CMS Pub. 100-04, ch. 4, § 290.4.3

Furnished Between January 1, 2006 and December 31, 2007

(Rev. 1760, Issued: 06-23-09; Effective Date: 07-01-09; Implementation Date: 07- 06-09)

Separate payment may be made for observation services provided to a patient with

congestive heart failure, chest pain, or asthma. The list of ICD-9-CM diagnosis codes

eligible for separate payment is reviewed annually. Any changes in applicable ICD-9-

CM diagnosis codes are included in the October quarterly update of the OPPS and also

published in the annual OPPS Final Rule. The list of qualifying ICD-9-CM diagnosis

codes is also published on the OPPS Web page.

All of the following requirements must be met in order for a hospital to receive a separate

APC payment for observation services through APC 0339:

1. Diagnosis Requirements

a. The beneficiary must have one of three medical conditions: congestive heart

failure, chest pain, or asthma.

b. Qualifying ICD-9-CM diagnosis codes must be reported in Form Locator (FL) 76,

Patient Reason for Visit, or FL 67, principal diagnosis, or both in order for the

hospital to receive separate payment for APC 0339. If a qualifying ICD-9-CM

diagnosis code(s) is reported in the secondary diagnosis field, but is not reported

in either the Patient Reason for Visit field (FL 76) or in the principal diagnosis

field (FL 67), separate payment for APC 0339 is not allowed.

2. Observation Time

a. Observation time must be documented in the medical record.

b. Hospital billing for observation services begins 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.

c. A beneficiary's time receiving observation services (and hospital billing) ends

when all clinical or medical interventions have been completed, including follow-up care furnished by hospital staff and physicians that may take place after a

physician has ordered the patient be released or admitted as an inpatient.

d. The number of units reported with HCPCS code G0378 must equal or exceed 8

hours.

3. Additional Hospital Services

a. The claim for observation services must include one of the following services in

addition to the reported observation services. The additional services listed below

must have a line item date of service on the same day or the day before the date

reported for observation:

• An emergency department visit (APC 0609, 0613, 0614, 0615, 0616) or

• A clinic visit (APC 0604, 0605, 0606, 0607, 0608); or

• Critical care (APC 0617); or

• Direct referral for observation care reported with HCPCS code G0379 (APC

0604); must be reported on the same date of service as the date reported for

observation services.

b. No procedure with a T status indicator can be reported on the same day or day

before observation care is provided.

4. 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.

Only observation services that are billed on a 13X bill type may be considered for a

separate APC payment.

Hospitals should bill all of the other services associated with the observation care,

including direct referral for observation, hospital clinic visits, emergency room visits,

critical care services, and T status procedures, on the same claim so that the claims

processing logic may appropriately determine the payment status (either packaged or

separately payable) of HCPCS codes G0378 and G0379.

If a bill for observation care does not meet all of the requirements listed above, then

payment for the observation care will be packaged into payments for other separately

payable services provided to the beneficiary in the same encounter.