Physicians Practice: Understanding Observation Codes

The Centers for Medicare & Medicaid Services (CMS) and many insurance payers are analyzing medical necessity of a one-day length of stay for inpatient admissions to hospitals versus observation. AAPC’s National Advisory Board Member Relations Officer Melody S. Irvine, CPC, CPMA , CEMC, CFPC, CPC-I, CCS-P, CMRS, recently published an article in Physicians Practice that explained the two sets of observation codes and how to make sure everyone is on the same page for billing to avoid revenue consequences for hospitals and physicians.

“I highly recommend auditing observation visits on a regular basis to prevent revenue consequences,” she says. “If the medical record documentation or the patient condition appears to fail to meet standardized admission criteria you could be a target for a RAC audit and could risk repayments to Medicare.”

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