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Create documentation guidelines for observation

APCs Weekly Monitor, September 8, 2006

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Create documentation guidelines for observation

QUESTION: Under what circumstances is it appropriate to report outpatient observation services performed in our birthing center, and what documentation requirements are necessary to be compliant? For example, a physician sends a patient to our hospital for "observation" services when he or she suspects the patient may be in premature labor, bleeding, etc. The observation is typically 4-10 hours, at which time staff perform fetal monitoring.

ANSWER: Observation services are designed for the physician to determine whether the patient needs to be admitted to the hospital as an inpatient. Medicare has very strict rules for when observation services are appropriate; however commercial payer policies vary significantly. The real answer to your question probably depends on who the patient's payer is. Since you describe a maternity situation, it is unlikely that this patient is a Medicare beneficiary.

Regardless of whom the payer is, your facility should have standard guidelines for documenting observation. For example, the physician order should clearly state the patient is to be placed in observation status. The order as well as the nurse's note should be dated and timed when the patient is received for care. The physician order should not indicate the patient is to be automatically discharged after a set period of time.

Some facilities have mistakenly assumed that if a patient is not admitted, then they must be in observation. This is not true. Just because a patient is in a bed for several hours does not automatically place them in observation.

Based on your description and assuming a standard definition of observation by the payer, observation seems appropriate. This is assuming that you have a valid order. It is equally important to document the time at which the doctor orders either admission or discharge. Observation should stop being billed at this point rather than when the patient leaves the facility.

Note that in the 2005 OPPS final rule, CMS regards discharge time from observation status as the clock time when all clinical or medical interventions are complete, including any necessary follow-up care furnished after a physician has ordered the release or admission of the patient. CMS notes in the rule that "observation care does not include time spent by the patient in the hospital subsequent to the conclusion of therapeutic, clinical, or medical interventions, such as time spent waiting for transportation or to go home."

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