bservation Billing Guidelines

1. bservation Billing Guidelines Module 3 Medicaid Rules Developed by Mary Askew, Healthcare Consultant

2. Medicaid Defines Observation • The purpose of outpatient observation is to treat patients expected to be stabilized and released within 24 hours, determine the need for further treatment or for inpatient admission. Georgia DCH Division of Medical Assistance, Part II Policies & Procedures for Hospital Services

3. Medicaid Rules • Observation services: • begin and end with a physician’s order & • must be reasonable and necessary. • It should be rare that observation services exceed 24 hours. • Count time of admission to observation status as the first hour. • Claims greater than 24 hours will be denied. Georgia DCH Division of Medical Assistance, Part II Policies and Procedures for Hospital ServicesNote: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

4. Medicaid Billing • “Units of Service” should reflect observation hours on claim. • Assign revenue code 762 . • ICD CM codes are required. Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

5. When is observation NOT covered? • Complex cases requiring inpatient care • Post-op monitoring during standard recovery time Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

6. When is observation NOT covered? • Routine preparation services prior to diagnostic testing in hospital outpatient department and recovery afterwards • Observation billed concurrently with therapeutic services such as chemo and physical therapy Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

7. When is observation NOT covered? • If observation stay is non-covered, all services provided while in observation are also non-covered. • If observation exceeds 24 hours and patient does not meet inpatient criteria, hard-copy claim and medical justification must be sent to Medical Review. Georgia DCH Division of Medical Assistance, Part II Policies and Procedures for Hospital Services. Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

8. Medicaid Rules • If Medical Review determines the continued observation stay exceeding 24 hours is medically necessary, observation status may be approved. • If not approved, only medically appropriate hours up to 24 hours will be paid. • Services provided beyond the medically necessary time are non-covered. Georgia DCH Division of Medical Assistance, Part II Policies and Procedures for Hospital Services Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

9. Observation to Inpatient • An outpatient observation status becomes inpatient when: • the determination is made that inpatient services are medically necessary • LOS is less than or at least 24 hours • Documentation must reflect admission is medically necessary and appropriate. Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

10. Request for Certification • Request for certification for inpatient must be received within 30 calendar days of the beginning date of the episode of care. • Failure to obtain certification will result in denial of ALL services. • Concurrent reviews must be conducted until inpatient criteria indicates inpatient is no longer necessary. Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

11. What about the observation charges? • Combine observation charges with inpatient charges (Applies to both APC and CAH facilities). • Assign 762 revenue code. • Observation charges are covered on an inpatient claim. • When combining observation services to an inpatient claim, the “statement covers from” date will be the date of inpatient admission. Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

12. What about the observation charges? • Services provided within 3 days of admission or discharge for the same or related diagnosis is considered part of the admission (includes lab and radiology services). Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

13. Documentation • Medical record must: • Disclose the extent, medical necessity and appropriateness of the services • Identify the patient • Support the diagnosis • Justify the treatment • Document the course and results accurately Georgia DCH Division of Medical Assistance, Part II Policies and Procedures for Hospital Services Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.

14. Comparison MEDICAID OUTPATIENT Note: All references to Medicaid refer to Georgia Medicaid. Please reference your state Medicaid regulations for all Medicaid specific instruction.