RetiredUnitedHealthcarePolicy CS356LA.D

Hospital Services: Observation and Inpatient (for Louisiana Only)

State-specific policy governing observation status, observation-to-inpatient conversion, and inpatient hospital service requirements for Medicaid MCO enrollees in Louisiana. Affects hospitals, attending clinicians, and MCO authorization processes in Louisiana.

Policy Summary

PayerUnitedHealthcare

PolicyHospital Services: Observation and Inpatient (for Louisiana Only)

Policy CodePolicy CS356LA.D

Change TypeRetirement and clarifications

Effective DateJan 1, 2026

Next Review Date

Key ActionIf observation is anticipated beyond 48 hours, notify the MCO as soon as reasonably possible to request authorization.

SourceLink

POLICY UPDATE CHANGES

Policy retired and Louisiana plan membership disenrolled on April 1, 2026.

Observation services are covered up to 48 hours without authorization; observation beyond 48 hours requires MCO authorization and unauthorized hours may be denied.

All observation status conversions to inpatient admission require notification to the MCO within one business day of the order to admit.

48 hoursobservation coverage without prior authorization

1 business dayprovider notification requirement after order to admit

Retired 04/01/2026policy retirement date (Louisiana)

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Coverage Criteria

Observation Services (up to 48 hours)

Covered when ALL of the following are met

Observation coverage: Enrollee is in observation status for a minimum of one hour and up to 48 hours; under the care of a physician with an observation order and appropriate timed, written, signed progress notes; services are medically necessary to observe and determine need for inpatient admission or discharge.<=48 hours

Observation and ancillary services up to 48 hours do not require authorization; hospitals should bill the entire outpatient encounter on the same claim with appropriate revenue codes.

Inpatient Hospital Services

Covered when ALL of the following are met

Inpatient admission criteria: Care is required that can only be provided safely and adequately in a hospital setting; ordered by an attending physician, emergency room physician, or dentist when monitoring is required for a dental procedure; each inpatient day must be medically necessary; admission decision based on medical necessity and clinician judgment.N/A

MCOs must require prior authorization for out-of-state non-emergency hospitalizations unless the enrollee is dual Medicare/Medicaid eligible; length of stay alone should not determine admission denial.

The MCO shall not reimburse for services that can be provided safely and adequately in the home or when the primary purpose of care is custodial or cosmetic. This exclusion applies to inpatient hospital services and aligns with the requirement that place of treatment be determined by medical necessity.

Length of stay alone must not be used as the sole basis to deny an inpatient admission or to automatically convert an admission to observation status. While observation is limited to an initial period (see day limits), an enrollee’s admission cannot be denied solely because of the time spent in the hospital. Services that do not meet medical necessity (for example, custodial care or care that can be provided at home) are excluded from reimbursement. Additionally, when an observation order is converted to an inpatient admission, the MCO must be notified within one business day of the admission order and the MCO will provide verbal notification of determinations within one business day and written notice within two business days.

Coding and Time Limits

Observation duration limit — up to 48 hours

Maximum observation durationUp to 48 hours of medically necessary observation care is covered without authorization.

Billing instructionHospitals should bill the entire outpatient encounter (ED, observation, associated services) on the same claim with appropriate revenue codes.

Authorization for extensionsAny observation service beyond 48 hours requires MCO authorization; unauthorized hours may be denied.

Observation day limits — up to 48 hours without authorization

Day limit without authorizationObservation care is covered up to 48 hours without prior authorization.

Notification when >48 hours anticipatedIf observation is anticipated beyond 48 hours, the hospital must notify the MCO as soon as reasonably possible to request authorization for extension.

Provider Actions, Authorization & Billing

Prior Authorization

Observation authorization requirement

Observation services up to 48 hours do not require authorization. If observation is anticipated to exceed 48 hours, the hospital must notify the MCO as soon as reasonably possible and obtain MCO authorization for the extended hours.

Observation and ancillary services do not require notification, precertification or authorization and will be covered up to 48 hours.
Any observation service over 48 hours requires MCO authorization; if anticipated beyond 48 hours the hospital must notify the MCO as soon as reasonably possible.

Prior Authorization

Out-of-state non-emergency inpatient prior authorization

Prior authorization is required for out-of-state non-emergency inpatient hospitalizations except when the enrollee is dually eligible for Medicare and Medicaid.

MCO shall require prior authorization for out-of-state non-emergency hospitalization unless the request is for a dual Medicare/Medicaid eligible enrollee.

Inpatient Admission Criteria

inpatient — admission criteria

Inpatient admission ordering: Admission must be ordered by an attending physician, emergency room physician, or dentist (when monitoring is required for a dental procedure).N/A

Place of treatment based on medical necessity; each inpatient day must be medically necessary.

Continued Stay Criteria

inpatient — continued stay criteria

Continued inpatient stay: Each day of an inpatient stay must be medically necessary; InterQual criteria may be used to support level-of-care decisions in conjunction with clinician judgment.N/A

MCO policies must align with these requirements; MCOs will use InterQual as a source of evidence when applicable.

Discharge Criteria

Patient discharge from observation occurs when the observation period ends with a clinician decision to discharge the enrollee or when an order for inpatient admission is placed. If an inpatient admission order is issued, the hospital must notify the MCO within one business day of that order. Observation services are intended for assessment and short-term management to determine the need for inpatient admission or safe discharge; the facility should document the clinical decision-making that supports discharge.

Background

Observation care is a defined set of clinically appropriate services provided to determine whether an enrollee requires formal inpatient admission or can be discharged. Observation is intended to be at least one hour and up to 48 hours, during which the enrollee remains under physician care and an observation order and timed, written, signed progress notes document the care. Observation and ancillary services up to 48 hours do not require prior authorization; any extension beyond that period requires MCO authorization and unauthorized hours may be denied.

Definitions

Observation Care — definition of observation services

DefinitionA well-defined set of specific, clinically appropriate services furnished while determining whether an enrollee will require formal inpatient admission or be discharged from the hospital.

DurationObservation is intended for a minimum of one hour and up to 48 hours.

Physician oversightThe enrollee must be in the care of a physician during the observation period, documented by an observation order and timed, written, signed progress notes.

Observation Time — definition of observation time start and end

Start of observation timeBegins at the time the order is written to place an enrollee in observation status or when an enrollee presents with an order for observation.

End of observation time