Hospital Address Hospital phone number fax Hospital website This

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					   Does the hospital get reimbursed for
    Yes, Medicare continues to pay for
    observation, though it does not make a
    separate payment for these services. The
    outpatient prospective payment system
    pays for observation by “packaging” these
    services with other services, such as
    surgery, that may lead to a period of

   Must there be designated “observation
    beds” in the hospital that are used only
    for observation?
    An observation bed can be anywhere in
    the hospital where observation services
    can be performed.

   What can I do to ensure compliance
    with Medicare?                                                                                    A Physician’s Guide to
    *Date and time your admission order.
    *Specify the level of care – “Place in          Your Hospital Name                                     Observation
      observation” or “Admit as inpatient.”
    *Patient evaluation in observation is                   Hospital Address
      recommended within 24 hours to
      establish the patient’s continued level of          Hospital phone number/fax
      care.                                                   Hospital website
    *For outpatient surgery patients who may
      need further monitoring post-surgery,
      document – after the surgery and
      recovery period – the reason                                                                        Your Hospital
      the patient is being placed in observation.
     *Be aware of how the hospital is billing
       to make sure your claim matches                This material was prepared by FMQAI, the
                                                                                                           (Your hospital may
       the hospital’s claim.                          Medicare Quality Improvement Organization for      customize this brochure
                                                      Florida, under contract with the Centers for
                                                      Medicare & Medicaid Services (CMS), an                for your own use)
                                                      agency of the U.S. Department of Health and
                                                      Human Services. The contents presented do not
                                                      necessarily reflect CMS policy.
   What is observation?                       What does not qualify for                    If the hospital determines after an
    It is the use of a bed and periodic         observation or inpatient                      inpatient admission that the patient
    monitoring by hospital staff to             admission?                                    did not meet an inpatient level of
    evaluate a patient’s condition to           *Routine stays following late surgery         care, can the stay be billed as
    determine the need for possible             *Diagnostic testing                           observation?
    inpatient admission.                        *Normal postop recovery time                  Yes, this is where Condition Code 44
                                                 following surgery                            is used. The physician’s written order
   Does observation require a                  *Stays for the convenience of                 to convert back to observation must
    doctor’s order?                               patient/family/doctor                       be made prior to the patient’s
    Yes. The order must be written prior        *Placement into observation before            discharge and must be agreed upon
    to the initiation of observation              the outpatient surgery procedure            by the attending physician and the
    services and may not be backdated.                                                        utilization review committee.
    The order should be dated and              If an observation patient is acute
    timed.                                      and is not responding to treatment,          What are some examples of
                                                can the patient be admitted as an             observation status/services?
   How should the physician write              inpatient?                                    *Abdominal pain not requiring
    the order for observation versus            Yes, the observation stay can be               surgery
    inpatient admission?                        converted to inpatient; the physician         *Allergic reaction, generalized
    State the level of care that is being       must then write an order to “Admit as         *Back pain
    ordered, e.g., “Place in                    inpatient” at that time. The                  *Chest pain
    observation,” or “Admit as                  documentation in the chart must               *Headache
    inpatient.”                                 support medical necessity of the              *Kidney stones, renal colic
                                                inpatient admission.                          *Nausea/vomiting/dehydration
   When is observation appropriate?                                                          *Ruling out any condition
    *The physician needs additional            How many hours of observation                 *T.I.A.
     time to evaluate the patient to            will Medicare cover?                          *Weakness/dizziness/syncope
     determine his need for an acute            Observation is typically                      *Urinary retention requiring a
     inpatient admission.                       recommended for 24 to 48 hours.                catheter
    *The physician thinks that the              Payment is based upon services                *Vaginal bleeding
     patient will respond rapidly to            received during that period of time. It       *Some postoperative complications
     treatment.                                 is recommended that physicians make
    *An outpatient surgery patient              a decision about the patient’s
     develops a complication and                continued status after 24 hours.
     requires monitoring or                     To convert the patient to an inpatient
     intervention.                              status at this time, the documentation
                                                in the medical record must support
                                                the acute medical necessity for that
                                                higher level of care.

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