Admissions VS. Observation Black and White Answers to Admissions Criteria and Observation Services

1. Admissions VS. ObservationBlack and White Answers to Admissions Criteria and Observation Services Presented by: HomeTown Health October 8, 2009

2. Medicare Sets the Record Straightwith Hospitals & Physicians

3. Transmittal 1760 - July Update of the OPPS published June 23, 2009 • Item 8. Clarification Related to Observation Services CMS updated Pub.100-04, Medicare Claims Processing Manual, chapter 4, §290, and Pub.100-02, Medicare Benefit Policy Manual, chapter 6, §20.6, to clarify that a hospital begins billing for observation services, reported with HCPCS code G0378, at the clock time documented in the patient’s medical record, which coincides with the time that observation services are initiated in accordance with a physician’s order for observation services. http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM6492.pdf EFFECTIVE OCTOBER 1, 2009

4. NO MORE “Admit to Observation”

5. Term ADMISSION removed from Medicare manual regarding Observation Services • Editorial changes to the manuals remove references to “admission” and “observation status” in relation to outpatient observation services and direct referrals for observation services. These terms may have been confusing to hospitals. The term “admission” is typically used to denote an inpatient admission and inpatient hospital services. • For payment purposes, there is no payment status called “observation”, observation care is an outpatient service, ordered by a physician and reported with a HCPCS code. Transmittal 1760, issued June 23, 2009

6. New Language on Orders required after October 1st

7. New Language on Orders required after October 1st • Transmittal 1760, issued June 23, 2009, didn't change the appropriate use of observation status, but it did change the language by which physicians order these services, says Deborah Hale, CCS, president of Administrative Consultant Services LLC. • Physician documentation on orders for patients to receive observation services should state "referred for observation services” OR Outpatient Observation

8. New Language on Orders required after October 1st • It's important to make sure the language is correct so that the Medicare Administrative Contractors (MAC) or Recovery Audit Contractors (RACs) will be able to determine the physician's intended level of care and avoid inappropriate claims that result when a physician's order is worded "admit for observation” • "The transmittal made it clear that the hospital staff cannot change a physician's order for inpatient admission or take sole responsibility for determining the patient's level of care. Only a physician can change a patient from inpatient status to observation services

9. Physician POLL QUESTION • Were you aware of this new Medicare rule regarding Observation going into effect on October 5th? • POLL RESULTS” • 36% Yes • 62% No

10. Hospital POLL QUESTION • Were you aware of this new Medicare rule regarding Observation going into effect on October 5th? • POLL RESULTS”

11. How does Medicare define “Observation”

12. Purpose of Observation Observation is used to evaluate a patient’s condition in order to determine the need for acute inpatient admission.

13. CMS Definition of Observation: CMS defines observation status as a “well defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment, and reassessment, before a decision can be made regarding whether patients will require further treatment as hospital inpatients or whether they can be discharged from the hospital “.

14. CMS Definition of Observation: • It is rare that an observation status would span over 48 hours. Usually the determination to discharge or admit the patient to the hospital can be made within 24 hours. • Medicare does not specify what type of bed or unit a patient must be in if they are observation status. • Medicare coverage for observation services requires at least 8 hours of monitoring. Observation time begins at the time the physician writes the order and it ends when the patient is actually discharged from the hospital or admitted as an inpatient. This time DOES NOT include the time a patient may spend waiting on transportation to get home.

15. Observation ServicesKEY Questions to ASK • In what condition will the patient most likely be tomorrow? “Better” =  Observation • Is it risky to send the patient home today? “Yes” =  Observation • Is it likely I will know whether to admit or send the patient home by tomorrow? “Yes” =  Observation

16. Observation ServicesKEY Questions to ASK • Are vital signs stable? “Yes” =  Observation • Will a diagnosis likely be made in 24 hours? “Yes” =  Observation • Will treatment, such as IV fluids, require standard monitoring and be complete within 24 hours? “Yes” =  Observation

17. Observation ServicesKEY Questions to ASK • Is the patient presenting with a symptom(s) (e.g., chest pain, abdominal pain, TIA) “Yes” =  Observation • Is the patient having an unusually long recovery period following outpatient procedure (e.g., pain management issues, cardiopulmonary concerns, urinary retention) “Yes” =  Observation http://www.hpmpresources.org/Portals/1/Tools/OBV_For%20Hospitals.ppt#300,9,Purpose of Observation

18. Do NOT use OBS for…. • Social reasons • Physician or patient convenience • Routine prep for diagnostic testing • Routine recovery from outpatient procedures • Procedures designated as “inpatient only”

19. Determining if and when observation begins. Observation time begins at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order. Hospitals should round to the nearest hour. For example, a patient who began receiving observation services at 3:03 p.m. according to the nurses’ notes and was discharged to home at 9:45 p.m. when observation care and other outpatient services were completed, should have a “7” placed in the units field of the reported observation HCPCS code. 290.2.2 - Reporting Hours of Observation (Rev. 1760, Issued: 06-23-09; Effective Date: 07-01-09; Implementation Date: 07-06-09)

20. Determining if and when observation begins. • In order to bill for medically reasonable observation services, the provider must obtain a timed and documented physician’s order. • Because there wasn’t an actual order for observation at the time the patient was admitted as an inpatient, the provider cannot begin counting observation hours until one is obtained. The order for observation is not “retroactive” back to the time of the original inpatient admission order.

21. Determining if and when observation begins. • Email clarification from National Government Services (NGS) confirming the need for and the timing of the observation order. After receiving inquiries from its providers, ). is as follows: • As you are aware, the recent regulation changes resulted in many questions.  We received confirmation from our CMS representative that indeed, a written order for observation status is required and that the inpatient stay can not be converted to observation time when CC 44 is applicable.  If the physician (or UR committee in conjunction with the physician) deems the patient meets observation criteria after conversion to outpatient status, then observation time may be billed if the level of care is met.  But observation time would begin when the order is written; and the previous (although incorrect) inpatient time could not be billed as observation. The services rendered while the patient was placed in inpatient status would be billed as outpatient services, but no observation time could be billed.

22. Determining if and when observation begins. • Noridian Administrative Services also sent out a notification on September 24th confirming this. • This is the example that was given: Patient A was admitted at noon on Sunday. On Monday afternoon it was determined that the patient didn’t meet inpatient criteria, the physician concurred, and the status was changed to outpatient. The outpatient status is considered to have begun at noon on Sunday. However, observation hours cannot be billed until the physician has written an order for observation. If the order was written at 2 p.m. on Monday, the hospital would begin the observation hours at that time. No observation can be charged between noon on Sunday and 2 p.m. on Monday. • http://blogs.hcpro.com/medicarefind/2009/09/condition-code-44

23. Determining if and when observation begins. Clarification from CAHABA’s Medical Director: • The observation issue has been quite convoluted and am not sure all the issues are resolved. However I would explain the distinction as follows. A patient is either an INPATIENT or OUTPATIENT. Within OUTPATIENT is a distinct status of OBSERVATION. Any admission order should be clear as to the admission status of a patient. If the intent is to have the patient as an inpatient, the Order should clearly delineate ADMIT AS/To INPATIENT. If the intent is to have the patient in OBSERVATION, the Order should clearly delineate (ADMIT/)PLACE in OBSERVATION.

24. Determining if and when observation begins. One example where this is important is if a post procedure patient qualifies for OBSERVATION: After the normal post procedure recovery time and the physician feels OBSERVATION is needed, then s/he should order 'PLACE in OBSERVATION' because the patient has only been in OUTPATIENT (NONOBSERVATION) status up until that time. To keep that patient "longer" as above without such order would continue the OUTPATIENT (NONOBSERVATION) status. I would agree with NGS' statement but have restated it above a little differently. Hope that helps. Let me know if further clarification is needed. Thanks and have a great weekend Greg McKinney, MD, MBA Senior Contractor Medical Director *J10 (Alabama, Georgia, and Tennessee) Cahaba GBA, LLC

25. How is a Patient changed from I/P back to Observation?CONDITION CODE 44

26. CONDITION CODE 44 • In cases where a hospital utilization review committee determines that an inpatient admission does not meet the hospital’s inpatient criteria, the hospital may change the beneficiary’s status from inpatient to outpatient and submit a CODE 44 claim for medically necessary Medicare Part-B services that were furnished to the beneficiary, provided all of the following conditions are met: • • The change in patient status from inpatient to outpatient is made prior to discharge or release, while the beneficiary is still a patient of the hospital. • • The hospital has not submitted a claim to Medicare for the inpatient admission. • • A physician concurs with the utilization committee’s decision. • • The physician’s concurrence with the utilization review committee’s decision is documented in the patient’s medical record followed with an order for observation services, timed and dated.

27. CONDITION CODE 44 To be Used Sparingly CMS allows the use of Condition Code 44 to address late-night or weekend admissions when no physician or case manager is on duty to offer guidance but emphasizes that it is to be used sparingly. "Use of Condition Code 44 is not intended to serve as a substitute for adequate staff or utilization management personnel or for continued education of physicians and hospital staff about each hospital's existing policies and admission protocols," the transmittal says. In order for hospitals to file a Condition Code 44 claim, the medical record must have documentation of a physician's concurrence that an inpatient admission is not medically necessary and that the patient should have been registered as an outpatient. The reason for the change and those involved in the review should be documented as well.

28. CONDITION CODE 44 Billing If the conditions for use of Condition Code 44 are not met, the hospital may submit a 12x bill type for covered “Part B Only” services that were furnished to the inpatient. Medicare may still make payment for certain Part B services furnished to an inpatient of a hospital when payment cannot be made under Part A because an inpatient admission is determined not to be medically necessary. Information about “Part B Only” services is located in Pub. 100-02, Medicare Benefit Policy Manual, chapter 6, section 10. Examples of such services include, but are not limited to, diagnostic x-ray tests, diagnostic laboratory tests, surgical dressings and splints, prosthetic devices, and certain other services. The Medicare Benefit Policy Manual includes a complete list of the payable “Part B Only” services.

29. WHEN CC 44 IS NOT MET Part B Only Services Payment may be made under Part B for physician services and for the nonphysician medical and other health services listed below when furnished by a participating hospital (either directly or under arrangements) to an inpatient of the hospital, but only if payment for these services cannot be made under Part A. In PPS hospitals, this means that Part B payment could be made for these services if: No Part A prospective payment is made at all for the hospital stay because of patient exhaustion of benefit days before admission; The admission was disapproved as not reasonable and necessary (and waiver of liability payment was not made); The day or days of the otherwise covered stay during which the services were provided were not reasonable and necessary (and no payment was made under waiver of liability); Cont.

30. WHEN CC 44 IS NOT MET Part B Only Services The patient was not otherwise eligible for or entitled to coverage under Part A (See the Medicare Benefit Policy Manual, Chapter 1, §150, for services received as a result of noncovered services); or No Part A day outlier payment is made (for discharges before October 1997) for one or more outlier days due to patient exhaustion of benefit days after admission but before the case’s arrival at outlier status, or because outlier days are otherwise not covered and waiver of liability payment is not made. However, if only day outlier payment is denied under Part A (discharges before October 1997), Part B payment may be made for only the services covered under Part B and furnished on the denied outlier days. http://www.cms.hhs.gov/manuals/downloads/bp102c06.pdf

31. WHEN CC 44 IS NOT MET Part B Only Services In non-PPS hospitals, Part B payment may be made for services on any day for which Part A payment is denied (i.e., benefit days are exhausted; services are not at the hospital level of care; or patient is not otherwise eligible or entitled to payment under Part A). Services payable listed at http://www.cms.hhs.gov/manuals/downloads/bp102c06.pdf

32. INPATIENT VS. OBSERVATION EXAMPLE: An 85-year-old Medicare patient with high blood pressure and diabetes arrives in the emergency room complaining of chest pain that resembled the pain he felt when he had an earlier heart attack. The physician’s course of action is clear: admit the patient to observe him. SO, does the hospital admit him or observe him? How will the physician bill Medicare? What CPT Code should be used? Does he meet criteria for I/P? http://www.minnesotamedicine.com/PastIssues/February2007/PulseMedicareFebruary2007/tabid/1701/Default.aspx

33. Welcome to theTwilight Zone of Medicare regulations.

34. Why is it so important to get it right? Getting this call wrong can result in either charges of Medicare fraud or a nearly $5,000 loss per admission to a hospital. It can even result in the entire physician payment being recouped at a later date from the RAC or MAC. “This is terribly confusing to providers,” says Jane Pederson, M.D., director of medical affairs for Stratis Health, Minnesota’s Medicare Quality Improvement Organization (QIO)

35. SO WHAT IS RIGHT?

36. Medicare SAYS: • The Medicare Benefit Policy Manual says that physicians should use a 24-hour period as a benchmark to distinguish between inpatient and outpatient status, meaning if a patient needs to stay more than 24 hours, then he or she likely qualifies as an inpatient. However, it also says the distinction is not solely based on the time the patient actually spends in the hospital. • The Medicare manual also says the decision to admit a patient is a “complex medical judgment” and that physicians need to assess the severity of the patient’s symptoms, the likelihood of a bad outcome, and the availability of diagnostic tests and resources before making their decision.

37. Hospitals may bill for patients who are directly referred to the hospital for outpatient observation services. A direct referral occurs when a physician in the community refers a patient to the hospital for outpatient observation, bypassing the clinic or emergency department (ED) visit. Effective for services furnished on or after January 1, 2003, hospitals may bill for patients directly referredfor observation services. See, Pub. 100-04, Medicare Claims Processing Manual, chapter 4, section 290, at http://www.cms.hhs.gov/manuals/downloads/clm104c04.pdf for billing and payment instructions for outpatient observation services. Billing Requirements for Observation Care

38. Observation services are reported using HCPCS code G0378 (Hospital observation service, per hour). Beginning January 1, 2008, HCPCS code G0378 for hourly observation services is assigned status indicator N, signifying that its payment is always packaged. No separate payment is made for observation services reported with HCPCS code G0378. In most circumstances, observation services are supportive and ancillary to the other separately payable services provided to a patient. Billing Requirements for Observation Care

39. In certain circumstances when observation care is billed in conjunction with a high level clinic visit (Level 5), high level Type A emergency department visit (Level 4 or 5), high level Type B emergency department visit (Level 5), critical care services, or direct referral for observation services as an integral part of a patient’s extended encounter of care, payment may be made for the entire extended care encounter through one of two composite APCs when certain criteria are met. For information about billing and payment methodology for observation services in years prior to CY 2008, see Pub. 100-04, Medicare Claims Processing Manual, Chapter 4, §§290.3-290.4. For information about payment for extended assessment and management under composite APCs, see §290.5. Billing Requirements for Observation Care

40. In making the determination whether an ABN can be used to shift liability to a beneficiary for the cost of non-covered items or services related to an encounter that includes observation care, the provider should follow a two step process. First, the provider must decide whether the item or service meets either the definition of observation care or would be otherwise covered. If the item or service does not meet the definitional requirements of any Medicare-covered benefit under Part B, then the item or service is not covered by Medicare and an ABN is not required to shift the liability to the beneficiary. However, the provider may choose to provide voluntary notification for these items or services. Services Not Covered by Medicare and Notification to the Beneficiary

41. Second, if the item or service meets the definition of observation services or would be otherwise covered, then the provider must decide whether the item or service is “reasonable and necessary” for the beneficiary on the occasion in question, or if the item or service exceeds any frequency limitation for the particular benefit or falls outside of a timeframe for receipt of a particular benefit. In these cases, the ABN would be used to shift the liability to the beneficiary (see Pub. 100-04, Medicare Claims Processing Manual; Chapter 30, “Financial Liability Protections,” Section 20, at http://www.cms.hhs.gov/manuals/downloads/clm104c30.pdf for information regardinLimitation On Liability (LOL) Under §1879 Where Medicare Claims Are Disallowed). Services Not Covered by Medicare and Notification to the Beneficiary

42. Clarifications from Physician Lunch N Learn

43. Q: If patient comes from physicians office but arrives later, when does the obs time start? A: Observation time begins at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order. Hospitals should round to the nearest hour. For example, a patient who began receiving observation services at 3:03 p.m. according to the nurses’ notes and was discharged to home at 9:45 p.m. when observation care and other outpatient services were completed, should have a “7” placed in the units field of the reported observation HCPCS code. 290.2.2 - Reporting Hours of Observation (Rev. 1760, Issued: 06-23-09; Effective Date: 07-01-09; Implementation Date: 07-06-09)

44. Q: If the M.D. dictates a good H & P for the outpatient stay and is converted to an inpatient, why would another H & P be required. Can you please clarify some of these things next week? A: 3. Physician Evaluation a. The beneficiary must be in the care of a physician during the period of observation, as documented in the medical record by outpatient registration, discharge, and other appropriate progress notes that are timed, written, and signed by the physician. b. The medical record must include documentation that the physician explicitly assessed patient risk to determine that the beneficiary would benefit from observation care.

45. Q: Can you please reference where we would find the information that states the same M.D. cannot change the patient's status A. The conditions for the use of Condition Code 44, as stated in section 50.3.2 below, require physician concurrence with the UR committee decision. For Condition Code 44 decisions, in accordance with 42 CFR §482.30(d)(1), one physician member of the UR committee may make the determination for the committee that the inpatient admission is not medically necessary. This physician member of the UR committee must be a different person from the concurring physician, who is the physician responsible for the care of the patient. http://www.cms.hhs.gov/Transmittals/downloads/R1803CP.pdf

46. Q: Need clarification please. If a doctor admits to inpatient that same doctor can not change them back to observation it has to be another doctor? Is that correct A. CLARIFICATION: This physician member of the UR committee must be a different person from the concurring physician, who is the physician responsible for the care of the patient.

47. Q. When can a patient go to observation following outpatient surgery and recovery? what is required to justify it? that it can't be planned or pre-scheduled for the patient to arrive for surgery then go to observation following the procedure, etc.? A. The Centers for Medicare and Medicaid Services (CMS) has updated the hospital outpatient prospective payment system (OPPS) to say that general standing orders for observation services following outpatient surgery are not recognized. "Hospitals should not report as observation care, services that are part of another Part B service, such as postoperative monitoring during a standard recovery period (e.g., 4-6 hours), which should be billed as recovery room services," the transmittal says.

48. SO . . .An Inpatient or Not?

49. More guidance is definitely needed on admissions coding—particularly in regard to chest pain, which causes the most confusion. American Heart Association and the American College of Cardiology have developed base guidelines that should be considered based on patient history, age, duration and severity of signs and symptoms.

50. An Inpatient or Not? • So if the 85-year-old described earlier in the story wasn’t currently having chest pain, most physicians would consider ordering observation services.   • However, if he had another bout of chest pain or his biomarkers turned positive while in the hospital, they would change his status to inpatient. • Physicians should use observation status as the default. Medicare is more lenient on code changes from observation to inpatient, rather than vice versa. • One thing is certain; that is in order to avoid problems, hospitals and physicians need to have a consistent, well-documented policy and process for making