Action Alerts

Medicare Observation Status in 2008
January 2008

Effective January 1, 2008 observation services are packaged. When there has been Extended Assessment and Management of the patient 2 composite APC’s have been created.

Composite APC 8002 will be paid ($351.04) for a direct admit from the physician’s office or if a high level clinic visit is reported. In those cases:

• The patient must be a direct admit from the physician’s office, reported with G0379, or
• Reported with high level hospital based clinic codes (CPT codes 99205 or 99215)
• Observation hours must be greater than 8 hours and listed on the claim with G0378.

Composite APC 8003 will be paid ($638.66) when the patient has had a high level emergency department or critical care visit reported. In those cases:

• The patient must have been treated in the Emergency Department or have critical care services provided (CPT codes 99284, 99285, or 99291)
• Observation hours must be greater than 8 hours and listed on the claim with G0378.

If a “T” status procedure has been performed on the day of or the day prior to observation services, CMS will not reimburse separately for observation status.

If these criteria are not met, payment for any separately payable services would be made through the usual associated APCs.

Medicare's OCE will determine when the hospital is eligible for payment.