Sam presents to the ED in the evening with somecardiac complaints. A careful assessment is madeand the cardiologist is called in for a consultation.Sam needs to have therapeutic cath lab services. While the Apex Medical Center does diagnosticcath lab services, therapeutic services are not provided. Sam’s condition is such that he will betransported to a larger hospital in the morning for theneeded services. He is placed in observation overthe night.

Comment on the correct way to bill for these services.




6. Sam has been experiencing chest pains. His daughter-in-law drives him to the Apex Medical Center’s ED. Upon getting out of the car, he does injure his hand, a simple laceration.

In the ED Sam is examined, his laceration is sutured, and he is given a battery of tests. A definitive diagnosis cannot be made, but he is put on the ‘Chest Pain Protocol’ and is kept in observation for 36 hours. He is then discharged home.

Comment to the coding for this case and the payment that will be received by the Apex Medical Center.

What if Sam was admitted to the hospital, stayed 36 hours and after he was discharged, Utilization Review determined the inpatient admission was incorrect, Condition Code 44 was not used.

Comment to coding and billing for this case and the payment that willbe received by the Apex Medical Center.


7. Sylvia is the head of UR/QA at the Apex MedicalCenter. She is reviewing a case in which one of thephysicians admitted a patient to inpatient status during the evening and then turned around and discharged the patient the next afternoon.

In Sylvia’s opinion, the documentation provided doesnot support the medical necessity for admission toinpatient status. She is thus changing the statusprior to any billing or claims being filed for this service.

Is this the correct way to handle this?

Where does the UR Committee fit into this picture?




8. Samantha is the Charge Master Coordinator at the Apex Medical Center. Concern has been expressed by thenursing staff relative to observation patients that have surgical procedures performed. Also, billingstaff do not know how to handle these claims. Some ofthese surgical procedures are actually performed atthe bedside while the patient is in observation, whileothers involve taking the patient to a treatment room or one of the minor surgical suites. Nobody seems to know how to code or bill for these situations.

How should this situation be handled?

Can the patient continue to be charged for observation when the patient away from the ‘observation bed’?

Will there be any APC difficulties?



9. The nursing staff at the Apex Medical Center have been strugglingwith properly documenting services. While they concentrate onclinical documentation there are increasing demands to document more completely other services. Their concerns are:

Does the actual stop time for an infusion need to be documented oris it OK to calculate the stop time based on the amount of the drugand the rate of administration?

When a patient is taken from an observation bed to another location for services, how should the time be documented?

Should the nursing documentation for a direct admit (from a physician’s office) be the same as an admit to observation throughthe ED?

How frequently should there be nursing assessments of observation patients?

Does the physician have to see the patient during their observation stay?



10. Utilization review personnel at the Apex Medical Center has requested a meeting with the compliance department and have included coding, nursing and patient financial services. The main question has to do withNOT using Condition Code 44 when the physician requests that the statusof the patient be changed from inpatient to outpatient observation. The argument is that the physician is simply correcting a mistake and thatCondition Code 44 is used only when the hospital determines that the status should be observation and requests that the physician agrees.

What do you think?



11.Condition Code 44 – Billing - A physician admitted Sarah through the ED as an inpatient because of an electrolytic imbalance. Sarah is doing quite well and it is now 28 hours into her stay. Utilization review has been checking the documentation and has asked to meet with the physician. A conference is held and it is determined that Sarah should have been an outpatient observation patient. The physician writes an order for observation care and Sarah is discharged 6 hours later.

Discuss how this should be billed and also how Medicare will pay for these services.



12. IV Injection - During her observations stay Sarah received a slow IV push. The push is provided over about 5 minutes. The nurse remains with Sarah for another 5 minutes to see if there is any reaction.

Discuss how this type of situation should be handled in view of the recent update guidance from CMS.



13.Telemetry Observation – Sylvia, the Chargemaster Coordinator at the Apex Medical Center, has been reviewing the new information about ‘active monitoring’ in subtracting time from observation. She is wondering about telemetry services. Her main question is whether or not this constitutes constant attendance is that there is a nurse that monitors in real-time, the telemetry data.

What do you think?



14. In the afternoon, Sam, a retired rancher, has been brought to the Apex Medical Center’s ED. He is complaining of chest pains and a severe headache. An extensive workup is provided at the ED including laboratory testing, cardiology testing and extensive radiology tests including a CAT scan. Sam’s attending physician decides to admit him as in inpatient due to a probable cardiac event.

The next morning, Sam is feeling much better. Virtually all of his symptoms are now abated. Additional testing indicates no problems and Sam is discharged just before lunch.



15.Sarah, an elderly patient from Anywhere, USA has presented to the Apex Medical Center’s ED complaining of cough, congestion, fever and general lack of energy. Her primary care physician in connection with the ER physician decide to place Sarah in observation. Hydration and medications are commenced.

On the second day of her stay, she suffers an apparent stroke. The ER I contacted and her primary care physician also comes to the hospital. The decision is made to admit Sarah to the hospital as an inpatient. She is there for five days and makes a remarkable recovery.

Discuss how this should be coded, billed and how payment will be made.


Observation Services – Special Topics Summary & Conclusion

Coding, Billing & Documenting Observation Services Represent A Very Real Challenge

Physicians Drive The Entire Process See Also Nursing Involvement “Medical Necessity” And The Associated Documentation Is Critical CMS Continues To Change the Way in Which Observation Services Are

or Are Not Paid See the new composite APCs starting in CY2008. It Is Recommended To Use An Observation Log To Help Document

Observation Services And To Assist Reviewers And Auditors Condition Code 44 Utilization Is Difficult Utilization Review Committee Activities Also Involve Observation Counting Hours for Interrupted Observation Services Is A Difficult

Operation Issue The DRG Pre-Admission Window Can Also Involve Observation

Services See Changed Rules See Also Various RAC Audit Issues Surrounding Observation vs. IP

Status Note That On-Going Guidance Continues to be Issued by CMS and This

Guidance Is Morphing Over Time See Nonsurgical Extended Duration Concept with Initial Supervision and then General Supervision

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