Incorrect Billing for Part A Outpatient Observation Services

Description of Issue

The CMS billing instructions for G0378 indicate a single line of coding with a NOS of at least eight, with all UOS on a single line and the DOS being the date of the original observation order. Claim editing changes implemented in July, 2021 are correctly rejecting observation services billed on separate lines. If multiple lines of G0378 are reported on a claim, the claim will now RTP with reason code W7051. All units of service must be reported on a single line to resolve the edit. If you have submitted an appeal request on a claim with inappropriate billing of multiple lines of G0378, any claim adjustment due to the appeal decision will result in the lines being combined. This may cause payment to then be made under a comprehensive APC on a 13X bill type, if units of G0378 are equal to or greater than 8 and you also billed on the same line item date of service or the day before the date reported for observation:

• A Type A or B emergency department visit (CPT codes 99281 through 99285 or HCPCS codes G0380 through G0384)
• A clinic visit (HCPCS code G0463); or
• Critical care (CPT code 99291); or
• Direct referral for observation care reported (HCPCS code G0379) (must be reported on the same date of service as the date reported for observation services.)

Appeals for these claim denials have resulted in significantly lower payments based on assignment of the comprehensive APC.

National Government Services Action

This production alert is being released as an explanation for providers who are now receiving decisions on previously denied claims that have been submitted for redetermination (appeal). NGS will continue to process these claims and appeals based on CMS guidelines.

Provider Action

Providers are reminded that, as per the CMS Internet-Only Manual (IOM) Publication 100-04, Medicare Claims Processing Manual, Chapter 4, Section 290.2.2:
“If a period of observation spans more than 1 calendar day, all of the hours for the entire period of observation must be included on a single line and the date of service for that line is the date that observation care begins.” Providers are required to bill these services correctly and appropriately according to CMS observation guidelines. The date of service for the initial observation service is the date on which the observation order was issued.

No further action needed.

Proposed Resolution/Fix

Closed