Observation services
What is observation?
Observation is a well-defined set of specific, clinically appropriate services provided to patients before a decision can be made regarding inpatient admission or discharge. This includes:
- Short term treatment
- Assessment
- Reassessment
Observation services are covered only when provided under a physician's order or someone authorized by state law and hospital staff bylaws to admit to inpatient status or order outpatient tests.
The decision to admit or discharge should be made within 48 hours, usually less than 24 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours.
Observation status is generally assigned to patients who present to the emergency department and require treatment/monitoring before a decision to admit or discharge can be made.
A "direct referral" occurs when a physician in the community refers a patient to the hospital for outpatient observation, bypassing the clinic or emergency department (ED) visit.
Not observation
The following are not considered covered services for observation:
- Services provided for the convenience of the patient, patient's family, or physician.
- Services covered under Part A (medically appropriate inpatient admission).
- Services that are part of another Part B service such as postoperative monitoring during a standard recovery period (e.g., 4-6 hours), which should be billed as recovery room services.
- Standing orders for observation following outpatient surgery.
References