Observation services, as defined by the Agency for Healthcare Research and Quality (AHRQ) “is an administrative classification of patients seen in hospital emergency rooms or outpatient clinics who have unstable or uncertain conditions potentially serious enough to warrant close observation, but usually not so serious to warrant admission to the hospital.”
 
Despite this seemingly perspicuous definition, observation is far from clear cut. “The designation of ‘observation status’ patients by hospitals is not well understood and has the potential to distort traditional measures of inpatient hospital utilization,” concludes AHRQ.

With RAC audits now investigating terms of medical necessity involved in decisions about observation, hospitals, rehabilitation centers and other facilities

are at stake for major financial liability due to erroneous coding and reporting, as well as subpar patient care based on inappropriate resource utilization.

The goal of this report is to provide frontline practitioners with background information, experts’ insight and real-life examples to make observation services as nondistorted as possible, to protect your financial well-being with workflow solutions, and to enhance the day-to-day operations of your facility.

Table of Contents

Section 1: Introduction and Key Terms
This section provides a comprehensive overview of federal guidelines, national defintions, recent position statements and

some of the most-asked questions about observation services.

By Richard Scott

Section 2: What Is Observation

Amid the confusion about changes to CMS policy, there now exist new and emerging opportunities for case managers to make a difference within their facilities.

By Susan Plough, MSN, APRN, BC, CCM

Section 3: Inpatient vs. Outpatient Levels of Care

The error-free care that patients expect from their providers begins at the very first interaction, when the physician determines the appropriate level of care, with the help of case management staff.

By Deirdre Hodges, RN, CCM

Section 4: Observation Services: Getting It Right
Hospitals can incur heavy expenses for incorrect status designation. The right process measures can help keep a facility’s money where it belongs: in their pockets.

By Marcia Colone, PHD, ACM

Section 5: 5 Surefire Strategies for Capturing Appropriate Observation Service

As with most compliance efforts, the more strategic checks and balances in place the better. This section presents five compliance-promoting workflow measures aimed to boost your operating prowess.

By Demetra Reid, RN-BC, BSN, MSHA, CCM

Section 6: Observation Service: Uncomplicating the Complicated
Examples and case studies highlight how facilities can maximize revenue capture from setting the correct designation status.

By Nadene R. Taniguchi, RN, CCM, PAHM

Section 7: Observation and the Importance of Patient Understanding

Enhancing patient satisfaction is vital to any organization, and it is of particular importance in the area of patient status, where provers’ decisions can cause out-of-pocket fees to greatly fluctuate.

By Marilyn Dunne, RN, MS, CNAA, BC

Section 8: Conditions of Observation: What the Patient Should Know

A step-by-step workflow and a “conditions of observation” letter are two ways facilities can improve the awareness levels of their clients.

By Harry D. Kallipolitis, RN, BSN

Additional Materials: Continuing Education

Optimize Your Use of Observation Services offers four continuing education credits for eligible professionals. Post-test and program evaluation are included.