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Medicare Hospital Observation Status Physician Quick Reference

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					MedicareHospitalObsStatus072407             7/25/07     11:25 AM      Page 1




         Medicare Hospital Observation Status
          Physician Quick Reference Guide
 Hospital observation services— definition
 Outpatient services furnished in a hospital, including the use of a
 bed and at least periodic monitoring by its nursing or other staff, that
 are reasonable and necessary to evaluate and treat a patient’s
 condition or determine the need for inpatient admission.
 Observation stays are
 • outpatient care, although rendered in a hospital
 • intended for short-term monitoring—generally < 48 hours
 Documentation is critical. A physician’s order must specify
 “observation status” and must be signed and dated.
 When a patient has been in observation status for 24 hours,
 documentation in the progress notes must include
 • the need to continue observation status, with plan for discharge
   within the next 12–24 hours
                                   or
 • the need to convert to inpatient, documenting the medical
   necessity for admission
                                   or
 • medical stability for discharge and plan for follow-up
   as needed
                         Important Notes
 • Conversion of observation to inpatient status cannot be
   retroactive:
    – Medical necessity for admission must be met and documented
      at the time of conversion.
    – Admission status cannot be changed after discharge or
      submission of the first claim.
 • Conversion of inpatient to observation status can be done prior
   to discharge if
    – the original order was ambiguous and the physician clarifies
      that order (must support change with contemporaneous medical
      record/physician notes and orders); or
    – the hospital UR committee determines that services did not
      meet inpatient criteria and all of the following are met
      (Condition Code 44):
            – a physician (does not have to be admitting physician)
               concurs with the decision and this is documented in
               the medical record
            – the change in status is made prior to discharge
            – the hospital has not yet submitted the inpatient
               claim to Medicare                        — continued
MedicareHospitalObsStatus072407                                    7/25/07            11:25 AM             Page 2




              Medicare Hospital Observation Status
                              Important Notes—continued
 • Continuous monitoring, such as telemetry, can be provided in
   an observation or inpatient status; in determining admission
   status, consider overall severity of illness and intensity of services
   rather than any single or specific intervention.
 • Hospitals can use specialty inpatient areas (including CCU or
   ICU) to provide observation services (e.g., for telemetry). Level of
   care, not physical location of the bed, dictates admission status.
 • For Asthma, CHF, and Chest Pain only: Separate hospital
   reimbursement is available when patients with these medical
   conditions are observed and treated for more than 8 hours, up to
   a maximum of 48 hours. All other hospital observation services
   are reimbursed as packaged services.
 • Examples of other conditions potentially appropriate for
   observation services: TIA, closed head injury, blunt abdominal
   trauma, and unexpected outpatient postsurgical complications.
 • If observation lasts > 48 hours: Medical necessity must be
   clearly documented. Consider whether inpatient admission would
   be appropriate.
 • NOTE: Medicare requires some procedures to be done in the
   inpatient setting. Consult your UR department for the Medicare
   “inpatient-only” list.
 • Private insurance companies’ admission status rules may differ
   from Medicare’s.




 Please contact your hospital’s utilization review staff with questions
 regarding patient admission status.




                   2020 SW Fourth Avenue, Suite 520 • Portland, OR 97201
                   503-279-0100 • Fax 503-279-0190 • www.acumentra.org

 This material was prepared by Acumentra Health, the Medicare Quality Improvement Organization for Oregon,
 under contract with the Centers for Medicare & Medicaid Services (CMS), an agency of the U.S. Department of
 Health and Human Services. The contents presented do not necessarily reflect CMS policy.
                                                                       8SOW-OR-HPMP-07-06         6/13/07

				
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