Attention Hospital Providers: Observation Billing Guidance

Effective July 1, 2024, NC Medicaid Fee-for-Service claims for outpatient hospital observation hours that do not comply with Clinical Coverage Policy Acute Inpatient Services 2A-1, Section 3.2.1.b will be denied.

The following information provides billing guidance to assist hospital providers billing for services arising under Clinical Coverage Policy Acute Inpatient Hospital Services 2A-1, Section 3.2.1.b which states that a beneficiary in hospital observation status “for more than 30 hours shall either be discharged by the attending physician or converted to inpatient status by written order of the physician to receive continued Medicaid reimbursement beyond the 30 hours” The full policy can be found on the Program Specific Clinical Coverage Polices webpage under Facility Services.

Note: The guidance below applies to NC Medicaid Direct claims billing only. For more information on how the NC Medicaid Managed Care health plans handle hospital observation billing, please reach out directly to the NC Medicaid Managed Care health plans.

Accurately Reporting Observation Hours

  • Observation hours (units) should reflect the actual number of hours the patient was under observation care.
  • Claims with observation status of 30 total hours or less do not require an entry in the non-covered charges field.
  • Any charges for hours in excess of the 30-hour limit, must be reported on a separate claim line and the ‘Non-Covered Charges’ field must be populated and equal to the “Total Charges” field.
  • Any claim line with services and/or units billed beyond the 30 observation hours must also be reported on a separate claim line and the ‘Non-Covered Charges’ field must be populated and equal to the “Total Charges” field.

Claim denials for incorrect hospital observation billing will include one of the following Explanation of Benefits (EOBs):

  • EOB 02232: CLAIM DENIED. OBSERVATION EXCEED 24 HOURS FOR A SINGLE DATE OF SERVICE.
  • EOB 60650: CLAIM DENIED. OBSERVATION HOURS LIMITED TO 30 HOURS PER OUTPATIENT HOSPITAL CLAIM. RESUBMIT CLAIM BILLING NON-COVERED OBSERVATION ON A SEPARATE CLAIM LINE.
  • EOB 02233: CLAIM DENIED DUE TO OUTPATIENT SERVICES BILLED DURING NON-COVERED OBSERVATION PERIOD. RESUBMIT A CORRECTED CLAIM OR SUBMIT RECORDS TO JUSTIFY OBSERVATION OUTPATIENT SERVICES BILLED DURING NON-COVERED OBSERVATION PERIOD.

Please refer to the Reporting Hospital Observation Hours Fact Sheet for claim billing examples under 'Claims Submission' on the User Guides and Fact Sheets webpage. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24141-R-2730