CMS says you’ll get paid for observation

Has your observation unit shut its doors in response to lack of reimbursement under ambulatory payment classifications (APCs)? If so, you may want to rethink that decision. The Baltimore-based Centers for Medicare & Medicaid Services (CMS) has added a new APC code for observation services for chest pain centers in EDs.

"CMS corrected their mistake in missing this the first time around," says Raymond D. Bahr, MD, FACP, FACC, president of the Society of Chest Pain Centers and Providers and medical director of The Paul Dudley White Coronary Care System at St. Agnes HealthCare, both in Baltimore.

On Aug. 24, 2001, CMS released the proposed rule revising the Medicare hospital outpatient prospective payment system for 2002. Currently, there is no separate reimbursement for observation. The costs are rolled into the payment rates for other services, says Candace E. Shaeffer, RN, MBA, vice president of coding/quality management for Lynx Medical Systems, a Bellevue, WA-based consulting firm specializing in coding and reimbursement for emergency medicine.

CMS now says it will create APC 0339 to provide payment for an observation stay under certain circumstances, she explains. According to Shaffer, the new APC code likely will not be implemented until April 1, 2002, since CMS has delayed implementation of the 2002 outpatient prospective payment system (OPPS) changes. (For more information on this topic, see "APCs have disturbing impact on emergency observation services" in ED Management, May 2001.)

The new APC code was added after much controversy erupted over the lack of reimbursement, resulting in a consensus among groups including the American College of Cardiology, the American Heart Association, and the American College of Emergency Physicians.

"At an early stage, we were able to engage HCFA [Health Care Financing Administration, now CMS] administrators who wrote the previous outpatient regulation," says Bahr. "We made them aware of the medical advances which have taken place in the care of patients with acute coronary syndrome." These include a system for chest pain evaluation in the ED including an "attack approach" for patients with acute myocardial infarction (AMI), and observation for some chest pain patients over time, Bahr explains.

This approach results in fewer AMI patients mistakenly being sent home and fewer inappropriate admissions to the hospital, with a significant reduction in health care costs, says Bahr. CMS officials were made aware of the advances in heart attack care through the collaborative efforts of ED physicians and cardiologists, says Bahr. "To put this chest pain center approach into place in the ED, hospital administrators needed to have the proper reimbursement," he says.

There is now separate payment for patients with chest pain, congestive heart failure, and asthma who are observed in the ED. "This will allow EDs to operate chest pain centers with observation services without a financial loss," says Bahr. "In turn, that will allow CEOs and COOs to provide a necessary service for the community." However, he adds that there is a stipulation that chest pain centers must be certified to obtain reimbursement under APCs. To be certified, a chest pain center must have the following, he says:

• an attack strategy;

• an observational plan;

• a cardiac outreach plan;

• adequate staffing; and

• a continuous quality improvement plan involving ED physicians, cardiologists, and critical care nurses. "Only then can they be certified and receive reimbursement for observational services," says Bahr.

Bahr predicts "exponential growth" of chest pain units as a result of the new APC code. "We are already seeing this growth," he says. "Within the next two or three years, we expect a chest pain center in almost every hospital in the United States."


For more information on getting paid for observation services, contact:

Raymond Bahr, MD, FACP, FACC, St. Agnes HealthCare, 900 Caton Ave., Baltimore, MD 21229. Telephone: (410) 368-3200. Fax: (410) 368-3207. E-mail:

Candace E. Shaeffer, RN, MBA, Lynx Medical Systems, 15325 S.E. 30th Place, Suite 200, Bellevue, WA 98007. Telephone: (425) 641-4451. Fax: (425) 641-5596. E-mail:


The complete text of Medicare Program; Proposed Changes to the Hospital Outpatient Prospective Payment Systems and Fiscal Year 2002 Rates (CMS 1159-P) can be accessed at