(Medicare Claims Processing Manual)

Direct referral for observation is reported using HCPCS code G0379 (Direct referral for hospital observation care). Prior to January 1, 2010, the code descriptor for HCPCS code G0379 was (Direct admission of patient for hospital observation care).  Hospita ls should report G0379 when observation services are the result of a direct referral for observation care without an associated emergency room visit, hospital outpatient clinic visit, or critical care service on the day of initiation of observation service s. Hospitals should only report HCPCS code G0379 when a patient is referred directly to observation care after being seen by a physician in the community.   Payment for direct referral for observation care will be made either separately as a hospital visit under APC 5013 (Level 3 Examinations & Related Services) or packaged into payment for comprehensive APC 8011 (Comprehensive Observation Services) or packaged into the payment for other separately payable services provided in the same  encounter. For inform ation about comprehensive APCs, see 10.2.3 (Comprehensive APCs) of this chapter.   The criteria for payment of HCPCS code G0379 under either APC 5013 or APC 8011 include:   1. Both HCPCS codes G0378 (Hospital observation services, per hr.) and G0379 (Dire ct referral for hospital observation care) are reported with the same date of service.   2. No service with a status indicator of T or V or Critical Care (APC 5041) is provided on the same day of service as HCPCS code G0379.   If either of the above criteria is not met, HCPCS code G0379 will be assigned status indicator N and will be packaged into payment for other separately payable services provided in the same encounter.  Only a direct referral for observation services billed on a 13X bill type may be cons idered for a comprehensive APC payment through the Comprehensive Observation Services APC (APC 8011).  290.5.3 - Billing and Payment for Observation Services Furnished Beginning January 1, 2016  (Rev. 3425, Issued: 12- 18-15, Effective: 01- 01-16, Implementation: 01 -04-16)  Observation services are reported using HCPCS code G0378 (Hospital observation service, per hour).  Beginning January 1, 2008, HCPCS code G0378 for hourly observation services is assigned status indicator N, signifying that its p ayment is always packaged.  No separate payment is made for observation services reported with HCPCS code G0378, and APC 0339 is deleted as of January 1, 2008.  In most circumstances, observation services are supportive and ancillary to the other services provided to a patient.  Beginning January 1, 2016, in certain circumstances when observation services are billed in conjunction with a clinic visit, Type A emergency department visit (Level 1 through 5), Type B emergency department visit (Level 1 through 5), critical care services, or a direct referral as an integral part of a patients extended encounter of care, comprehensive payment may be made for all services on the claim including, the entire extended care encounter through comprehensive APC 8011 (Com prehensive Observation Services) when certain criteria are met. For information about comprehensive APCs, see 10.2.3 (Comprehensive APCs) of this chapter.   There is no limitation on diagnosis for payment of APC 8011; however, comprehensive APC payment will not be made when observation services are reported in association with a surgical procedure (T status procedure) or the hours of observation care reported are less than 8.  The I/OCE evaluates every claim received to determine if payment through a compre hensive  APC is appropriate.  If payment through a comprehensive  APC  is inappropriate, the I/OCE, in conjunction with the Pricer, determines the appropriate status indicator, APC, and payment for every code on a claim.   All of the following requirements mus t be met in order for a hospital to receive a comprehensive APC payment through the Comprehensive Observation Services APC (APC 8011):   1.  Observation Time   a. Observation time must be documented in the medical record.   b. Hospital billing for observation services begins at the clock time documented in the patients medical record, which coincides with the time that observation services are initiated in accordance with a physicians order for observation services.   c. A beneficiary's time receiving observation services (and hospital billing) ends when all clinical or medical interventions have been completed, including follow -up care furnished by hospital staff and physicians that may take place after a physician has ordered the patient be released or admit ted as an inpatient.   d. The number of units reported with HCPCS code G0378 must equal or exceed 8 hours.  2.  Additional Hospital Services   a. The claim for observation services must include one of the following services in addition to the reported observation services.  The additional services listed below must have a line item date of service on the same day or the day before the date reported for observation:    A Type A or B emergency department visit (CPT codes 99281 through 99285 or HCPCS codes G 0380 through G0384); or    A clinic visit (HCPCS code G0463); or    Critical care (CPT code 99291); or    Direct referral for observation care reported with HCPCS code G0379 (APC 5013) must be reported on the same date of service as the date reported for observa tion services.   b. No procedure with a T status indicator or a J1 status indicator can be reported on the claim.   3.  Physician Evaluation   a. The beneficiary must be in the care of a physician during the period of observation, as documented in the medical  record by outpatient registration, discharge, and other appropriate progress notes that are timed, written, and signed by the physician.   b. The medical record must include documentation that the physician explicitly assessed patient risk to determine tha t the beneficiary would benefit from observation care.   Criteria 1 and 3 related to observation care beginning and ending time and physician evaluation apply regardless of whether the hospital believes that the criteria will be met for payment of the extended encounter through the Comprehensive Observation Services APC (APC 8011).  Only visits, critical care and observation services that are billed on a 13X bill type may be considered for a comprehensive APC payment through the Comprehensive Observatio n Services APC (APC 8011).  Non-repetitive services provided on the same day as either direct referral for observation care or observation services must be reported on the same claim because the OCE claim -by-claim logic cannot function properly unless all services related to the episode of observation care, including hospital clinic visits, emergency department visits, critical care services, and T status procedures, are reported on the same claim.  Additional guidance can be found in chapter 1, section 50.2.2 of this manual.  If a claim for services provided during an extended assessment and management encounter including observation care does not meet all of the requirements listed above, then the usual APC logic will apply to separately payable items and services on the claim; the special logic for direct admission will apply, and payment for the observation care will be packaged into payments for other separately payable services provided to the beneficiary in the same encounter.   290.6 - Services Not Covered as Observation Services  (Rev. 1445, Issued:  02- 08-08; Effective:  01- 01-08; Implementation:  03 -10-08)  Hospitals must not bill beneficiaries directly for reasonable and necessary observation services for which the OPPS packages payment for observati on as part of the payment for the separately payable items and services on the claim.  Hospitals should not confuse packaged payment with non- coverage or nonpayment.  See the Medicare Benefit Policy Manual, Pub 100- 02, chapter 6, section 20.6 for further explanation of non- covered services and notification of the beneficiary in relation to observation care.       300 - Medical Nutrition Therapy (MNT) Services  ((Rev. 11426; Issued: 05 -20-22; Effective: 01 -01-22; Implementation: 07- 05-22)  Section 105 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) permits Medicare coverage of Medical Nutrition Therapy (MNT) services when furnished by a registered dietitian or nutrition professional meeting certain requirements. The benefit is available for beneficiaries with diabetes or renal disease, when referral is made by a physician as defined in 1861(r)(l) of the Social Security  Act (the Act) . It also allows registered dietitians and nutrition professionals to receive direct Medicare reimbursement for the first time. The effective date of this provision is January 1, 2002.  The benefit consists of an initial visit for an assessment; follow -up visits for interventions; and reassessments as necessary during the  12-month period beginning with the initial assessment (episode of care) to assure compliance with the dietary plan. Effective October 1, 2002, basic coverage of MNT for the first year a beneficiary receives MNT with either a diagnosis of renal disease o r diabetes as defined at 42 CFR, 410.130 is 3 hours. Also effective October 1, 2002, basic coverage in subsequent years for renal disease is 2 hours.   For the purposes of this benefit, renal disease means chronic renal insufficiency or the medical condition of a beneficiary who has been discharged from the hospital after a successful renal transplant within the last 36 months. Chronic renal insufficiency means a reduction in renal function not severe enough to require dialysis or transplantation (glomerula r filtration rate (GFR) 1559 ml/min/1.73m). Effective January 1, 2004, the Centers for Medicare & Medicaid Services (CMS)  updated the definition of diabetes to be as follows: Diabetes is defined as diabetes mellitus, a condition of abnormal glucose metab olism diagnosed using the following criteria: a fasting blood sugar   126 mg/dL on two different occasions; a 2 -hour post -glucose challenge  200 mg/dL on 2 different occasions; or a random glucose test over 200 mg/dL for a person with symptoms of uncontrolled diabetes.   The MNT benefit is a completely separate benefit from the diabetes self -management training (DSMT) benefit. CMS had originally planned to limit how much of both benefits a beneficiary might receive in the same time period. However, the nat ional coverage determination, published May 1, 2002, allows a beneficiary to receive the full amount of both benefits in the same period. Therefore, a beneficiary can receive the full 10 hours of initial DSMT and the full 3 hours of MNT. However, providers are not allowed to bill for  both DSMT and MNT on the same date of service for the same beneficiary.    300.1 - General Conditions and Limitations on Coverage  (Rev. 11426; Issued: 05- 20-22; Effective: 01 -01-22; Implementation: 07- 05-22)  A. General Conditions of Coverage    The follow ing are the general conditions of coverage:    A physician must make a referral and indicate a diagnosis of diabetes or renal disease. Physician is defined in 1861(r)(l) of the Act.     The number of hours covered in an episode of care may not be exceede d unless a second referral is received from the physician;    Services may be provided either on an individual or group basis without restrictions and;    For a beneficiary with a diagnosis of diabetes, DSMT  and MNT services can be provided within the same time period, and the maximum number of hours allowed under each benefit are covered. The only exception is that DSMT and MNT may not be provided on the same day to the same beneficiary. For a beneficiary wi th a diagnosis of diabetes who has received DSMT and is also diagnosed with renal disease in the same episode of care, the beneficiary may receive MNT services based on a change in medical condition, diagnosis , or treatment as stated in 42 CFR 410.132(b)(5).   B. Limitations on Coverage   The following limitations apply:    MNT services are not covered for beneficiaries receiving maintenance dialysis for which payment is made under section 1881 of the Act.   A beneficiary may not receive MNT and DSMT on t he same day.   300.2 - Referrals for MNT Services  (Rev. 11426; Issued: 05- 20-22; Effective: 01 -01-22; Implementation: 07- 05-22)  Medicare covers 3 hours of MNT in the beneficiary s initial calendar year. No initial hours can be carried over to the next calendar year. For example, if a physician gives a referral to a beneficiary for 3 hours of MNT but a beneficiary only uses 2 hours in November, the calendar year ends in December and  if the third hour is not used, it cannot be carried over into the following year. The following year a beneficiary is eligible for 2 follow -up hours (with a physician referral). Every calendar year a beneficiary must have a new referral for follow -up hours.   Referral may only be made by a physician when the beneficiary has been diagnosed with diabetes or renal disease.