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January 25, 2018

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CMS Modifies Criteria for Reporting Hours of Observation

July 13, 2011:

Regina Magnani, Clinical/Technical Editor

The Centers for Medicare and Medicaid Services (CMS) has changed its current policy barring the billing of observation services with diagnostic or therapeutic services involving active monitoring (for example, colonoscopy or chemotherapy) to accommodate situations in which such a procedure interrupts observation services. Hospitals may report observation hours for the services that are not related to the procedure monitoring.

CMS is letting the hospital determine the most appropriate way to capture this time. For example, a hospital may record the beginning and ending times for each period of observation services during the hospital outpatient encounter. The length of time for each period of observation services would be added together and the total number of units reported on the claim for the hourly observation services HCPCS code G0378 (Hospital observation service, per hour). A hospital may also use an average length of time of the interrupting procedure. This average would be deducted from the total duration of time the patient receives observation services.

In a January 2010 FAQ, CMS addressed drug administration, which is probably one of the more common procedures that might require monitoring that would occur during an observation period. The hospital must determine if active monitoring is a part of the particular drug administration services received by the patient and the amount of time used for the monitoring. The determination as to whether active monitoring is a part of the drug administration service may depend on the type of drug administration service furnished, the specific drug administered, and/or the needs of the patient. For example, a complex therapeutic drug infusion intended to achieve a specified therapeutic response may require constant active monitoring by hospital staff. However, the routine infusion of an antibiotic, which may be reported with the same HCPCS codes for a therapeutic infusion, may not require much active monitoring.


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