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Medical Coding News Archives

CMS Creates Composite APCs for Observation

 
November 27, 2007:
The Centers for Medicare and Medicaid Services (CMS) has decided to create two composite ambulatory payment classifications (APCs) that will provide payment to hospitals in certain circumstances when extended assessment and management of a patient occur.

The composite APCs describe an extended encounter for care provided to a patient. When observation serves are rendered in specific circumstances, one composite payment will be made that includes both the visit and observation. A composite payment will be made in the following circumstances:
  • The patient’s encounter is classified:
    • A level 5 clinic visit (CPT® code 99205 or 99215)
    • A level 4 or 5 emergency department visit (CPT® code 99284 or 99285)
    • Critical care services (CPT® code 99291)
    • A direct admission to observation (HCPCS level II code G0379)
  • Total observation hours reported equal eight hours or more.
  • A service with status indicator T has NOT been performed on the same date of service or one day earlier than the date of service of the observation.
  • The codes for observation and the encounter appear on the same claim.
There will be no diagnosis restrictions or testing requirements. The follow general reporting requirements for all observation services remain in effect. CMS believes that these more general requirements encourage hospitals to provide medically reasonable and necessary care. They also help ensure observation services are reported on correctly coded hospital claims that reflect the full charges associated with all hospital resources used to provide the reported services.

Observation Time
  1. Observation time must be documented in the medical record.
  2. A beneficiary’s time in observation (and hospital billing) begins with the beneficiary’s admission to an observation bed.
  3. A beneficiary’s time in observation (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 to be released or admitted as an inpatient.
  4. The number of units reported with HCPCS code G0378 must equal or exceed eight hours.
Physician Evaluation
  1. The beneficiary must be in the care of a physician during the period of observation, as documented in the medical record by admission, discharge, and other appropriate progress notes that are timed, written, and signed by the physician.
  2. The medical record must include documentation that the physician explicitly assessed patient risk to determine that the beneficiary would benefit from observation care.
Composite APC 8002 will be paid when criteria are met and the patient encounter is a level 5 clinic visit (CPT® code 99205 or 99215) or a direct admission to observation (HCPCS level II code G0378). Composite APC 8003 will be paid when criteria are met and the patient encounter is a level 4 or 5 emergency department visit (CPT® code 99284 or 99285), critical care (CPT® code 99291). The 2008 national unadjusted payment rate for composite APC 8002 is $351.04, versus the national unadjusted payment rates for the individual services of $138.47 for 99205 and $105.76 for 99215. The 2008 national unadjusted payment rate for composite APC 8003 is $638.66, versus the national unadjusted payment rates for the individual services of $53.43 for G0379, $212.59 for 99284, $315.51 for 99285, $466.02 for 99291, and $53.43 for G0379. Code G0378 is packaged and has no assigned payment rate.

If the composite criteria are not met, payment will be made for the appropriate services and visits with the individual APC, and observation is packaged. CMS notes that current claims data indicate a “normal and stable distribution of clinic and ED visit levels.” The agency does not expect this distribution to change and show an increase in high-level visits that may result from the new composite APCs. CMS will continue to review claims data and may modify the composite APCs or move to packaging observation care as was originally proposed.

When not meeting criteria for the composite payment, a direct admission to observation (HCPCS level II code G0379) must meet different criteria for separate payment. For 2008, to receive separate payment for a direct admission into observation (APC 00604), the claim must:
  • Contain both HCPCS level II codes G0378 Hospital observation services, per hr, and G0379 Direct admission of patient for hospital observation care, with the same date of service
  • Indicate that no services with a status indicator T or V or critical care (APC 0617) were provided on the same day of service as HCPCS code G0379
For 2008, when the above criteria are met for separate payment, payment will be made under APC 0604 with a national unadjusted payment rate of $53.43. If either of the above criteria is not met, HCPCS code G0379 will be packaged.

Regina Magnani, RHIT
Clinical/Technical Editor

CPT is a registered trademark of the American Medical Association.

 

 
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