Outpatient Hospital Observation Services

Outpatient Hospital Observation Services The Division of Medicaid defines outpatient hospital observation services as a well-defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment, reassessment, and monitoring that are necessary to determine whether a beneficiary’s condition requires further treatment as a hospital inpatient or allows for the beneficiary to be discharged from the hospital. B. The Division of Medicaid covers outpatient hospital observation services for no more than seventy two (72) hours and must be documented in the physician’s orders by the evaluating physician or other physician authorized by hospital bylaws to order outpatient hospital diagnostic tests or treatments, or an inpatient hospital admission. The decision for ordering outpatient hospital observation services or an inpatient hospital admission is solely the responsibility of the evaluating physician or authorized physician. Factors that must be taken into consideration by the evaluating physician or authorized physician when ordering outpatient hospital observation services include, but are not limited to, 1. Severity of the beneficiary’s signs and symptoms, 2. Degree of medical uncertainty the beneficiary may experience an adverse occurrence, 3. Need for diagnostic studies that can be appropriately performed in the outpatient hospital setting and does not ordinarily require the beneficiary to remain at the hospital for more than seventy two (72) hours to assist in assessing whether the beneficiary must be admitted to inpatient hospital, and 4. Availability of diagnostic procedures at the time and location where the beneficiary seeks services. C. A beneficiary may be admitted directly to outpatient hospital observation from the evaluating practitioner’s office without being evaluated in the emergency room by a hospital-based physician. 1. The physician’s order must clearly specify that the physician requests the beneficiary to be admitted to outpatient hospital observation status. 2. An order for “direct admission” will be considered an inpatient admission unless otherwise specified by the physician’s orders. D. The Division of Medicaid does not cover: 1. More than seventy two (72) consecutive hours of outpatient hospital observation services. 2. The following as outpatient hospital observation services: a) Substitution of outpatient hospital services provided in outpatient hospital observation for physician-ordered inpatient hospital services. b) Services not reasonable, necessary or cost effective for the diagnosis or treatment of a beneficiary. c) Services provided solely for the convenience of the beneficiary, hospital, family or the physician. d) Excessive time and/or amount of services medically required by the condition of the beneficiary. e) Services which are appropriate to be provided in a hospital-based outpatient surgical center and not supported by medical documentation of the need for outpatient hospital observation services. f) Discharging beneficiaries receiving inpatient hospital services to outpatient hospital observation services. g) Services for routine preparation and recovery of a beneficiary following diagnostic testing or therapeutic services provided in the facility. h) Services provided when an overnight stay is planned prior to, or following, the performance of procedures such as surgery, chemotherapy, or blood transfusions. i) Services provided in an intensive care unit. j) Services provided without a physician’s order and without documentation of the time, date, and medical reason for outpatient hospital observation services. k) Services provided without clear documentation as to the unusual or uncommon circumstances that would necessitate outpatient hospital observation services. l) Complex cases requiring inpatient hospital services. m) Routine post-operative monitoring during the standard recovery period. n) Routine preparation services furnished prior to diagnostic testing in the hospital outpatient department and the recovery afterwards. o) Outpatient hospital observation services billed concurrently with therapeutic services including, but not limited to, physical therapy. E. Documentation in the medical record must include, but is not limited to: 1. The medical necessity and reason for outpatient hospital observation services including: a) Appropriateness of the setting, [Moved to Miss. Admin. Code Part 202 Rule 2.4.D.] b) Beneficiary’s condition, c) Treatment, and d) Response to treatment. 2. A physician’s order: a) Specifying “admit to outpatient hospital observation services”, b) Documented in the physician’s orders and not the emergency department record, and c) Containing an original or electronic signature of the ordering physician, 3. The actual time of outpatient hospital observation and the services provided. 4. A physician face-to-face contact with the beneficiary at least once during outpatient hospital observation, and 5. The medical necessity and reason for changing from outpatient hospital observation services to inpatient hospital services, if applicable, with a physician’s order specifying “admit to inpatient hospital services” and “discharge from outpatient hospital observation”. F. Outpatient hospital observation billing and reimbursement is as follows: The Division of Medicaid considers the seventy-two (72) outpatient hospital observation stay as an outpatient service when the stay does not result in an inpatient hospital admission. 2. Services provided during outpatient hospital observation resulting in an inpatient hospital admission must be included on the inpatient hospital claim. a) The “Statement Covers Period From Date” on the inpatient hospital claim is the first date the beneficiary received outpatient hospital observation services. b) The “Treatment Authorization Code” on the inpatient hospital claim is the Treatment Authorization Number (TAN) received from the Utilization Management and Quality Improvement Organization (UM/QIO) which corresponds with the date the physician documents the inpatient hospital admission in the physician’s orders. 1) A TAN is not required for outpatient observation services directly preceding an inpatient admission. 2) A TAN issued by the UM/QIO is only required for an inpatient hospital admission/continued stay. 3. The Division of Medicaid reimburses the outpatient hospital observation Healthcare Common Procedure Coding System (HCPCS) code G0378 using an hourly fee for hours eight (8) through and twenty-three (23). A reimbursed bundled rate of zero dollars ($0.00) for the hours one (1) through seven (7) and for hours twenty-four (24) through seventy two (72). 4. The Division of Medicaid may perform a retrospective review to ensure that the documentation supports the medical necessity of the outpatient observation services. Medical records will be evaluated to determine whether the physician’s order and the services provided were consistent.