CMS incorrectly uses the term “observation.”
As expected, the Centers for Medicare & Medicaid Services (CMS) released the 2023 Outpatient Prospective Payment System (OPPS) and Physician Fee Schedule (PFS) rules last week. While I have not read them in their entirety yet, it did not take me long to find things to whine about.
The first whine: CMS released two versions of each of the rules. The first came out on Tuesday afternoon, and the next day they released another version. The first one is labeled as “HHS (U.S. Department of Health and Human Services) approved, but not yet placed on public display.” What does that mean? How do you post a document for the public to read, yet not put it on public display? Perhaps I can accept that as another one of the many quirks of federal rules and terminology, but then they released the public display versions the next day, and lo and behold, it is in the same format, but the PFS rule is 351 pages shorter and the OPPS rule is 203 pages shorter. What is in those pages that they removed? I am going to be searching for the secrets CMS apparently didn’t want us to read.
The second whine, and it kept me up at night, is that 20 times in the PFS rule, CMS used the words “observation status.” Twenty times! And they use the proper term “observation services” only 19 times. They know that observation is a service provided to outpatients and not a status, and in fact, they have recouped money from providers that billed for observation when doing so was deemed inappropriate. It’s frustrating when the rule-makers use their own terminology incorrectly.
Why is this a big deal? Well, as I described in past episodes of Monitor Mondays about the proposed rule, the new code changes, written by the Current Procedural Terminology (CPT©) committee and adopted by CMS, did absolutely nothing to address the increasing number of patients who are in the hospital as outpatient, but not receiving observation services, such as the patient staying overnight as part of routine recovery after an outpatient surgery.
I whined about it here and I submitted comments to CMS and the American Medical Association (AMA), and it appears their answer is that for such patients, the doctor caring for them should bill their visits with the office visit codes. Now, officially, these codes are called “office and other outpatient visit” codes, but the whole idea of this code simplification was not only to reduce the annoying and dangerous copy-and-pasting, but also to make code selection easier. (This is where Clark Anthony should insert the sound made by a video game when your character dies, because CMS and the AMA failed miserably.)
In addition, in the final rule CMS indicated that when a patient is receiving observation services, the attending can bill the hospital visit codes, but any specialist who sees the patient would have to use office visit codes. That is not simplification.
But just to reassure you, there were no changes to the two-midnight rule, and only minor changes to the inpatient-only list, but also not one word about the continuing unacceptable practices of the Medicare Advantage (MA) plans.
It finally happened! The Centers for Medicare & Medicaid Services (CMS) finally released the 2026 Outpatient Prospective Payment Final Rule on Friday at 4:15 pm,
EDITOR’S NOTE: Ritesh Ramesh, CEO for MDaudit, appeared on Monitor Monday to report his company’s findings on nationwide audit trends. The rate of payer audits
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