Awareness : OBC Tips

Observation Services Are Covered Only When:

Observation services are covered only when provided by the order of a physician or another individual authorized by State licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient tests. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. There must be a documented assessment by the Physician at 24 hour as to whether the patient is to remain in Observation, be admitted to Inpatient status or be discharged home. A second assessment is to be documented at 48 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours. Hospitals may bill for patients who are “direct admissions” to observation. A “direct admission” occurs when a physician in the community refers a patient to the hospital for observation, bypassing the clinic or emergency department (ED).

When a physician orders that a patient be placed under observation, the patient’s status is that of an outpatient. The purpose of observation is to determine the need for further treatment or for inpatient admission. Thus, a patient in observation may improve and be discharged, or be admitted as an inpatient.