Focus on Observation

Observation: Admission date is first inpatient day

Physician's available knowledge is key

When a patient with Medicare Part A coverage is furnished observation bed services and is then admitted as an inpatient, the day on which the patient is formally admitted is considered the first inpatient day. That date is entered as the admission date on the UB 92 claim form. An inpatient's status may not be changed retroactively to observation outpatient. The physician's intent to admit at the time the patient entered the facility is the controlling factor and cannot be changed retroactively.

Medicare gives physicians four factors to consider when making decisions on acute care admissions:

· the severity of patients' signs and symptoms;

· the complexity of treatment plans;

· the medical predictability of adverse outcomes;

· the reasonable expectation that patients will need more than 24 hours of inpatient care.

The principal diagnosis for a patient admitted to acute care following observation is determined by applying the Uniform Hospital Discharge Data Set guideline, which states, "that condition established after study to be chiefly responsible for occasioning the admission to the hospital for care." The diagnosis prompting the physician's decision to make the patient a formal admission may not be the same as the reason for transfer to observation status. When two conditions equally meet the definition of principal diagnosis, either may be sequenced first.

What did you know, and when?

The determining factor is not what happens after the fact, but what the physician knew at the time. Medicare gives the following example: A patient comes to the ED at 11 p.m. with the signs and symptoms indicating a kidney stone. The physician admits the patient, orders the appropriate treatment, and schedules the patient for an intravenous pyelography the following morning. The next morning, the patient passes the stone, feels fine, wants to go home, and so is discharged.

The question to Medicare is: Will that admission be denied because the patient was in the hospital for less than 24 hours? Medicare says, "No," because at the time the physician made the decision, it was reasonable to believe that the patient would need more than 24 hours of care.