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

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

Observation Issues: Clearing the Confusion

Version 9.7 - 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 ServicesObjectives

Observation Services - ObjectivesJust What Is Observation?

How Do We Differentiate Inpatient from Outpatient?

Confused About Whether Observation Is A Status or Location?

What Needs To Be Documented for Observation Services?

When Does Observation Start and Stop?

Why Do Hospitals Have Difficulty With Observation?

How Can We Audit Observation Services

How Do We Code/Billing Injections/Infusions for Observation?

How Does Nursing Staff Influence Observation Status to Ensure Proper Payment?

Do We Need to Have An Observation Log?

How Does the ED Fit Into Observation?

How Should We Handle Post-Operative Surgery?


Observation ServicesChanges 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’. Other Questions – See physician supervision concerns for inpatients that

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


Observation ServicesFundamental 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

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?


Observation ServicesIntroduction

Observation Services Represents A Very Difficult Area Definition Of ‘Observation’ Is Not Always Clear Physicians Drive The Entire Process Billing For Services Creates Compliance Concerns Documentation Is The Key In This Area Nursing Service Challenges – Documentation, Direct Admits, Infusions and Injections

What Is ‘Observation’?A simplistic definition might be:

Observation services are outpatient services where the patient is being held to determine if the patient should be admitted, discharged home or sent to another provider.

Why Does Medicare Have Such A Problem With Observation?Medicare ‘believes’ that hospital have been cheating by

inappropriately billing for observation services. With the implementation of APCs, over the period of nine years, CMS has constantly changed the coding, billing and payment process.



How Do Other Third-Party Payers View Observation?

How Did Observation Services Come Into Being?

What Has To Be Synchronized In Order To FullyHandle Provision, Documentation and Billing For Observation?

What Is The Difference Between ProfessionalComponent Billing And Technical Component Billing?

Can We Avoid All The Problems By Just Not BillingFor Observation?

Our QIO Is Heavily Reviewing Same Day Admits And Discharges – Is It OK To Make Them Observation?

What Is The Difference Between ‘Inpatient’ And ‘Outpatient’?

Does Nursing Staff Know When Patient Is In Observation?



What Observation Is NOT

A Substitute for an Inpatient Admission For Continuous Monitoring For Medically Stable Patients Who Need Diagnostic Testing or Outpatient Procedures For Patients Who Need Therapeutic Procedures (e.g., blood transfusion, chemotherapy, dialysis) that are routinely provided in an outpatient setting For Patients Waiting Nursing Home Placement To Be Used as a Convenience to the patient, his or her family, the hospital, or the attending physician For Routine Prep or Recovery Prior to or Following Diagnostic or Surgical Services A Routine “Stop” Between the Emergency Department and an Inpatient Admission

• The above is from the December 2002 issue of the Medical Director’s Corner - AdminaStar



CMS – Changes for Observation Starting In CY2008

“In summary, we are adopting our proposal to package payment for observation care reported with HCPCS code G0378 for CY 2008, with a modification to establish two new composite APCs for extended assessment and management. For CY 2008, payment for observation services reported with HCPCS code G0378 will remain packaged with status indicator “N.” We are creating two composite APCs for extended assessment and management, of which observation care is a component. In addition, we will not require a qualifying diagnosis for composite APC payment, but for the purposes of composite APC payment, will retain all other criteria, including a minimum number of eight hours; a qualifying visit, direct admission, or critical care; and no “T” status procedure reported on the day before or day of observation services. Additionally, we are retaining the general reporting requirements for all observation services, whether fully packaged or included in the composite APC payment. These are criteria related to the physician order and evaluation, documentation, and observation beginning and ending times. These are the more general requirements that ensure the proper reporting of observation care on correctly coded hospital claims that reflect the charges associated with all hospital resources utilized to provide the reported services.” Page 906 CMS-1392-FC (Examination Copy)


Observation ServicesBasics

Just, What Is Observation?

While there are different interpretations, for Medicare from HIM-10 §455 (Pub. 100-2, Medicare Benefits Policy Manual, Chapter 6, §70.4):

Observation services are those services:

(a) Furnished on a hospital’s premises(b) Includes use of a bed and periodic monitoring by

nursing or other staff(c) Reasonable and necessary(d) To evaluate an outpatient’s condition(e) Determine the need for possible admission as

an inpatient(f) Ordered by physician or qualified NPP(g) Usually do not exceed one day(h) May go for up to 48 hours(i) Under unusual circumstances may exceed 48 hours

Note: §70.4 No longer exists. See next slide for slightly updated information.



Just What Is Observation? See Transmittal 1445 to Publication 100-04 and Transmittal 82 to Publication 100-02 for updated definitions and directives.

Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment 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. Observation status is commonly assigned to patients who present to the emergency department and who then require a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge.Observation services are covered only when provided by the order of a physician or another individual authorized by State licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient tests. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours.



Observation Is A Status (?) Or Is It A Bed (?)

How Does A Patient Get Into Observation?

A Physician Must Order There Must Be Medical Necessity Proper Documentation Must Be Provided Note: These are all dependent upon the physician! How does nursing staff become involved in observation?

Direct Admits Provision of Services

Where Are Observation Services Provided?

The Medicare definition requires the use of a ‘bed’ and nursing services.In theory the bed can be any place.Typical location is a nursing unit. We’ll discuss others.What about ‘observation in critical care’?Does telemetry qualify for observation?



The Doctor’s Order Just Says “Admit”. How Can We Tell Whether It Is Inpatient Or Observation?This is an area of great difficulty. The doctor needs to be quite explicit as to whether this is an “admit to observation” or an “admit to the hospital”. For short stays (less than 48 hours) it can be difficult to distinguish.Note: The determination of the status of the patient must be made at the front-end, not after the fact. Nurses need to assist physicians in being explicit!

Inpatient Admissions - See HIM-10 §210 (Publication 100-2, Medicare Benefit Policy Manual, Chapter 1, §10):An inpatient is a person who has been admitted to a hospital for bed occupancy for the purposes of receiving inpatient hospital services.Physician must make the decision as to whether the patient should be admitted as an inpatient.The physician should use a 24-hour period as a benchmark. Anticipate more than 24 hours inpatient; Anticipate less than 24 hours outpatient.See also Medical Staff Bylaws, admission policies and patient’s diagnoses.



Inpatient Admissions – Continued

“Day Patients” are generally considered to be outpatients.

There are a number of situations where there is a tendency to classify patients after the fact to be outpatient, observations, when it was initially intended that they be inpatients. For example, patient presents and is admitted for an inpatient (only) surgical procedure. The patient is prepared but the surgery is cancelled and the patient is sent home several hoursafter presenting. Same-day admit/discharge or observation??

Sources For Observation Admissions Through Or In Conjunction With The ED Directly From A Clinic/Physician’s Office (Freestanding vs. Provider-Based) – So-Called ‘Direct Admit’ Post-Outpatient Surgery

Summary Of Basics For ObservationThe physicians must order, justify and document the observation services. The decision as to whether the admit is observation or inpatient is to be made at the time the decision is made by the physician.


Observation ServicesBasics-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 ServicesBasics-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 ServicesClinical Aspects

Medical Decision Making

Decision To Admit Or Place In Observation Care And Review During Observation Services

Question: Must the physician see and carefor the patient while the patient is in observation?

Decision To Discharge From ObservationQuestion: Is this a service that the physicianmust perform? Are nursing discharges “bycriteria” sufficient?

Basic Decision Making Parameters

Decision To Place Patient In Observation Status Decision To Keep Patient In Observation Status Decision To Discharge Patient Decision To Admit Patient To Hospital



Extended Medical Decision-Making Process

Care Paths/Critical Pathways/Clinical Pathways

This comprises rather extensive templates or protocols guiding the decision-making of the physician(s) and clinical staff. The development of these processes can require significant resources and the medical staff must buy into the process and resulting care paths.

The fact that there is no specific care path does not mean that observation services cannot be ordered and justified by the physician for other purposes.

The most typical areas for Observation Care Pathsare:

Chest Pain/Acute Angina Abdominal Pain Congestive Heart Failure Asthma Pneumonia



Prior to CY2008 CMS provided three very basic care paths for separately payable observation services. The requirements for separate paymenthave variably depended upon certain diagnosis codes and/or diagnostic tests.

Congestive Heart Failure (CHF)

Asthma

Chest Pain

Starting in CY2008 CMS has moved to a composite payment process by blending observation payment in with ER visits and/or high level clinic visits.

Certain diagnosis codes and/or specific tests are no longer specifically required.



Documentation Considerations

Signed Physician OrderThis is typically placed in the patient’s chart. It should be quite explicit and the doctor should order the patient placed in

observation status. Different wording may be used such as “24 hourhold” or some equivalent.

Medical NecessityAppropriate diagnostic statements and/or indications must be provided that justify the observation services being provided.

ED Physician – It is late, I’m placing the patient in observation because there is no one to take care of this patient at home.

Surgeon – Post OP Surgery – The surgery was delayed, it is now 11:30 p.m. and there is no way for the patient to return home. Keep in observation until tomorrow.

Overall Documentation Clear, Concise And Convincing



Documentation Considerations – ContinuedIt is highly recommended that an “Observation Log” be maintained for each observation case regardless of the location of service. 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 ServicesTime/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.



Documentation Considerations – Continued

One of the on-going controversies concerning keeping track of time in observation status is when observation starts and stops. The following is taken from PM A-02-129:

Observation time begins at the clock time appearing on the nurse's observation admission note, which should coincide with the initiation of observation care or with the time of the patient's arrival in the observation unit.

Observation time ends at the clock time documented in the physician’s discharge orders, or, in the absence of such a documented time, the clock time when the nurse or other appropriate person signs off on the physician's discharge order. This time should coincide with the end of the patient's period of monitoring or treatment in observation.

Additionally, some variable language is provided in some of the associated Federal Register entries. The approach listed above is probably the safest. If there is a need to vary the way the start and stop times are measures, thenbe certain to document an appropriate policy and a procedure.




In the November 15, 2004, Federal Register, CMS provided a little more guidance which does little to really answer the question as to when observation starts and stops.See page 65831.

Discharge Time: Comment: Several commenters supported our proposal to change how we define ending time or ‘‘discharge’’ from observation care. However, those commenters also requested further clarification of what we mean by ‘‘discharge.’’

Response: Specifically, we consider the time when a patient is ‘‘discharged’’ from observation status to be the clock time when all clinical or medical interventions have been completed, including any necessary follow-up care furnished by hospital staff and physicians that may take place after a physician has ordered that the patient be released or admitted as an inpatient. However, observation care does not include time spent by the patient in the hospital subsequent to the conclusion of therapeutic, clinical, or medical interventions, such as time spent waiting for transportation to go home.




Start Time: Comment: A few commenters requested clarification of the starting time for observation. One commenter recommended that CMS make it clear that observation time begins with the patient’s placement in the bed and initiation of observation care, regardless of whether the bed is in a holding area or is in an actual observation bed or unit, as long as appropriate observation care is being provided. Another commenter asked if CMS will allow providers to document observation start time on any applicable document in the medical record and not limit the start time documentation to the nurse’s observation admission note.

Response: We have stated in past issuances and rules that observation time begins at the clock time appearing on the nurse’s observation admission note, which coincides with the initiation of observation care or with the time of the patient’s arrival in the observation unit (66 FR 59879,November 30, 2001; Transmittal A–02– 026 issued on March 28, 2002; and Transmittal A–02–129 issued on January 3, 2003.) In the August 16, 2004 proposed rule, we stated that observation time must be documented in the medical record and begins with the beneficiary’s admission to an observation bed (69 FR 50534). We agree with the commenter on the need for clarification, and we will reiterate in provider education materials developed for the CY 2005 OPPS update that observation time begins at the clock time documented in the patient’s medical record, which coincides with the time the patient is placed in a bed for the purpose of initiating observation care in accordance with a physician’s order.




November 10, 2006 Federal Register (70 FR 68693) – CMS continues to attempt to refine and explain start and stoptimes. (Reiterated in CY2008 Final Update FR Entry)

Observation Time

a. Observation time must be documented in the medical record.

b. A beneficiary’s time in observation (and hospital billing) begins with the beneficiary’s admission to an observation bed.

c. A beneficiary’s time in observation (and hospital billing) 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 be released or admitted as an inpatient.

d. The number of units reported with HCPCS code G0378 must equal or exceed 8 hours.



Transmittal 1445 - Observation time begins at the clock time documented in the patient’s medical record, which coincides with the time the patient is placed in a bed for the purpose of initiating observation care in accordance with a physician’s order. Hospitals should round to the nearest hour. For example, a patient who was placed in an observation bed at 3:03 p.m. according to the nurses’ notes and discharged to home at 9:45 p.m. should have a “7” placed in the units field of the reported observation HCPCS code.

Observation time ends when all medically necessary services related to observation care are completed. For example, this could be before discharge when the need for observation has ended, but other medically necessary services not meeting the definition of observation care are provided (in which case, the additional medically necessary services would be billed separately or included as part of the emergency department or clinic visit). Alternatively, the end time of observation services may coincide with the time the patient is actually discharged from the hospital or admitted as an inpatient.




Transmittal 1445 - General standing orders for observation services following all outpatient surgery are not recognized. Hospitals should not report as observation care, services that are part of another Part B service, such as postoperative monitoring during a standard recovery period (e.g., 4-6 hours), which should be billed as recovery room services. Similarly, in the case of patients who undergo diagnostic testing in a hospital outpatient department, routine preparation services furnished prior to the testing and recovery afterwards are included in the payments for those diagnostic services. 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).





Start and Stop Times Have Gone Through A Mutation Over the Years

Currently – Publication 100-04, Chapter 4, §290.2.2 (See Transmittal 1760, June 23, 2009)

• Start Time - Observation time begins at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order.

Notice the movement from the bed concept.

• End Time –

Observation time ends when all medically necessary services related to observation care are completed.

Alternatively, the end time of observation services may coincide with the time the patient is actually discharged from the hospital or admitted as an inpatient.



Service Locations Observation Is A Status – Thus, in theory, itcan be provided anywhere there is a bed.

In The ED Adjacent To The ED – Special ED Observation Unit

Through The ED – Up To A Nursing Unit On The Floor

Distinct Part Observation Unit

Specialized Observation Units – Large Hospitalso Adulto Pediatrico Cardiac

Telemetry Unit

Critical Care (?)

Other – For Example Obstetrics



Nursing Staff Considerations Direct Admissions – Process and Documentation

Injections and Infusions

Documentation Coding/Billing Charge Entry vs. Professional Coding Encounter May Involve 3 Dates of Service

Frequency and Level of Services Bed-Side Procedures

Condition Code 44

Use of Advance Beneficiary Notices (ABNs)

Patient Taken Elsewhere for Procedure

Working With UR, QA and Social Workers



Nursing Staff Considerations

Injections and Infusions

o Nurses routinely provide clinical documentation

Drugs Provided

Timing on Infusions and Injections

oHow should the coding and billing be accomplished?

• Nursing Staff –•If so, then special training will have to be provided

• Coding Staff –•Code and bill from the clinical record provided by nursing staff

o There is no easy solution to this challenge!


Observation ServicesPayment System Considerations

Payment Systems And Associated Third-PartyPayers Vary Widely In The Area Of Observation Services Coding For Observation Services

Physician Professional BillingPhysicians 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 DateOf Service

There are several coding delimitations. The maindelimitation is that the physician billing for the observation care cannot charge other E/M visits.For example, an ED physician providing observationcare can bill for either the ED level or the observation level, but not both.


Hospital Billing For Observation ServicesIs Generally Straightforward As Long As The ServicesAre Properly Documented

RCC=762 – Observation Services Is Used The Units = The number of hours in observation. Charges are by the hour. Charges are typically set so that after 12-14 hoursfor a given date of service, the typical room rate isachieved and the charge is capped. Otherwise,pro-rate daily charge over 24 hours.

Billing Personnel Need To Be Constantly Aware OfSpecial Third-Party Payer Requirements Even Medicaid Has Idiosyncrasies With ObservationServices Program Memorandums and TransmittalsAPC Grouping Logic See Update Transmittals



Let’s Consider CMS’s Approach Starting in CY2008 Under APCs Coding and Billing Remain The Same as CY2007

Use G0378 on an hourly basis, Use G0379 for direct admits. Will CMS change this? For coding, billing and chargemaster purposes, there is really no change.

What CMS has changed is the APC grouping logic There are two new ‘composite’ APCs

APC=8002 – Level I Extended Assessment and Management Composite, and APC=8003 – Level II Extended Assessment and Management Composite.

• APC=8002 $381.34 ($375.70 – CY2009; $351.04 – CY2008)

• APC=8003 $705.27 ($674.73 – CY2009; $638.66 – CY2008)

“The OCE will evaluate every claim received to determine if payment through a composite APC is appropriate.” Page 274 CMS-1392-FC Examination Copy.




CMS’s Approach Starting in CY2008

“APC 8002 will be assigned when 8 or more units of HCPCS code G0378 (Hospital observation service, per hour) are billed—

● On the same day as HCPCS code G0379 (Direct admission of patient for hospital observation care); or

● On the same day or the day after—

++ CPT code 99205 (Office or other outpatient visit for the evaluation and management of a new patient (Level 5)); or

++CPT code 99215 (Office or other outpatient visit for the evaluation and management of an established patient (Level 5)).” Page 275 CMS-1392-FC Examination Copy, November 1, 2007



CMS’s Approach Starting In CY2008

“APC 8003 will be assigned when eight or more units of HCPCS code G0378 (Hospital observation service, per hour) are billed on the same day or the day after CPT code 99284 (Emergency department visit for the evaluation and management of a patient (Level 4)), 99285 (Emergency department visit for the evaluation and management of a patient (Level 5)); or 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes).” Page 275 CMS-1392-FC Examination Copy

Note that for both 8002 and 8003 the required E/M services are bundled for payment. This is why they are called ‘composite’ APCs.

Note: For CY2009, the Level 5 Type B Emergency Department Visit also justifies observation services. See HCPCS G0384.


CMS’s Approach Starting in CY2008

Questions:

Can you think of a situation in which the hospital would use 99205 or 99215 would be used?

Is the 99205 or 99215 a technical component code or a professional component code?

Do hospitals always perform a nursing assessment (i.e., G0379) when a patient is directly admitted?

Will this process provide an incentive to perform E/M services in order to insure observation payment?




Status Indicator “T” Bundling Background

From the November 10, 2005 Federal Register (70 FR 68693)

“…, we believe that in most cases, where observation care is billed on a claim on the same date as a ‘‘T’’ status procedure, the observation services are most likely related to post procedural observation for which we do not make separate payment.”

From CMS-1392-FC, page 276, Examination Copy November 1, 2007

“If a hospital provides a service with status indicator “T” on the same date of service, or one day earlier than the date of service associated with HCPCS code G0378, the composite APC 8003 would not apply. Instead, payment for the ED visit or critical care and any other separately payable services will be made through the usual associated APCs, and payment for HCPCS code G0378 for observation services will remain packaged because we consider the observation care to be supportive and ancillary to whichever service(s) it accompanies. There is no diagnosis requirement for purposes of this composite APC either. Instead, patients with any diagnosis may trigger payment of APC 8003.”

The Status Indicator “T” Bundling Continues to be Some Confusing, But the APC Does Bundle the Observation Payment – See also the Q2 and Q3 Status Indicators.


Observation ServicesCompliance Considerations

There Are Many Compliance Issues Surrounding Observation Services

Medicare “Believes” That Hospital Have Committed Fraud By Filing ClaimsFor Observation Services That Were Not Medically Necessary (False Claims)

Medicare Thus Does Not Generally Pay Separately For Observation Services

The Following Lists Some Of The Compliance Concerns – Several of these concerns have already been discussed to some extent.

Documentation Requirements Signed, Dated Physician Order Diagnostic Conditions Documentation Of Care

Medical Necessity Concerns Delayed Outpatient Surgery No Body To Care For Patient At Home ‘Normal’ Observation Services - Post Recovery Standing Orders



Observation Compliance Concerns – Continued

Time Of Admission/Discharge

Outside Clinic Admissions – Where is the documentation?

Physician Services During Observation – In otherwords, the physician must see the patient.

Nursing Discharges Based On Criteria

Total Allowable Observation Time

Observation versus Same Day Admits/Discharges

Outpatient Surgery – When does extendedrecovery become observation?

Obstetric Observation – Is it really observation?



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.


1. At the Apex Medical Center the standard procedurewhen a pregnant lady presents after hours to the ED is to send her immediately to Labor & Delivery. The patient is assessed and then generally monitored for a number of hours. If it turns out that the lady is not in labor, she is discharged home. In some cases this may take from four to eight hours. This is being charged as “Observation” with RCC=762.

Comments?

Observation ServicesExercises/Case Studies


2. The ED physicians have raised a concern aboutpatients that are often in the ED for up to aboutsix hours. For a variety of reasons, these patientsare assessed, treated but kept in the ED to be observed to make certain there are no adverse reactions to treatment, drugs, etc. The ED physicianswant to charge this out as observation services.

Comments?




3. Code the following scenarios for both the physicianand the hospital. Both Sarah and Sam are Medicarepatients.

a. Dr. Brown admits Sarah to observation status at10:00 p.m. on Monday. On Tuesday Sarah isworse and Dr. Brown decides to admit her tothe hospital.

b. Dr. Brown admits Sam to observation status fora cardiac condition at 4:00 p.m. on Monday. OnTuesday Dr. Brown assesses Sam and decides to keep him in observation for another day. OnWednesday morning Dr. Brown discharges Samfrom observation at 11:00 a.m.


4. After an outpatient surgical procedure, a patientgoes to recovery. The normal recovery periodis exceeded and the physician is called to assessthe patient. The physician orders the patient placedin observation. Orders are left with the nursingstaff to either contact the physician if the patient isnot doing better in a few hours. Otherwise they areto discharge the patient if the patient recovers.

Comments?



5. Sam is scheduled to have an outpatient surgicalprocedure performed. He arrives at 8:00 a.m. but istold that the surgeon has been delayed. He is toreturn at 3:30 p.m. The surgery finally takes placeat 6:00 p.m. and lasts until almost 8:00 p.m. Sam istaken to recovery. Since it is Friday evening, therecovery room closes at 10:00 p.m. and Sam is takento the distinct part observation area where he completes his recovery at about 1:00 a.m. the next day.Since it is after midnight the nursing staff calls thephysician and obtains permission to keep him overthe night. He is discharged by nursing staff the nextmorning.

Comments?



6. Sarah is not feeling well today. She goes to theAcme Medical Clinic to see Dr. Brown. Dr. Browndoes a fairly thorough assessment and decides thatSarah should be placed in observation. She writes anorder for Sarah to be placed in observation. Sarah isexcited about going to the hospital, goes home andpacks a bag and then shows up at the Apex Medical Center. She remain in observation for almosttwo days and is then discharged.

Comments?

Discuss this both for pre-2008 and then post 2008.



7. The ED physicians at the Apex Medical Center arequite excited. A new suite has been added to the EDwith six beds to handle observation patients. TheED physicians have recently been granted observationadmission privileges. In the past an attendingphysician actually did the observation work on a nursing unit floor. One of the motivations for the EDphysicians is that they will be able to generate morerevenue.

Comments?




8. One of the coding staff at the Apex MedicalCenter has been following a “listserv” on the Internet.

a. A question has been raised about the propriety of the hospital billing a technical component for both theED visits and observation services. The logic is thatif the ED physicians are not allowed to charge bothan ED E/M and an Observation E/M then the hospitalshould not be doing this either.

b. There is also indication that for Medicareobservation services longer than 48 hours that anABN must be issued.

Comments?



9. An elderly patient is brought to the Apex MedicalCenter’s ED at about 11:30 p.m. by a concerned neighbor. The patient lives alone and was noted tobe wandering around their yard talking to themselves.The ER physician does an assessment. Other thanthe disorientation there appear to be no unusualconditions. No social service agencies are availableat this time of the night, so the patient is placed inobservation until a social worker can see the patient.

Comment on the correct way to bill for these services.



10. Sam is not feeling well. He goes to the Acme MedicalClinic and is seen by Dr. Brown. Dr. Brown does athorough assessment and decides that Sam should be placed in observation status at the Apex MedicalCenter. It is 1:20 p.m. Dr. Brown calls the hospital only to find that no beds will be available for several hours. Sam is instructed to go home with his daughter and wait for the hospital to call so that Sam can be put into observation. After three hours the hospital calls and Sam goes into observation. He has the orderfrom Dr. Brown that is signed, dated and has a time stamp. The nursing notes indicate that Sam went intoan observation bed at 4:40 p.m.



11. Stephen, another elderly resident of Anywhere, USA,attended a party this evening and became somewhatintoxicated. He has fallen and suffered a laceration tothe forehead. He is brought to the Apex MedicalCenter’s ED at 11:00 p.m. He is assessed, the foreheadlaceration is repaired, a CAT scan is performed alongwith other diagnostic tests. At 2:00 a.m., with the services completed, he is allowed to rest in a treatment room until 8:00 a.m. when security takes him home.





12. You are a consultant performing some work at theApex Medical Center. You have been “invited” to ameeting. There is some controversy concerning howto bill for services. A patient presented to the ED at10:00 p.m. and was provided services. At 2:00 a.m. thenext day, the attending physician orders that the patient be admitted to observation. The patient stayedin observation for 47 hours.

One group of participants thinks that the observationservices must be billed with a ‘from date’ of the datethat observation was ordered. Other think that the ‘from date’ for observation should be the date that the patient presented to the ED.




13. Sydney, yet another elderly patient in Anywhere,USA, has been in the hospital for the past ten days recovering from a severe case of influenza.

The time has come for Sydney to move to a SNFto complete the recovery process. Unfortunately,there are no skilled beds anywhere in the area to which Sydney can move.

As a result, Sydney is discharged from inpatient status and moved to observation status. This goes on for five days before a SNF bed becomes available.

Is this the proper way to handle this situation?



14.Observation Exceeding 48 Hours – Due to unusual circumstances the Apex Medical Center has an observation case that went for 52 hours. Patient financial services personnel want to know how this should be billed (i.e., 52 units of G0378) and also if there will be any problems in getting the claim to go through.

What do you think?


Observation ServicesSummary & Conclusion

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

Physicians Drive The Entire Process See Also Nursing Involvement Distinguishing Between “Inpatient” Admissions And “Observation”

Admissions – Use Of The “24-Hour” Concept See “Status” versus “Admission” versus “Referral”

Physician Coding & Billing Is Different From Hospital Coding & Billing In This Area

“Medical Necessity” And The Associated Documentation Is Critical Care Must Be Taken To Avoid “Social” or “Convenience”

Circumstances To Drive Observation Care It Is Recommended To Use An Observation Log To Help Document

Observation Services And To Assist Reviewers And Auditors CMS Continues To Change the Way in Which Observation Services Are

or Are Not Paid See the new composite APCs starting in CY2008. Formal Care Paths Can Assist With Observation Services See Also Various RAC Audit Issues Surrounding Observation vs. IP

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

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