Highmark Medicare Services

12102, 12202, 12302

MAC Part A & B

L27548

Acute Care: Inpatient, Observation and Treatment Room Services

L27548

CPT codes, descriptions and other data only are copyright 2007 American Medical Association (or such other date of publication of CPT). All Rights Reserved. Applicable FARS/DFARS Clauses Apply. Current Dental Terminology, (CDT) (including procedure codes, nomenclature, descriptors and other data contained therein) is copyright by the American Dental Association. © 2002, 2004 American Dental Association. All rights reserved. Applicable FARS/DFARS apply.

Title XVIII of the Social Security Act, Section 1862(a)(1)(A) states that no Medicare payment shall be made for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury.

Title XVIII of the Social Security Act, Section 1862(a)(7).  This section excludes routine physical examinations.

Title XVIII of the Social Security Act, Section 1833(e) states that no payment shall be made to any provider for any claim that lacks the necessary information to process the claim.

CMS Pub 100-1 §10.2 is the primary reference for Medicare inpatient status determinations.

Social Security Act Section 1862 (a) (2) prohibits payment for which the individual furnished such items or services has no legal obligation to pay.

Code of Federal Regulations Section 421.100 (a) (2) directs the intermediary to take appropriate action to reject or adjust the claim if the services furnished were not reasonable, not medically necessary, or not furnished in the most appropriate setting; or if the claim does not properly reflect the kind and amount of services furnished.

CMS Pub 100-2, 6 §70.4 defines extended observation and delineates the appropriate use of that service.

CMS Pub 100-2, 6 §20.1 discusses the appropriate billing of "Day Stay" patients.

CMS Pub 100-4, 3 §140.2.3 & 30 §20.1 delineates provisions regarding reimbursement for a patient that is transferred between hospitals.

CMS Pub 100-4, 3-§10.4 discusses reimbursement for specialized services that do not necessitate a transfer.

CMS Pub 100-2, 6 §20.1 specifies that services provided to an inpatient or outpatient of a hospital are covered only when that primary hospital bills Medicare for the services.

Maryland, District of Columbia, Delaware

Central Office

For services performed on or after 07/11/2008

N/A

For services performed on or after N/A

N/A

Compliance with the provisions in this policy may be monitored and addressed through post payment data analysis and subsequent medical review audits.

The companion article to this policy (to follow) represents a compilation of Medicare regulations that bear on outpatient observation and brief inpatient admissions, and summarizes their impact as it applies to correct billing. It provides clarification regarding both coverage and billing issues. This LCD exists to support the medical necessity determinations with respect to observation.

The determination of an inpatient or outpatient status for any given patient is specifically reserved to the admitting physician. The decision must be based on the physician's expectation of the care that the patient will require. The general rule is that the physician should order an inpatient admission for patients who are expected to need hospital care for 24 hours or longer and treat other patients on an outpatient basis. An inpatient admission is not covered when the care can be provided in a less intensive setting without significantly and indirectly threatening the patient's safety or health. Although in many institutions there is no difference between the actual medical services provided in inpatient and observation settings, in such cases the designation still serves to assign patients to an appropriate billing category. The correct physician application of Medicare patient status guidelines is therefore always critically important.

A person is considered an inpatient if he is formally admitted based on the physician's expectation of a need for an appropriate inpatient stay. If the patient dies, is transferred, leaves AMA or recovers in a shorter period of time, an inpatient admission is still appropriate. The justification for the admission, then, is based on the information available at the time of admission. Subsequent information may support a physician's "hunch" that the patient needed inpatient care, but never serves to refute that original determination.

Certain diagnoses and procedures generally do not support an inpatient admission, and fall within the definitions of outpatient observation. Specific medical necessity for both admissions and observation, though, is always determined on a case-by-case basis. Uncomplicated presentations of chest pain (rule out MI), mild asthma/COPD, mild CHF, syncope and decreased responsiveness, atrial arrhythmias and renal colic are all frequently associated with the expectation of a brief (less than 24-hour) stay unless serious pathology is uncovered. Routine diagnostic cardiac catheterization, electrophysiologic mapping, and renal dialysis are usually performed with a similar short stay expectation and are thus usually outpatient procedures.

Medical records will be evaluated to determine the consistency between the physician order (physician intent), the services actually provided (inpatient or outpatient) and the medical necessity of those services, including the medical appropriateness of the inpatient or observation stay. The medical record must clearly support the medical necessity for observation and should include a timed order to observe which will support the number of hours billed.

Observation services are defined as the use of a bed and periodic monitoring by the hospital's nursing or other ancillary staff, which are reasonable and necessary to evaluate an outpatient's condition or determine the need for possible inpatient admission. Observation services must be patient specific and not part of the facility's standard operating procedure or protocol for a given diagnosis or service; observation determinations made by protocol without consideration of the applicability to the specific patient will be considered to be not medically necessary. Observation services generally do not exceed 24 hours. Although some patients may require a second day of observation, only in rare and exceptional cases do observation services span more than 48 hours.

Observation is only medically necessary when the patient's current condition requires hospital services or when there is a significant risk of deterioration in the immediate future such that continued observation in a non-hospital environment is inadvisable. Observation services for the convenience of the patient are by definition not medically necessary.

Hospital Care (Inpatient), Outpatient Hospital Services

Contractors may specify Bill Types to help providers identify those Bill Types typically used to report this service. Absence of a Bill Type does not guarantee that the policy does not apply to that Bill Type. Complete absence of all Bill Types indicates that coverage is not influenced by Bill Type and the policy should be assumed to apply equally to all claims.

Contractors may specify Revenue Codes to help providers identify those Revenue Codes typically used to report this service. In most instances Revenue Codes are purely advisory; unless specified in the policy services reported under other Revenue Codes are equally subject to this coverage determination. Complete absence of all Revenue Codes indicates that coverage is not influenced by Revenue Code and the policy should be assumed to apply equally to all Revenue Codes.

N/A

Conditions that are not listed in the "ICD-9-CM Codes that Support Medical Necessity" section of this policy.

1. All documentation must be maintained in the patient’s medical record and available to the contractor upon request.
   
   
2. Every page of the record must be legible and include appropriate patient identification information (e.g., complete name, dates of service(s)).  The record must include the physician or non-physician practitioner responsible for and providing the care of the patient.
   
   
3. The submitted medical record should support the use of the selected ICD-9-CM code(s).  The submitted CPT/HCPCS code should describe the service performed.

In the event that a request for additional documentation is generated for a specific claim, the following information will be required:

Complete UB-04

Itemized bill

Complete medical record which includes orders, progress notes, nurses notes, procedure notes, test results, admission and discharge summaries, and hospital face sheets.

The physician documentation should clearly differentiate an order for outpatient observation from an order for inpatient admission. The reason for observation must be stated in the orders for observation. [CMS Pubs 100-4, 6-§10, 9-§30.2,23-§10, 24-§20.2, 25-§50.1, 60, 28-§30.2 (Rev. 13-3-1726)] As a compliance standard for observation services, then, the facility should ensure that the order contains the medical necessity for observation, includes parameters specifying what is to be observed and how, and documents a start time and date.

In accordance with CMS Ruling 95-1 (V), utilization of these services should be consistent with locally acceptable standards of practice.

65 FR 18457

CMS Pub 100-1, 5 §10.2

CMS Pub 100-2, 1 §10

CMS Pub 100-2, 6 §10

CMS Pub 100-2, 6 §70.4

CMS Pub 100-4, 6 §10, 9 §30.2, 23 §10, 24 §20.2, 25 §50.1 & 60, 28 §30.2

CMS Pub 100-4, 4 §290

CMS Pub 100-4, 3 §50.1, 25 §80.2.1

CMS Pub 100-4, 29 §60.27.3

MIM Transmittal No. 1604 09-97 BILL REVIEW 3604 Rev. 13-3-1726 (12-98 BILLING PROCEDURES 460 Rev. 10-738)

MIM Transmittal No. 1689

OPPS Training Manual Chpt IV: clinical implications of the OPPS-Medical Review Decisions

OPPS Training Manual Chpt V: Outpatient PPS Payment Calculations: Packaging

PRO 19-1010.C

PRO 19-4110.A

Social Security Act § 1833(e).

Social Security Act §1862(a)(1)(A)

Other Contractor’s Policies

Highmark Medicare Services Contractor Medical Directors

This policy does not reflect the sole opinion of the contractor or Contractor Medical Directors. Although the final decision rests with the contractor, this policy was developed in cooperation with advisory groups, which includes representatives from the appropriate specialty (ies).

CAC/IAC Distribution:  04/01/2008

05/15/2008

05/23/2008

L27548

05/22/2008

This LCD has no Related Documents.

There are no attachments for this LCD.