CurrentBlue Cross Blue Shield - MainePolicy C-11005

Observation Services - Facility

Governs reimbursement and documentation expectations for facility-based observation services provided to Anthem Blue Cross members; applies to facilities contracting with Blue Cross Blue Shield - Maine and providers submitting claims under Anthem benefit plans.

Policy Summary

PayerBlue Cross Blue Shield - Maine

PolicyObservation Services - Facility

Policy CodePolicy C-11005

Change TypeNo material change

Effective DateJul 20, 2022

Next Review DateN/A

Key ActionOrder observation services with a written 'admit to observation' order and document the specific problem, treatment and frequency of skilled services.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

24max observation duration (hrs)

6inappropriate use examples

1definition entries

CMSreference cited

When Observation Services are Eligible

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Covered when documentation includes a written order that clearly states 'admit to observation' and demonstrates the specific problem, treatment and/or frequency of skilled services expected to be provided.

One or more of the following clinical scenarios

Active care or further observation is needed following emergency room care to determine if the member is stabilized.
Complication from an outpatient surgical procedure requiring additional recovery time that exceeds the normal recovery time.
Member care required is initially at or near the inpatient level.
Further diagnostic testing and/or observation is needed to make a diagnosis and establish appropriate treatment protocol.
Short-term medical intervention by facility staff that requires physician direction.
Observation is required to determine if the member requires inpatient admission to the facility.

Observation service duration, in general, shall not exceed 24 hours.

Reimbursement for observation services is subject to the Plan Compensation Schedule or Agreement with the applicable facility; if the facility agreement does not provide for separate reimbursement, the facility may not separately bill for observation services.

Inappropriate uses

The following uses are considered inappropriate for observation services and are not eligible for reimbursement:

ANY of the following

Physician, member, and/or family convenience.
Routine preparation and recovery for diagnostic, therapeutic or surgical procedures.
Social issues preventing discharge.
Blood administration.
Cases routinely cared for in the Emergency Room or Outpatient Department.
Routine recovery and post-operative care after outpatient surgery, including standing orders following outpatient surgery and observation following an uncomplicated treatment or procedure.

Observation services that lack the required written 'admit to observation' order or documentation demonstrating medical necessity are not eligible for reimbursement.

Coding and Duration Guidance

General coding guidancemixed

No codes listed

Maximum typical observation duration — general rule (inv-04)

Maximum typical observation durationDesignated observation service status, in general, shall not exceed 24 hours.

Documentation requirementMedical record must include a written order that clearly states 'admit to observation'.

Clinical demonstrationDocumentation must state the specific problem, the treatment and/or frequency of the skilled service expected to be provided.

Orders, Documentation, and Reimbursement Conditions

Documentation Required

Order and documentation requirements for observation

Observation services must be ordered by a physician or other individual authorized by state licensure law and facility staff bylaws to admit members to the hospital or order outpatient tests. The member’s medical record must include a written order that clearly states “admit to observation” and documentation that demonstrates observation is required by stating the specific problem, the treatment and/or frequency of the skilled service expected to be provided. The designated observation service status generally shall not exceed 24 hours.

Order must be by a physician or other individual authorized by state licensure law and facility bylaws.
Medical record must include a written order stating “admit to observation.”
Documentation must state the specific problem, treatment and/or frequency of skilled service expected.
Observation status generally shall not exceed 24 hours.

Billing Rule

Reimbursement contingent on facility agreement

Reimbursement for observation services is determined by the Plan Compensation Schedule or the facility’s Agreement with the health plan; if the facility agreement does not provide separate reimbursement for observation services, the policy does not permit the facility to separately bill for and seek reimbursement for observation services.

Reimbursement is specified in the Plan Compensation Schedule or Agreement with the facility.
This policy does not modify the facility’s agreement terms and conditions.
If the facility’s agreement lacks separate reimbursement for observation, separate billing for observation is not allowed.

Key Definitions

Observation Services — definition (inv-07)

DefinitionObservation Services: Active, short-term medical and/or nursing services performed by an acute facility on that facility's premises that includes the use of a bed and monitoring by nursing or other staff required to observe a member's condition to determine if inpatient admission is needed.

Location and settingServices are performed on the acute facility's premises and include use of a bed and monitoring by facility nursing or other staff.

PurposeTo observe a member's condition to determine if the member requires inpatient admission to the facility.