Q: When should observation orders be written?

Q: When should observation orders be written?

A: Physician orders for outpatient observation must be written prior to the initiation of observation services. Orders may not be backdated.

Editor’s note: The Texas Medical Foundation answered this question.

Routine care in outpatient observation?

Q: Would it be permissible for a hospital to routinely care for all patients in outpatient observation prior to making a decision about their need for inpatient admission?

A: No. It is the responsibility of the admitting physician to make a decision at the time of admission about the patient’s condition and the level of services required. When it is clear to the admitting physician that the patient requires an inpatient level of care, the provision of these services should not be delayed.

Editor’s note: The Texas Medical Foundation answered this question.

Would it be permissible for a hospital to routinely care for all patients in outpatient observation prior to making a decision about their need for inpatient admission?

Q: Would it be permissible for a hospital to routinely care for all patients in outpatient observation prior to making a decision about their need for inpatient admission?

A: No. It is the responsibility of the admitting physician to make a decision at the time of admission about the patient’s condition and the level of services required. When it is clear to the admitting physician that the patient requires an inpatient level of care, the provision of these services should not be delayed.

Editor’s note: The Texas Medical Foundation answered this question.

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.

Under what circumstances is use of outpatient observation appropriate?

Q: Under what circumstances is use of outpatient observation appropriate?

A: Use of outpatient observation is appropriate when:

Understanding Medicare insurance cards

This tool will help your staff understand insurance, services covered, and required information for producing clean claims.

Q&A: Alcohol & drug abuse

Q: Can a provider disclose information related to a patient’s alcohol and drug abuse or HIV status to an insurance company to obtain approval for admission, verify coverage, or submit a claim for payment purposes?

A: The privacy rule doesn’t offer special protections for sensitive information such as treatment for substance abuse, HIV/AIDS, or mental health conditions. However, there are other federal regulations (e.g., Confidentiality of Alcohol and Drug Abuse Patient Records, 42 CFR Part 2) that provide additional protections for treatment of alcohol or drug abuse. HIPAA doesn’t preempt these regulations.

42 CFR Part 2 doesn’t apply to most healthcare providers. It applies only to federally funded programs “that hold themselves out as providing alcohol or drug abuse diagnosis, treatment, or referral.” For example, this law doesn’t apply to an acute-care hospital that treats a patient in the ED or intensive care unit for the acute effects of a drug overdose.

To comply with 42 CFR Part 2, substance-abuse-treatment facilities can disclose information to third-party payers only with the written consent of the patient and must limit the information to the minimum necessary.

Some state laws/regulations might offer additional protections for sensitive information, and you should review them for additional restrictions.

Can you bill managed care as you’d bill Medicare for discontinued procedures?

Q: If we bill Medicare for a discontinued procedure, can we bill Managed Care the same way? Some consultants are telling us that commercial insurance must follow Medicare guidelines.

Other consultants are telling us that Medicare is allowing this billing practice to anyone who is paid under OPPS, that the ability to bill discontinued procedures is not a federal guideline that Managed Care must follow, but a contract with Medicare.

Managed Care does not pay under OPPS so we would not be able to bill Managed Care for discontinued procedures. Instead, we must follow each particular contract.

A: The modifiers you cited are to be used in the Outpatient PPS system for “discontinued procedures”-outpatient surgical or diagnostic procedures that were started but discontinued by the physician due to “extenuating circumstances or to circumstances that threatened the well being of the patient”.

Modifier 73 is used for a procedure that is discontinued AFTER the patient is prepared for the procedure but BEFORE anesthesia is administered or the procedure is started. Modifier 74 is used for a procedure that is discontinued AFTER the patient is prepared for the procedure and AFTER anesthesia is administered or the procedure is started.

Medicare pays the provider for the costs incurred in preparing the patient, even though the procedure was not completed. The modifiers for discontinued services MUST be used by providers billing the Medicare program for services to Medicare beneficiaries.

In addition, payors offering Medicare Advantage or Medicare supplemental products with benefits that mirror Medicare coverage must provide payment for discontinued services. If the patient is not enrolled in a Medicare Advantage or Medicare supplemental product, the payor MAY accept the 73 or 74 modifier, but because the payor is not required to cover the same benefits as Medicare, it may not.

Whether this modifier would be accepted (and the discontinued procedure reimbursed) would depend on the terms of the patient’s insurance coverage and the terms of the contract between the provider and payor. Some payor contracts expressly refuse to pay for procedures discontinued for reasons which the payor deems to be inefficiency on the part of the provider or practitioner, such as scheduling conflicts for practitioners, equipment or procedure rooms, failure to properly prepare the patient, etc.

If the patient is NOT enrolled in a product providing Medicare coverage, you would need to determine the payor’s coverage policies for discontinued procedures. For more information on Medicare’s rules regarding Modifiers 73 & 74, click here.

This question was answered by Robin Fisk, Esq., a lawyer from Ashland, NH. It is not intended as legal advice.

Sample denial database summary report

This form is an example of a summary report in one provider’s denial database.

Download this document

Follow ABN guidelines for noncovered outpatient procedures

Q: When a Medicare beneficiary presents for an outpatient procedure that we know is noncovered by Medicare, can we ask the patient for payment at the time of the service? If so, can we ask the patient to make a full payment? What about for a procedure that might not be covered and for which we deliver an advanced beneficiary notice (ABN)? Can we collect any payment at the time of service?

A: Medicare does not require providers to issue an ABN for services that are “statutorily excluded” (services that are never a Medicare benefit). However, you may still want the patient to sign a waiver of liability to ensure that they understand that they are responsible for the charges. For an excluded service, you can collect full payment for the services and, if it is your usual practice, you may request payment at the time of service.

If Medicare covers the service and the patient completes an ABN, you may collect payment from the patient at the time of service. If Medicare pays for the service, you must make the appropriate refund. If the service may be covered and you do not require the patient to complete an ABN, you cannot bill the patient.

Be sure to use any applicable condition codes and/or modifiers (e.g., -GA, -GX, -GZ) on the UB-92 or CMS-1500 form.

This question was answered by the APCs Weekly Monitor panel of experts.