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(Editor’s note: This is the first of a two-part series on ED observation services. This month, we cover ways to increase reimbursement under ambulatory payment classifications [APCs] and from non-Medicare payers. Next month, we explore reasons for nonpayment and tell you how to make your observation unit cost-effective.)
ED observation units shutting their doors. Plans for chest pain centers or observation units being abandoned by hospital administrators. Patients who are prime candidates for observation being admitted or sent home. This is the devastating aftermath of the Baltimore, MD-based Health Care Financing Administration (HCFA) switch to ambulatory payment classifications (APCs), which do not reimburse separately for ED observation of Medicare outpatients, according to experts interviewed by ED Management.
When the news first hit that no separate reimbursement would be given for observation services, an alarm bell sounded in EDs nationwide. "Shortly afterward, we took an informal survey of EDs across the country. Over 40 EDs reported that chest pain units or observation units were either closed, or plans to add them were put on hold because of this," 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 Health Care, both in Baltimore, MD.
"Many hospitals have closed their observation units due to the APC issue," reports Louis Graff, MD, FACEP, FACP, associate chief of emergency medicine at New Britain (CT) General Hospital. "Half of the units in Connecticut have closed," Graff says.
This disturbing trend is continuing, says Bahr. "Observation units are being put in a holding pattern, because the perception across the country is that payment will not be made," he says. However, Bahr says this perception is not entirely accurate, and that many ED managers do not know how to receive reimbursement for services offered in observation. "It is there, but it is difficult to find," he says. "Everyone is fending for themselves to figure this out. There is a lot of confusion."
Here are some ways to maximize your reimbursement for patients in observation:
• Bill for multiple APCs for ED visits as appropriate. Thorough documentation and accurate coding is the crucial factor in getting the maximum payments with APCs, Graff advises. "You can get multiple APCs per ED visit, but only if you have complete documentation and coding," he says. There are multiple APCs for procedures that an ED patient obtains while under observation that can be coded for, Graff explains. "That way, the lack of an APC for observation is not a complete loss," he says. Examples of this include a repeat EKG, exercise stress testing, and cardiac scanning, says Graff.
A procedure that is performed and appropriately documented while in the ED or observation may be assigned, as long as it is separately billable, not a component part of another procedure, or otherwise inappropriate to assign, says Candace E. Shaeffer, RN, MBA, vice president of coding/quality management for Lynx Medical Systems, a Bellevue, WA consulting firm specializing in coding and reimbursement for emergency medicine. Shaeffer provides the following examples of such procedures:
Surgical procedures, such as a wound repair, more likely would be performed in the ED, but if wounds are repaired in observation, you could assign the procedure code, she adds.
• Focus on other payers. Commercial payers might still pay for observation services, and ED physicians still are reimbursed for the professional portion of observation services, notes Shaeffer.
Medicare is the payer for only 20-30% of the patients in an ED observation unit, estimates Graff. "The other payers are still paying for observation," he notes. "They are happy about it, since their charge from the hospital is half that of what the charges would be if the patient was admitted for the workup and treatment." Also, the physician’s professional fee is still paid, Graff notes. "If the physicians are salaried, the hospital gets this fee," he says. (See table, below.)
How to Increase Payments from Non-Medicare Payers
|Have observation services policies and procedures in place that specify appropriate admissions and operating procedures. Services must be reasonable and medically necessary in order to receive reimbursement.|
|Ensure that only appropriate patients are admitted to observation. For instance, the recovery time for a surgical procedure would be an inappropriate service for separately reported observation services, she explains.|
|Make sure there is a physician order to admit to observation status.|
|Accurately document observation services and admit and discharge times.|
|Accurately assign and report CPT and ICD-9-CM diagnosis codes and numbers of units (hours).|
|Review payer Explanation of Benefits (EOBs), and follow-up/appeal any inappropriate claim denials or down coding.|
|Source: Candace E. Shaeffer, RN, MBA, Vice President of Coding/Quality Management, Lynx Medical Systems, Bellevue, WA.|
• Don’t close observation units. ED observation is best for patient care and should be offered regardless of reimbursement issues, urges Graff. "For example, with an ED observation unit, the missed myocardial infarction (MI) error rate is lowered tenfold, from 5% to less than 0.5%," he says.1 To avoid misdiagnosing patients with critical illnesses such as acute MI or appendicitis who present atypically, your ED needs an observation unit, Graff argues. (See charts that illustrate the impact of observation patients being sent home or admitted, below.)
There are also potential liability risks associated with removal of observation, notes Graff. If the hospital had a 60% admit rate for chest pain before observation, this would correlate with a 4%-5% missed myocardial infarction (MI) error rate and 50% of admissions having no serious disease, he notes. "The liability risk will depend how physician thresholds for admission changed after observation was removed," he explains. "Either they continued their high rule-out MI evaluation rate and changed to high admit rates to ensure high quality of care — and few missed MI errors — or they went back to their old moderate admit rates, which correlates with a moderate risk of missed-MI errors," he says.
The odds are if an acute MI was missed when you have a high rule out rate, the patient had a very atypical presentation and no one could have made the diagnosis, says Graff. "In this scenario, the hospital and physician will be OK if the case does go to trial," he adds.
But if the rule out rate is low, the odds are the patient whose diagnosis was missed had many clinical findings that a physician should have picked up on, and recommended a workup and rule out MI with admission, says Graff. "In these circumstances the hospital and physician will probably lose in the malpractice trial," he explains. Thus, the ED director and the hospital risk manager should be very aware of their rate for ruling out MI and ED disposition pattern, says Graff. The patient who suffers a missed MI error has a 100% increased risk of death, Graff warns. "This is the number one malpractice problem of emergency physicians, internists, and family practitioners," he underscores.
HCFA is considering adding a separate APC for observation. "Hopefully, the problem of no APC for observation will be resolved this year," Graff predicts. (Editor’s note: For details, go to the Society of Chest Pain Centers and Providers web site [www.scpcp.org] and click on "HCFA discussion on observation services.")
HCFA directs providers to report observation services under revenue code 762, Shaeffer says. "HCFA will use this data when considering revision of the APC rules pertaining to observation services," she says.
1. Graff LG, Dallara J, Ross MA, et al. Impact on the care of the emergency department chest patient from the Chest Pain Evaluation Registry (CHEPER) Study. Am J Cardiol 1997; 80:563-568.
For more information on observation services and reimbursement, contact:
• Raymond Bahr, MD, FACP, FACC, St. Agnes Health Care, 900 Caton Ave., Baltimore, MD 21229. Telephone: (410) 368-3200. Fax: (410) 368-3207. E-mail: email@example.com.
• Louis Graff, MD, FACEP, FACP, Department of Emergency Medicine, New Britain General Hospital, 100 Grand St., New Britain, CT 06050. Telephone: (860) 224-5675 Fax: (860) 224-5774. E-mail: firstname.lastname@example.org.
• Candace E. Shaeffer, RN, MBA, Vice President of Coding/Quality Management, Lynx Medical Systems, 15325 SE 30th Place, Suite 200, Bellevue, WA 98007. Telephone: (800) 767-5969 ext. 2039 or (425) 641-4451. Fax: (425) 641-5596. E-mail: email@example.com.