What types of services would/would not qualify for outpatient observation?

Q: What types of services would/would not qualify for outpatient observation?

A: Although the reimbursement for outpatient observation has changed, the rules for use of observation have not changed. There must be medical necessity of observation services and the medical necessity must be documented in the medical record. Routine stays following late surgery, diagnostic testing, or outpatient therapy/procedures may not be billed as observation unless there is documentation that the patient’s condition is unstable. Normal postoperative recovery time following surgery cannot be billed as an outpatient observation. Editor’s note: The Texas Medical Foundation answered this question.