CMS Pub. 100-02, ch. 8, § 30.2.3.2

A3-3132.1.C.2, SNF-214.1.C.2

Observation and assessment are skilled services when the likelihood of change in a

patient’s condition requires skilled nursing or skilled rehabilitation personnel to identify

and evaluate the patient’s need for possible modification of treatment or initiation of

additional medical procedures, until the patient’s condition is essentially stabilized.

EXAMPLE 1:

A patient with arteriosclerotic heart disease with congestive heart failure requires close

observation by skilled nursing personnel for signs of decompensation, abnormal fluid

balance, or adverse effects resulting from prescribed medication. Skilled observation is

needed to determine whether the digitalis dosage should be reviewed or whether other

therapeutic measures should be considered, until the patient’s treatment regimen is

essentially stabilized. The medical documentation must describe the skilled services that

require the involvement of nursing personnel to promote the stabilization of the patient's

medical condition and safety.

EXAMPLE 2:

A patient has undergone peripheral vascular disease treatment including revascularization

procedures (bypass) with open or necrotic areas of skin on the involved extremity.

Skilled observation and monitoring of the vascular supply of the legs is required. The

medical documentation must describe the skilled services that require the involvement of

nursing personnel to promote the patient's recovery and medical safety in view of the

patient's overall condition.

EXAMPLE 3:

A patient has undergone hip surgery and has been transferred to a SNF. Skilled

observation and monitoring of the patient for possible adverse reaction to the operative

procedure, development of phlebitis, or skin breakdown, is both reasonable and

necessary. The medical documentation must describe the skilled services that require the

involvement of nursing personnel to promote the patient's recovery and medical safety in

view of the patient's overall condition.

EXAMPLE 4:

A patient has been hospitalized following a heart attack, and following treatment but

before mobilization, is transferred to the SNF. Because it is unknown whether exertion

will exacerbate the heart disease, skilled observation is reasonable and necessary as

mobilization is initiated, until the patient’s treatment regimen is essentially stabilized.

The medical documentation must describe the skilled services that require the

involvement of nursing personnel to promote the stabilization of the patient's medical

condition and safety.

EXAMPLE 5:

A frail 85-year-old man was hospitalized for pneumonia. The infection was resolved, but

the patient, who had previously maintained adequate nutrition, will not eat or eats poorly.

The patient is transferred to a SNF for monitoring of fluid and nutrient intake, assessment

of the need for tube feeding and forced feeding if required. Observation and monitoring

by skilled nursing personnel of the patient’s oral intake is required to prevent

dehydration. The medical documentation must describe the skilled services that require

the involvement of nursing personnel to promote the patient's recovery and medical

safety in view of the patient's overall condition.

EXAMPLE 6:

A patient with congestive heart failure may require continuous close observation to detect

signs of decompensation, abnormal fluid balance, or adverse effects resulting from

prescribed medication(s) that serve as indicators for adjusting therapeutic measures. The

medical documentation must describe the skilled services that require the involvement of

nursing personnel to promote the patient’s recovery and medical safety in view of the

patient’s overall condition, to maintain the patient’s current condition, or to prevent or

slow further deterioration in the patient’s condition.

If a patient was admitted for skilled observation but did not develop a further acute

episode or complication, the skilled observation services still are covered so long as there

was a reasonable probability for such a complication or further acute episode.

“Reasonable probability” means that a potential complication or further acute episode

was a likely possibility.

Information from the patient's medical record must document that there is a reasonable

potential for a future complication or acute episode sufficient to justify the need for

continued skilled observation and assessment.

Such signs and symptoms as abnormal/fluctuating vital signs, weight changes, edema,

symptoms of drug toxicity, abnormal/fluctuating lab values, and respiratory changes on

auscultation may justify skilled observation and assessment. Where these signs and

symptoms are such that there is a reasonable potential that skilled observation and

assessment by a licensed nurse will result in changes to the treatment of the patient, then

the services are reasonable and necessary. However, observation and assessment by a

nurse is not reasonable and necessary to the treatment of the illness or injury where these

characteristics are part of a longstanding pattern of the patient's waxing and waning

condition which by themselves do not require skilled services and there is no attempt to

change the treatment to resolve them.

Skilled observation and assessment may also be required for patients whose primary

condition and needs are psychiatric in nature or for patients who, in addition to their

physical problems, have a secondary psychiatric diagnosis. These patients may exhibit

acute psychological symptoms such as depression, anxiety or agitation, which require

skilled observation and assessment such as observing for indications of suicidal or hostile

behavior. However, these conditions often require considerably more specialized,

sophisticated nursing techniques and physician attention than is available in most

participating SNFs. (SNFs that are primarily engaged in treating psychiatric disorders are

precluded by law from participating in Medicare.) Therefore, these cases must be

carefully documented.