Observation Services - Facility, Commercial Reimbursement Policy
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Governs reimbursement requirements for outpatient hospital observation services for commercial members of Blue Cross Blue Shield - Nevada, including documentation, billing, and duration rules for facilities.
No material clinical or coverage changes in this revision.
Observation Service Coverage Criteria
Observation reimbursement criteria and exclusions
Covered when ALL of the following are met; exclusions are listed as a separate branch.
ALL of the following
- Revenue code 0762 is billed with type of bill 013X, 078X, or 085X
- Revenue code 0762 is billed with HCPCS G0378 along with allowed E/M or observation codes on the claim
- All observation services billed on one claim line with no date span and the total number of hours spent in observation
Eligible clinical situations (ONE or more)
- Active care or further observation is needed following emergency room care to determine if the member is stabilized
- Member has a complication from an outpatient surgical procedure that requires additional recovery time that exceeds the normal recovery time
- Member care required is initially at or near the inpatient level
Exclusions (observation is inappropriate)
- Physician, member, and/or family convenience
- Routine preparation and recovery for diagnostic, therapeutic, or surgical procedures
- Social issues
- Blood administration
- Cases routinely cared for in the Emergency Room or Outpatient Department
- Routine recovery and post-operative care after outpatient surgery
- Standing orders following outpatient surgery
- Observation following an uncomplicated treatment or procedure
Applicability and limitations
This policy applies as stated and is subject to governing laws and the member's benefit terms.
Observation Service Coding and Duration
| G0378 | Hospital observation service, per hour (required for observation services) |
| G0379 | Direct admission of patient for hospital observation care; for observation service must be billed with G0378 and revenue code 0762 |
| G0380 | Level 1 hospital emergency department visit provided in a type B emergency department; for observation services must be billed with G0378 |
| G0381 | Level 2 hospital emergency department visit provided in a type B emergency department; for observation services must be billed with G0378 |
| G0382 | Level 3 hospital emergency department visit provided in a type B emergency department; for observation services must be billed with G0378 |
| G0383 | Level 4 hospital emergency department visit provided in a type B emergency department; for observation services must be billed with G0378 |
| G0384 | Level 5 hospital emergency department visit provided in a type B emergency department; for observation services must be billed with G0378 |
| G0463 | Hospital outpatient clinic visit for assessment and management of a patient; for observation services must be billed with G0378 |
| 99281 | Emergency department visit for the evaluation and management of a patient that may not require the presence of a physician or other qualified health care professional; for observation services must be billed with G0378 |
| 99282 | Emergency department visit for the evaluation and management of a patient which requires a medically appropriate history and/or examination and straightforward medical decision making; for observation services must be billed with G0378 |
Provider Documentation, Billing, and Policy Updates
Observation: required written order, authorized practitioners, documentation, and billing combinations
The member’s medical record must include a written order that explicitly states “admit to observation.” The order must be from a physician or other individual authorized by state licensure law and facility staff bylaws to admit members or order outpatient tests. Documentation must also state the specific problem and the treatment and/or frequency of the skilled service expected, and must show the observation status duration (minimum 8 hours, maximum 48 hours). Billing for observation must use revenue code 0762 with type of bill 013X, 078X, or 085X, billed with HCPCS G0378 and the applicable E/M/observation codes on one claim line with no date span and the total number of hours. Note: HCPCS G0379 cannot be billed on the same claim with CPT 99281-99285, G0380-G0384, G0463, or 99291.
- Written order must clearly state “admit to observation.”
- Order must be by a physician or other individual authorized by state licensure law and facility bylaws to admit members or order outpatient tests.
- Documentation must state the specific problem and the treatment and/or frequency of skilled service expected.
- Observation status must be at least 8 hours and no more than 48 hours.
- Revenue code 0762 must be billed with type of bill 013X, 078X, or 085X.
- 0762 must be billed with HCPCS G0378 and applicable E/M/observation codes on the claim.
- Bill all observation services on one claim line with no date span and the total number of hours.
- HCPCS G0379 cannot be billed with CPT 99281-99285, G0380-G0384, G0463, or 99291 on the same claim.
Policy applicability — follow state/federal law and member benefit limits
This policy is governed by applicable federal and state laws and by the member’s benefits, terms, conditions, and limitations on the date of service; the reimbursement policy is subject to periodic review and updates.
- State and federal law and the member’s benefit terms, conditions, and limitations control applicability.
- Reimbursement policies may be reviewed and updated periodically.
Definitions and Billing Types
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