AmeriHealth will update its policy for facility reporting of observation services to be consistent with the Center for Medicare & Medicaid Services? guidelines. Claim Payment Policy #00.01.19d: Facility Reporting of Observation Services was posted as a Notification on November 30, 2018, and will go into effect January 1, 2019.

Updated policy

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.

AmeriHealth 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 Notification for this policy, visit our Medical Policy Portal and select Accept and Go to Medical Policy Online. Then select Active Notifications.