This policy applies to professional and outpatient facilities observation services.
Policy Statement
The Plan follows the observation guidelines outlined in the Current Procedural Terminology (CPT) Manual. Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment, and reassessment, that are furnished while a decision is being made regarding whether a patient will require further treatment as a hospital inpatient or if the patient is able to be discharged from the hospital. Observation services are commonly ordered for a patient who presents to the Emergency Department (ED) and who then requires a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge.
Professional Providers
All related Evaluation and Management (E/M) services provided on the same date of service (DOS) by the same practitioner or more than one practitioner within the same group with the same or overlapping specialty/sub-specialties, are considered integral to the observation care E/M code. Providers billing for unrelated E/M services, provided on the same DOS by the same practitioner or another practitioner within the same group with the same or overlapping specialty/sub-specialties, must append modifier 25 when the service is separately distinct and unrelated to the observation care. Provider must have documentation to support the use of a modifier, when appended to a procedure or service.
Similarly, all related E/M services, including observation care, provided on the same DOS by the practitioner or another practitioner within the same group with the same or overlapping specialty/sub-specialties, are considered integral to an Inpatient E/M admission code. Practitioners providing observation care may report a valid observation E/M CPT code for the professional service(s) on a CMS-1500 Claim Form when the patient is not subsequently admitted as an inpatient on the DOS.
Institutional Providers
Hospital observation codes should be reported whether the observation service is separately payable or packaged. The Healthcare Common Procedure Coding System (HCPCS) observation codes must be used when billing on the UB-04 Claim Form. Hospital observation must be reported with the HCPCS codes G0378 (Hospital Observation Services, Per Hour) and G0379 (Direct Admission of Patient for Hospital Observation Services). Hospitals should not report the CPT codes for physician observation when reporting hospital observation services on the UB-04 Claim Form.
Observation services may not be billed on the same claim as pre-labor monitoring services on revenue code 072x (excluding 0723). When both the 0762 and 072x revenue codes (excluding 0723) are submitted on the same claim the claim will be rejected to the provider.
HCPCS code G0378 must be submitted with revenue code 0762 and the units must equal the number of hours the individual was in an observation status. Providers may not submit more than one line of 0762 on the UB-04 Claim Form. HCPCS code G0379 is used when an individual is referred directly to observation care after being seen by a practitioner in the community and without an associated Emergency Room (ER) visit, hospital outpatient clinic visit, or critical care service on the same DOS as the initiation of observation care. G0379 may be reported with only one unit and must be submitted in conjunction with G0378.
If a patient has two distinct observation stays on the same or overlapping days, separate claims may be submitted for each stay. However, if documentation supports that an early discharge resulted in the second stay, the charges for the Observation Care may be combined onto one claim.
Time
Observation time starts at the time documented in the nurse’s notes as to when the patient entered an observation status. Observation time ends at the time documented in the Physician or Other Qualified Healthcare Professional (QHP) discharge orders. This time should coincide with the end of the patient’s treatment in observation.
Direct referral observation time begins after the patient arrives at the facility and it is documented in the medical record that observation time has started. Hospitals should round to the nearest hour when reporting observation care; however, the total time should exclude any “carved out” time that carry an inherent time component for the service being billed (e.g., emergency room services, infusion services, services rendered exclusively by time, surgical, diagnostic, therapeutic services, etc.).
Reimbursement
Enhanced Ambulatory Patient Groups (EAPG)
Claims priced under EAPG, when observation care is present on a surgical claim, reimbursement will be packaged with a significant procedure EAPG. Separate payment will be allowed for observation care with a medical visit EAPG.
Per Diem Providers
Outpatient claims will be reimbursed on a percentage of charge unless otherwise noted in the provider’s participation agreement with BCBSND.
Global Period
Observation Care codes are not separately reimbursable services when performed within the assigned global period of a procedure or service. Observation care services, during a global period, are included in the global package.
Coding Guidelines
The below guidelines outline the correct coding for professional and facility claims based on the individual scenario and claim forms used.
