Health Information Management

Q/A: Report correct revenue code for observation

APCs Insider, August 27, 2010

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Q: A physician signs an order for a patient to be placed in observation. Should we bill the hours with revenue code 0761 and HCPCS Level II code G0378 or revenue code 0762 without a HCPCS code?

A: Revenue code 0762 (observation hours) is used to bill hours of observation covered by Medicare with G0378 (hospital observation service, per hour). Coverage requires that a physician order medically necessary observation and that the hospital comply with all other conditions of coverage (i.e. physician supervision). CMS also has indicated that room resources for outpatients that are not covered because the physician did not write an order but represent covered costs to the hospital may be billed with this revenue code with a charge, number of hours, and without a HCPCS code.

Revenue code 0761 (treatment room) arguably may also be an appropriate place to bill for these charges even though CMS has specifically also authorized use of 0762 and it may more appropriately match revenue to expenses. Revenue code 0761 is appropriate for those separately payable services that are sometimes provided in beds, such as infusions and chemotherapy.



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