Q&A: Calculating carve outs from observation services

Q: How are you carving out other services from observation? Are you using a standard time or calculating based on the time off the nursing unit? What services are you carving out? Are you carving out services for other non-Medicare payers?

A: Typically, I see hospitals carving out the specific time if it is a procedure such as surgery or cath lab when there is a specific place in the record where the time is documented. Many surgery departments bill by time, so this is an "easy" way to capture that time. However, you will run yourself (and your clinical staff) crazy trying to figure out how long the patient was in nuclear medicine or how long the echocardiogram took. Ask the departments for an average time for the procedures. Then, through whatever process/team is responsible, once it is agreed upon, make a list of what the carve out time is for each procedure/type of procedure and publish it internally for consistency in application. Using average times for procedures is allowed under the CMS guidance. You may want to consider making the list an addendum to your overall observation policy. Then when updates are indicated, the list can be updated (date is recommended) without having to go through a full policy review process. 

Note: This question can be found in the compliance category of the NAHRI Forums where you can find answers to questions on a variety of topics from billing and claims to compliance to reimbursement. This question was answered by Denise Williams, COC, senior vice president of the revenue integrity division and compliance auditor at Revant Solutions in Trussville, Alabama.