Subject:
Observation Care
Description:
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IMPORTANT NOTE:
The purpose of this policy is to provide general information applicable to the administration of health benefits that Horizon Blue Cross Blue Shield of New Jersey and Horizon Healthcare of New Jersey, Inc. (collectively “Horizon BCBSNJ”) insures or administers. If the member’s contract benefits differ from the medical policy, the contract prevails. Although a service, supply or procedure may be medically necessary, it may be subject to limitations and/or exclusions under a member’s benefit plan. If a service, supply or procedure is not covered and the member proceeds to obtain the service, supply or procedure, the member may be responsible for the cost. Decisions regarding treatment and treatment plans are the responsibility of the physician. This policy is not intended to direct the course of clinical care a physician provides to a member, and it does not replace a physician’s independent professional clinical judgment or duty to exercise special knowledge and skill in the treatment of Horizon BCBSNJ members. Horizon BCBSNJ is not responsible for, does not provide, and does not hold itself out as a provider of medical care. The physician remains responsible for the quality and type of health care services provided to a Horizon BCBSNJ member.
Horizon BCBSNJ medical policies do not constitute medical advice, authorization, certification, approval, explanation of benefits, offer of coverage, contract or guarantee of payment.
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According to the Milliman Care Guidelines (MCG), observation care spans the gap between outpatient and inpatient care. It encompasses both emergency department observation (spanning more than the usual 2-hour to 4-hour ER visit time frame) and care provided in a dedicated unit or other specific hospital-based observation care setting.
Observation care may be appropriate for patients requiring short-term evaluation for a condition, treatment for a known condition, or repeat or re-evaluation to determine the patient's diagnosis and care needs.
Observation care is usually completed in less than 24 hours. In most patients, observation care results in either an inpatient admission (i.e., meeting clinical indications for admission to inpatient care) or discharge from observation care (i.e., meeting observation care discharge criteria with subsequent follow-up care performed as an outpatient).
Policy:
(NOTE: The following criteria are based on the Milliman Care Guidelines 24th Edition for Observation Care OGC: OC-022 and the Novitas CMS LCD. This Policy shall not apply if the observation services have been contracted.
For Medicare Advantage, Medicaid and FIDE-SNP, please refer to the Coverage Sections below for coverage guidance.)
I. Observation care is considered medically necessary for a member who meets ALL of the following lettered criteria:
A. It is beyond the scope of usual outpatient care episodes; and
(NOTE: According to MCG, "Most acute evaluation and treatment episodes in a usual outpatient setting, e.g., emergency department evaluation, are completed in less than 3 to 6 hours. Some treatment settings, e.g., infusion center, may provide care for longer periods of time.")
B. It is expected to be short term (generally less than 24 hours, and not to exceed 48 hours); and
(NOTE: According to MCG, "Observation care should be undertaken with the anticipation that it will generally last no more than 24 hours - although in some rare situations it may be appropriate to continue for a longer period of time. It is anticipated that within this time period it will be determined whether a patient is appropriate for discharge and outpatient follow-up, or conversely is not and should be admitted for inpatient care.")
C. It is indicated for one or more of the following:
1. diagnostic evaluation is needed (e.g., rule out MI), or
2. acute treatment and response evaluation is needed (e.g., asthma), or
3. monitoring for event (e.g., arrhythmia) or recovery (e.g., from drug ingestion) is needed
II. Examples of clinical conditions for which observation care is medically necessary:
Patient has clinical condition for which observation care is needed as indicated by 1 or more of the following:
· Significant adverse reaction to treatment (eg, significant allergy to outpatient medication, with need to observe early response to treatment)
· Monitoring needed after treatment (eg, response to treatment in COPD, CHF, asthma, and other disorders where a fairly rapid response is possible)
· Abnormal finding (eg, from laboratory test, imaging study, physical examination) prompting significant concern that requires immediate follow-up assessments so as to finalize diagnosis or at the least rule out those conditions that cannot be followed and treated in the outpatient setting
· Cardiovascular abnormalities (eg, hypertensive urgency, tachycardia, monitoring for cardiac injury
· Respiratory abnormalities (eg, dyspnea, bronchospasm, tachypnea)
· Infectious processes (eg, cellulitis, observation for antibiotic or hydration response)
· Neurologic abnormalities (eg, unexplained altered mental status, new focal neurologic finding)
· Gastroenterologic problems (eg, suspected pancreatitis, evaluation for suspected ileus, obstruction, possible appendicitis, observe response to hydration)
· Obstetric issues (eg, suspected or incomplete spontaneous abortion, suspected ectopic pregnancy, or preterm labor)
· Head and neck disease (eg, acute glaucoma, labyrinthitis, headache)
· Electrolyte or metabolic derangements (eg, hypernatremia, hyponatremia, hyperkalemia, hypokalemia)
· Injuries (eg, snake bite, trauma)
· Control of significant vomiting
· Temperature abnormalities requiring further evaluation
· Poisoning
· Severe pain requiring acute management
· Behavioral health issues requiring further evaluation and disposition arrangement, including patient who is 1 or more of the following
· Danger to self (eg, self-mutilating or suicidal behavior)
· Danger to others (eg, assaultive or homicidal behavior)
· Incapacitated because of grave disability (eg, severe regression with inability to provide for self)
· Experiencing withdrawal or other drug-induced disorder
· Monitoring or clinical intervention needed, including 1 or more of the following:
· Repetitive vital signs, neurologic signs, or vascular checks
· Cardiac or respiratory monitoring
· Fetal monitoring
· IV fluid replacement
· IV medication or electrolyte infusion
· Oxygen supplementation
· Respiratory therapy
· Rapid diagnostic testing (eg, observation pending laboratory or other testing results)
· Other care requirements that exceed usual outpatient care
· Child whose situation includes 1 or more of the following:
· Clinical response to outpatient therapy uncertain
· Outpatient supervision by parents or caregivers uncertain
III. Observation care discharge criteria:
A. Inpatient admission or transition to admission from observation care when clinical indications for admission to inpatient care are met; or
(NOTE: According to MCG, "Transition to inpatient admission and continued care is indicated when a condition, e.g., acute MI, is diagnosed requiring a long-term - usually longer than 24 hours - stay, e.g., acute MI, or when long-term - usually longer than 24 hours - treatment or monitoring is needed for a condition, e.g., persistent severe asthma.")
B. Discharge to non-acute care follow-up when all of the following criteria are met:
1. acute signs, symptoms, and other findings are resolved or adequately improved; and
2. care requirements are appropriate for non-acute care setting; and
3. adequate evaluation are completed (as indicated) and negative for condition requiring inpatient admission.
IV. Examples of services for which observation care is not considered medically necessary include, but are not limited to, the following:
- convenience of the physician, patient and/or family;
- services furnished as part of the standard preparation for or standard recovery from diagnostic testing, uncomplicated treatment or procedure, etc.
Medicare Coverage:
Per Medicare Benefit Policy Manual Chapter 6, Section 20.6: Outpatient Observation Services, Observation services are covered only when provided by the order of a physician or another individual authorized by state licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient tests. All hospital observation services, regardless of the duration of the observation care, that are medically reasonable and necessary are covered by Medicare. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours.
Per Article A52985, general standing orders for observation services following all outpatient surgery are not recognized. Hospitals should not report as observation care, 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. Observation services should not be ordered by the physician for future, elective outpatient surgeries.
For additional information and eligibility, refer to:
Medicare Benefit Policy Manual. Chapter 6 - Chapter 6, Section 20.6: Outpatient Observation Services. Available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c06.pdf.
Local Coverage Article: Acute Care: Inpatient, Observation and Treatment Room Services (A52985). Available to be accessed at Novitas Solutions, Inc., Medical Policy Search page: https://www.novitas-solutions.com/webcenter/portal/MedicareJL/pagebyid?contentId=00024370.
Medicaid Coverage:
For members enrolled in Medicaid and NJ FamilyCare plans, Horizon BCBSNJ applies the above medical policy.
FIDE SNP:
For members enrolled in a Fully Integrated Dual Eligible Special Needs Plan (FIDE-SNP): (1) to the extent the service is covered under the Medicare portion of the member’s benefit package, the above Medicare Coverage statement applies; and (2) to the extent the service is not covered under the Medicare portion of the member’s benefit package, the above Medicaid Coverage statement applies.
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Horizon BCBSNJ Medical Policy Development Process:
This Horizon BCBSNJ Medical Policy (the “Medical Policy”) has been developed by Horizon BCBSNJ’s Medical Policy Committee (the “Committee”) consistent with generally accepted standards of medical practice, and reflects Horizon BCBSNJ’s view of the subject health care services, supplies or procedures, and in what circumstances they are deemed to be medically necessary or experimental/ investigational in nature. This Medical Policy also considers whether and to what degree the subject health care services, supplies or procedures are clinically appropriate, in terms of type, frequency, extent, site and duration and if they are considered effective for the illnesses, injuries or diseases discussed. Where relevant, this Medical Policy considers whether the subject health care services, supplies or procedures are being requested primarily for the convenience of the covered person or the health care provider. It may also consider whether the services, supplies or procedures are more costly than an alternative service or sequence of services, supplies or procedures that are at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of the relevant illness, injury or disease. In reaching its conclusion regarding what it considers to be the generally accepted standards of medical practice, the Committee reviews and considers the following: all credible scientific evidence published in peer-reviewed medical literature generally recognized by the relevant medical community, physician and health care provider specialty society recommendations, the views of physicians and health care providers practicing in relevant clinical areas (including, but not limited to, the prevailing opinion within the appropriate specialty) and any other relevant factor as determined by applicable State and Federal laws and regulations.
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Index:
Observation Care
References:
1. Milliman Care Guidelines: Inpatient & Surgical Care 20th Edition. Observation Care Guidelines. Copyright © 2016 MCG Health, LLC.
2. Novitas Solutions, Inc. Local Coverage Article: Acute Care: Inpatient, Observation and Treatment Room Services (A52985). Available at https://www.cms.gov/medicare-coverage-database/details/article-details.aspx?articleId=52985&ver=11&ContrId=317&ContrVer=1&SearchType=Advanced&CoverageSelection=Both&NCSelection=NCA%7cCAL%7cNCD%7cMEDCAC%7cTA%7cMCD&ArticleType=SAD%7cEd&PolicyType=Final&s=38&KeyWord=observation&KeyWordLookUp=Title&KeyWordSearchType=Exact&kq=true&bc=IAAAABAAEAAAAA%3d%3d&
3. Novitas Solutions, Inc. Local Coverage Article: Acute Care: Inpatient, Observation and Treatment Room Services (A52985). Available at https://www.cms.gov/medicare-coverage-database/details/article-details.aspx?articleId=52985&ver=31&name=314*1&UpdatePeriod=765&bc=AAAAEAAAAAAA&
4. Milliman Care Guidelines: Inpatient & Surgical Care 23nd Edition. General Criteria: Observation Care. Copyright © 2019 MCG Health, LLC.
5. Milliman Care Guidelines: Inpatient & Surgical Care 24th Edition. General Criteria: Observation Care. Copyright © 2020 MCG Health, LLC.
Codes:
(The list of codes is not intended to be all-inclusive and is included below for informational purposes only. Inclusion or exclusion of a procedure, diagnosis, drug or device code(s) does not constitute or imply authorization, certification, approval, offer of coverage or guarantee of payment.)
CPT*
99217
99218
99219
99220
99224
99225
99226
99234
99235
99236
HCPCS
* CPT only copyright 2020 American Medical Association. All rights reserved. CPT is a registered trademark of the American Medical Association.
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Medical policies can be highly technical and are designed for use by the Horizon BCBSNJ professional staff in making coverage determinations. Members referring to this policy should discuss it with their treating physician, and should refer to their specific benefit plan for the terms, conditions, limitations and exclusions of their coverage.
The Horizon BCBSNJ Medical Policy Manual is proprietary. It is to be used only as authorized by Horizon BCBSNJ and its affiliates. The contents of this Medical Policy are not to be copied, reproduced or circulated to other parties without the express written consent of Horizon BCBSNJ. The contents of this Medical Policy may be updated or changed without notice, unless otherwise required by law and/or regulation. However, benefit determinations are made in the context of medical policies existing at the time of the decision and are not subject to later revision as the result of a change in medical policy
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