(Medicare Claims Processing Manual)

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 payment 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.  Beg inning 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 (Comprehensive 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 comprehensive  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 must 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 admitted 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 report ed for observation:    A Type A or B emergency department visit (CPT codes 99281 through 99285 or HCPCS codes G0380 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 observation 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 that 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 Observation 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 encount er.  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 observation 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 Socia l 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 or 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 (glomerular filtration rate (GFR) 15 59 ml/min/1.73m). Effective January 1, 2004, the Centers for Medicare & Medicaid Services (CMS) updated the definition of di abetes to be as follows: Diabetes is defined as diabetes mellitus, a condition of abnormal glucose metabolism 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 national 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 sam e 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 following 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 exceeded 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 with 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, di agnosis, 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 the 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 beneficiarys 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 bene ficiary 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.   Documentation must be noted by the referring physician in the beneficiarys medical record. Referrals must be made for each episode of care and reassessments prescribed during an episode of care as a result of a change in medical condition or diagnosis. Th e National Provider Identifier (NPI) number of the referring physician must be on the Form CMS -1500 claim submitted by a registered dietitian or nutrition professional. The A/B MAC (B) or A/B MAC (A) shall return claims that do not contain the referring NP I of the referring physician.   NOTE: Additional covered hours of MNT services may be covered beyond the number of hours typically covered under an episode of care when the physician determines there is a change of diagnosis or medical condition within such episode of care that makes a change in diet necessary. Appropriate medical review for this provision should only be done on a post payment basis. Outliers may be judged against nationally accepted dietary or nutritional protocols in accordance with 42 CFR 410.132 (a).   300.3 - Dietitians and Nutritionists Performing MNT Services  (Rev. 11426; Issued: 05- 20-22; Effective: 01 -01-22; Implementation: 07 -05-22)   A. Professional Standards for Dietitians and Nutritionists   For Medicare Part B coverage of MNT, only a registered dietitian or nutrition professional may provide the services. Registered dietitian or nutrition professional means a dietitian or nutritionist licensed or certified in a state as of December 21, 2000 (they are not required to meet any other requirements); or an individual whom, on or after December 22, 2000: