Independence will update its policies for facility reporting of observation
services to be consistent with the Center for Medicare & Medicaid Services?
guidelines. The following updated policies were posted as Notifications on
November 30, 2018, and will go into effect January 1, 2019:
- Commercial: #00.01.19d: Facility Reporting of Observation
Services
- Medicare Advantage: #MA00.040a: Facility Reporting of
Observation Services
Updated policies
Observation services involve the use of a bed and periodic monitoring by the
facility's nursing or other ancillary staff in order to evaluate and treat an
individual's condition or determine the need for possible inpatient admission.
Observation services, which must be ordered by a professional provider,
are eligible for reimbursement separate from the emergency room (ER) visit when
treatment and/or evaluation requires eight or more hours. However, the
reimbursement for the ER visit is inclusive of the first seven hours of
observation care.
Observation services are indicated, when in the professional provider?s
opinion, the individual?s clinical condition is either unchanged or has not
sufficiently improved to permit discharge, and additional monitoring and/or
treatment is required until a disposition decision is rendered. A disposition
decision is expected to be made within 24 hours.
The full observation length of stay may be eligible for reimbursement
consideration when the individual is directly entered to observation without an
ER visit.
Exclusions
Independence does not provide separate reimbursement for
observation services for any of the following (This list is not
all-inclusive):
- standing orders following outpatient surgery
- extended observation following a procedure
- services provided concurrently with chemotherapy
- routine preparation prior to, and recovery after, diagnostic testing
- routine recovery and post-operative care after same-day surgery
- awaiting transfer to another facility
- outpatient blood administration (e.g., blood transfusion)
Observation services begin at the time the professional provider writes the
order for outpatient observation. If the observation stay results in an
inpatient admission, the inpatient admission begins at the time of the
admission for observation services. The inpatient claim should include all
charges incurred during the stay. In this situation, observation services will
not be considered for reimbursement.
More information
To view the Notifications for these polices, visit our Medical Policy Portal
and select Accept and Go to Medical Policy Online. Then select either
Commercial or Medicare Advantage under Active Notifications.