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OBSERVATION STATUS IN 2006
Two changes in the coding of observation status and the implementation of Medicare OPPS payment policies for observation were implemented in calendar year 2006. These changes were made in an effort to ensure more consistent hospital billing for separately payable and packaged observation services in order to guide CMS in the future analysis of observation, and to shift the burden for determining separately payable observation status from the hospital’s responsibility to the outpatient code editor when the claim is processed.
HCPCS codes deleted in 2006 include: G0244, G0263 and G0264. Two new HCPCS codes were created to be used by hospitals to report: all observation services (whether separately payable or packaged) and direct admission to observation status (whether separately payable or packaged). These new HCPCS codes are:
G0378 Hospital observation services, per hour
G0379 Direct admission of patient for hospital observation care
In addition, the determination of whether the observation services are separately billable has been shifted from the hospital to the OPPS claims processing.
Hospitals will now bill HCPCS code G0378 when observation services are provided to any patient admitted to observation status. HCPCS code G0379 is used when observation services are the result of a direct admission to observation status without an associated ED visit, hospital outpatient clinic visit or critical care visit on the same day or day prior to the observation services. HCPCS code G0378 (hourly observation) is billed in addition to G0379 (direct admit to OBS) in order to receive payment for a direct admit to observation.
HCPCS codes G0378 and G0379 have been assigned to new status code indicator Q that is defined as “packaged services subject to separate payment under OPPS payment criteria”. The units of service reported with HCPCS code G0378 is equal to the number of hours the patient is in observation status.
Separately payable observation status will list G0378 (hospital observation services, per hour) on the claim. In addition there are criteria that must be met for a hospital to receive separate OPPS payment for medically necessary observation services provided to a patient. That criteria includes:
Meeting the diagnosis requirements for congestive heart failure, chest pain or asthma that must be listed in the reason for visit field (FL 76) or principal diagnosis field (FL 67) of the UB-92. Observation time must be documented in the medical record and must equal or exceed 8 hours. The number of hours is reported with G0378. Hours begin with a physician order and the patient’s admission to an observation bed and end when all clinical interventions have been completed. A physician order to discharge the patient or admit the patient to inpatient status must be documented in the medical record. There must be an E & M code or G0379 on the same day of or day prior to the observation code. No procedure with a status indicator T can be listed on the claim on the day of or day prior to observation services for observation to be separately paid. The patient must be under the care of a physician during the entire period of observation.
The OPPS Final Rule states that CMS will provide further detailed guidance regarding the billing for observation status.
While the requirements for Medicare observation are noted above, other payers may have their own requirements which must be met for observation status to be paid.
FUTURE ISSUE
The next issue will address the 2006 Inpatient Only Procedures.
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