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Welcome to the weekend, and thanks for checking in.

We’re bringing you the news from the past week as well as providing you with a look at the week ahead. And looking ahead, we have a preview of tomorrow’s edition of Monitor Mondays. 


The MOON Shot 

There continues to be buzz about the Centers for Medicare & Medicaid Services’ (CMS) proposed rule that will require hospitals to provide a standard Medicare Outpatient Observation Notice (MOON) that, unlike other notices of non-coverage, does not require the provider to say why Medicare won’t pay.

Just this past week, another email on the MOON came to my attention from a RACmonitor and Monitor Monday community member. Her question prompted an enlightened response from Ronald Hirsch, MD, and vice president of Accretive Physician Advisory Services. 

Follow the thread.

Debbie’s Question: 

Dear Chuck – we read your (Dr. Hirsch) article ‘HOTEL by the light of the MOON’ and have a question regarding a statement in the article. It was referencing GZ modifier billing for OBS hours that are considered not medically necessary – the phrasing was “as they should be doing now.” Currently we bill OBS hours up to the point of DC or to end of services provided that were order prior to DC. Do you have any CMS guidance that provides more clarification on how providers are using GZ with OBS billing? Thank you as always for providing excellent information and insight into our industry. Take care – Debbie

Dr. Hirsch’s Response:

In that article I was referring to the patient that is placed observation and spends a night and then is stable to go home but can’t get a ride or the doctor won’t discharge because it is too late or the doctor wants to keep for testing that does not require hospitalization. As you know, and is stated on the MOON, observation should not surpass 48 hours (actually two midnights- the 2014 IPPS Rule says- patients in necessary hospitalizations should not pass the second midnight without being admitted as inpatient.) In those cases, the patient’s stay is not necessary so hospitals should not be billing Medicare for the hours past the point that their medically necessary care has ended. But since you are still caring for the patient, you should put the hours on the claim but indicate it is not medically necessary.


  • Monday 8 am presents with chest pain, observation (obs) ordered at 10 am.
  • Tuesday stress test finally done and read at 7 pm as normal. Patient has no ride home.
  • Doctor orders discharge in a.m.
  • Wednesday patient leaves at 9 am, after a hearty free breakfast

The medically necessary observation was from 10 am Mon to Tues 7 pm (subtracting carve out hours) when the patient became stable and no longer needed hospital care

From Tues 7 pm to Wed 9 am was not necessary care- it was HOTEL care. 

The claim would list two lines for obs-medically necessary – G0378- 43 hours- 2 stress test hours= 41 hours not necessary- G0378-GZ- 14 hours 

Now, does CMS explicitly say to bill like this for obs? No, but a hospital should never bill CMS for services for which it does not deserve payment. You don’t get any direct money since obs is paid as an APC but the hours go on your cost report and that affects payments globally. And of course you could always give an ABN and charge the patient your hourly obs rate to spend the night. If you do that, you use modifier -GA.

QIC Study Update

We continue to receive comments about the CMS decision to suspend temporarily the QIO reviews of the Two-Midnight Rule. One reader reported:

“My organization had been having the same issue as mentioned by other listeners in your article. We had 25 claims requested back in December for the 1st round of QIO two midnight review with no response to date from Livanta and now all the claims are past or approaching the 1 year rebilling deadline for Part B services. It will be interesting to see how the concerns will be addressed.” 

We’re planning to conduct another QIO study. So, please let me know how the QIO audits have been affecting your organization, especially the types of issues they are reviewing.


RACmonitor eNews

Here are highlights of several of the articles you’ll be reading next Thursday in the RACmonitor e-news.

New CMS Instructions for MACs 

Healthcare attorney David Glaser with the law firm of Fredrikson & Byron is slated to report on a an to talk about a new instruction from CMS — one that says in a complex appeal MACs may not use a new reason to deny the claim, they can only consider issues raised in the original denial.

The New CMS Data Dump 

Senior healthcare analyst Frank Cohen of DoctorsManagement is researching a developing story for next Thursday. The 2014 Medicare data dump was released last week. “This year,” writes Cohen, “CMS included the HCC scores and when he ran an analysis against payments, the result is basically no correlation, meaning that the HCC score, contrary to what CMS has touted, has almost no value when it comes to predicting Medicare costs, which was the primary purpose of the HCC scoring system.” 

EsMD Back in the News 

Nicole Smith, vice president of operations and government services at Vyne, formerly MEA/NEA, is scheduled to report on how one provider is deploying the electronic submission of medical documents (esMD) system. By using the system the provider is saving more than $3 million in the process.

Upcoming Webcasts

You and your staff are certain to find value in the following upcoming webcasts being produced by RACmonitor.

How to Win Against Auditors Who Use Dirty Tricks Against You

Edward M. Roche, PhD, JD
Wednesday, May 25, 2016
1:30-2:30 pm. ET

Not all contract auditors are bad.  But some are, and they know how to manipulate hospital data to make the facility look like it cheated the federal government. Based on an auditor’s gross manipulation of a hospital’s claims data, a facility could end up owing millions of dollars based on an extrapolation from only 30 claims. In his upcoming webcast, New York attorney Edward Roche, PhD, JD, will reveal how facilities can learn the secrets behind the devious tricks used by unscrupulous contract auditors. Register here.

Avoid Being Wrong on Patient Rights

Ronald Hirsch, MD, FACP, CHCQM
Thursday, June 9, 2016
1:30-2:30 p.m. ET

Knowing how and when to use the right Medicare form will help your facility from providing unreimbursed and medically unnecessary care. Register here.

Audit Nation: The Documentary: Exposing Investigational Audits

Special Edition Broadcast on Thursday, June 2, 2:00-3:30 PM ET

Senior healthcare analyst Frank Cohen with DoctorsManagement will reveal a sophisticated pre-audit compliance risk application that relies on predictive analytics to minimize false positives, thus ensuring a more efficient audit process. This live broadcast is sponsored by DoctorsManagement. Register here.

New Strategies That Are Removing Rural Health from Life Support

Janelle Ali-Dinar, PhD
Thursday, June 23, 2016 
1:30-2:30 PM ET

A new future is happening right now in the delivery of care that is making healthier rural communities and creating new strategic pathways and practices for the most vulnerable of America’s healthcare safety nets. Learn how rural hospitals are achieving “thrive-ability.” Register here.


Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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