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  • FAQs
  • Outpatient hospital services are diagnostic, therapeutic, rehabilitative, or palliative items or services that are furnished by or under the direction of a physician or dentist to an outpatient in an institution licensed and certified as a hospital. Outpatient services may include scheduled services, surgery, observation room and board, and emergency services provided in an area meeting licensing and certification criteria.

    An outpatient is a patient who is receiving professional services at a hospital for a period generally not to exceed 24 hours. An outpatient may be admitted to a room by an attending physician for either daytime or overnight observation.

    SC Medicaid outpatient hospital services are paid by a fee schedule.

    Outpatient services are divided into three major categories. The category and reimbursement types for outpatient services are as follows:

    • Outpatient Surgical Services óReimbursement Type 1
    • Outpatient Non-Surgical Services óReimbursement Type 5
    • Treatment/Therapy/Testing Services óReimbursement Type 4

    The outpatient fee schedule is designed to reimburse for actual services rendered. Only one category of service, based on the highest classification billed, is paid per claim. Reimbursement is based on the fee schedule rate or the charges reflected on the claim, whichever is less. The fee schedule can be found in Section 4 of the provider.

    Observation Services

    Observation services are furnished by a hospital on its premises and include the use of a bed and periodic monitoring by a hospitalís nursing or other staff. Such services must be reasonable and necessary to evaluate an outpatientís condition or to determine whether there is a need for admission as an inpatient. These services usually do not exceed one day and must be ordered verbally and/or authenticated by signature of a physician or another individual authorized by state licensure law and hospital bylaws to admit patients to the hospital. The period of observation begins when the physician orders observation and when the monitoring of the patient actually begins. Observation ends when ordered verbally and/or authenticated by signature of a physician or another individual authorized by state licensure law and hospital bylaws to discontinue such treatment.

    The observation room revenue code (762 and 769) units do not multiply. Each 24 hours of observation can be filed on one claim for multiple dates of service. While observation services usually do not exceed 24 hours, they may exceed 24 hours in some cases and are not explicitly limited in duration.

    Note: In cases where the observation stay must span two calendar days, to equal 24 hours, observation should not be billed for both days.

    Outpatient observation charges must be billed using either revenue code 762 or 769 for up to 24 hours of continuous service. The observation period shall commence when the patient is formally admitted to an observation room. The attending physician may admit the patient for daytime or overnight observation. Observation charges may be reimbursed in addition to the surgical and non-surgical payment.

    Observation days prior to an inpatient admission can be billed as outpatient services when the observation stay is unrelated to the inpatient admission, excluding the day of admission. Bill the date the beneficiary was switched from observation to inpatient status as the first day of the hospital admission. Observation stays related to and within 72 hours of an admission are considered inpatient services and are included in the inpatient DRG payment. Refer to Section 3 of the provider manual for specific billing instructions.

    Observation should only be billed if the patient meets the conditions for observation. Do not substitute outpatient observation services for medically appropriate inpatient admissions. Test preparation, whether performed by the patient or the facility by itself, does not qualify for observation and observation should not be billed concurrently with the test. In addition, observation services should not automatically be billed because the time for normal recovery from a surgical procedure is exceeded. Observation would be appropriate when the recovery period exceeds normal expectations for the type of surgery and when the patientís condition requires observation.

    Prior Approval Info


    SCDHHS contracts with a quality improvement organization (QIO), Qualis, to perform presurgical review of select surgical procedures.

    Qualis will answer questions regarding pending reviews only . General prior approval (PA) questions should be directed to the appropriate program representative. Qualis staff can be reached at (877) 717 - 8592.

    All documentation must be mailed. Providers must send all available information along with the request ( i.e., history and physical, photographs, and recommendations). Qualis will not accept medical review documentation via facsimile.

    PA requests for beneficiaries enrolled in Physician Enhanced Program (PEP), Medical Home Local Network (MHLN), or hospice programs must receive a PA from these programs before contacting the QIO.

    PA requests for beneficiaries enrolled in a Managed Care Organization (MCO) program must be handled by the MCO only. At present, the Medicaid enrolled MCOs are Select Health and Better Health Plans (BHP). Select Health may be contacted toll free at (888) 559-1010. BHP may be contacted toll free at (800) 600-9007. Requesting physicians are responsible for providing the PA number to any facility or medical provider who will submit a Medicaid claim related to the service.

    A list of procedure codes requiring prior authorization from Qualis can be found in Section 4 of the provider manual.

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