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Outpatient Hospital Services

Revised: 07-27-2018

  • Eligible Providers
  • Eligible Recipients
  • Covered Services
  • Noncovered Services
  • Billing
  • Definitions
  • Legal References
  • Hospital Services Home Page
    Critical Access Hospital (CAH) Services

    Inpatient Hospital Authorization

    Inpatient Hospital Services

    Hospital In-reach Service Coordination (IRSC)


    Outpatient hospital services are provided in a facility qualified to participate in Medicare. Outpatient hospital services must be medically necessary and provided by or under the supervision of a physician, dentist, or other provider having medical staff privileges in the facility.

    Eligible Providers

    A facility that meets the definition of and is licensed as a hospital or hospital clinic, is qualified to participate in Medicare, including a hospital that is part of the Federal Indian Health Service (IHS), and is designated by the federal government to provide acute care is eligible to be a provider of outpatient hospital services.

    Provider Type Home Page Links
    Review related webpages for the latest news and additions, forms, and quick links.

    Eligible Recipients

    All MHCP recipients are eligible to receive outpatient hospital services.

    Covered Services

    Outpatient Hospital Clinic

    An outpatient hospital clinic is a nonemergency service providing diagnostic, preventive, curative and rehabilitative services on a scheduled basis.

    In medically indicated situations when it is not in the best interest of the recipient to be physically moved to multiple outpatient hospital clinic sites due to the recipient’s physical or mental disability, the outpatient hospital facility may bill a specialty clinic facility fee for each distinctly different specialty clinic service that is brought to the recipient at one clinic site.

    Observation Services

    Outpatient observation services are covered when they are reasonable and necessary to treat or diagnose a recipient, and are independent of other procedures. Observation services are covered for up to 48 hours. MHCP will consider observation services for up to 72 hours for unusual circumstances when submitted with additional documentation. See the Noncovered Services section for when outpatient observation services are not covered.

    Direct Admission to Observation Status

    Hospitals may bill for recipients who are direct admissions to observation. Direct observation is reportable once per observation stay.

    A direct admission occurs when a physician in the community refers the recipient to the hospital for observation, bypassing the clinic or emergency department (ED).

    MHCP Eligibility Beginning After the Date of Inpatient Admission

    Refer to Inpatient Hospital Services section on inpatient recipient’s MHCP eligibility beginning after the date of inpatient admission.

    Inpatient Hospital Services When Inpatient Authorization is Denied

    Refer to Inpatient Hospital Services for Authorization Denials

    Hydration, Infusion, Drug Injections and Chemotherapy Administration

    Service delivery does not drive coding selection. Report the one initial code with the highest level of service provided during that visit or day regardless of the time administered during the visit. After selection of the initial code, report all additional related services provided with add on, subsequent or concurrent codes. Refer to the following code information:

  • • Add on, subsequent and concurrent codes
  • • Concurrent infusions-only reportable once per encounter
  • Modifier 59: Reporting of modifier 59 is only appropriate when the recipient has return visit(s) on the same day or more than one IV site. (Multiple IV lines running into a single IV site do not qualify as multiple sites.); documentation is required
  • IV irrigation: not reportable if an injection, infusion or evaluation and management (E/M) is provided on the same day
  • Cardiac Rehabilitation

    Cardiac rehabilitation is described by the U.S. Public Health Service as consisting of "comprehensive, long-term programs involving medical evaluation, prescribed exercise, cardiac risk factor modification, education, and counseling." Outpatient hospitals and physician-directed clinics with a Medicare-approved cardiac rehabilitation program may provide cardiac rehabilitation services to MHCP recipients.

    A cardiac rehabilitation program is 36 sessions. Request authorization for additional sessions when more than 36 sessions will be provided.

    MHCP follows Medicare criteria for cardiac rehabilitation services, which includes the following:

  • • Cardiac rehabilitation services are the aftercare for myocardial infarction, coronary bypass surgery, stable angina, and other similar diagnoses
  • • Cardiac rehabilitation services are for the following additional indications:
  • • Angioplasty
  • • Congestive heart failure
  • • Heart or heart-lung transplant
  • • Heart valve replacement
  • • Cardiac rehabilitation services include a recovery program primarily consisting of monitored exercise or exercise therapy with recipient instruction and diagnostic testing services
  • • All settings must have a physician immediately available and accessible for medical consultations and emergencies at all times when items and services are being furnished under the program. MHCP follows the Centers for Medicare & Medicaid Services (CMS) for services furnished in the hospital or critical access hospital (CAH) or in an on-campus outpatient department of the hospital or CAH.
  • Prolonged Intravenous Therapy

    Prolonged IV therapy begins when the IV needle is in place, continues through the administration, and ends when the insertion site care is complete. The following are billable in addition to the prolonged IV therapy:

  • • Blood
  • • Blood products
  • • Biologicals
  • • Chemotherapy agents
  • • Other drugs that require prolonged infusion
  • • Specialty catheters not routinely supplied
  • Blood Transfusions

    Blood transfusions require the actual number of units provided related to the specific product or procedure.

    Pulse Oximetry

    Pulse oximetry is considered part of the ED, ambulatory surgical center (ASC), or outpatient specialty clinic.

    Mental Health Partial Hospitalization

    Mental health partial hospitalization is a covered service for adults and adolescents if the hospital has received MHCP approval for its partial hospitalization program. Refer to Partial Hospitalization Program for billing instructions.

    Additional Services

    Professional services (for example, anesthesiologist, physician) are covered in addition to outpatient hospital services. Other services, such as lab, radiology, supplies, injectable drugs, etc., may also be separately covered services when outpatient hospital services are provided. Refer to the specific service sections of this manual for coverage and billing policy.

    Noncovered Services

    The following outpatient hospital services are not covered and are ineligible for payment:

  • • Services provided by an employee of the hospital, such as an intern or a resident
  • • Services lasting 24 hours or more, except for observation status
  • • Detoxification not medically necessary to treat an emergency
  • • Patient convenience items revenue code 990–999
  • • Facility fees, ancillary charges and other procedure or service charges related to outpatient hospital charges for noncovered services
  • • Hospital charges when related to outpatient hospital care for investigative services, plastic surgery or cosmetic surgery, which are not covered unless determined medically necessary through the medical review authorization process and services designated as noncovered in Statutes or Rules. A physician may donate his or her services to perform a noncovered service, but MHCP does not cover facility fees, ancillary charges and other procedure or service charges related to performing the noncovered services
  • Observation Services

    Ambulatory Payment Classification (APC) facility service payments are paid according to the most recent CMS APC system rates published in the Federal Register. The rates are listed in the column titled “Payment Rate.”

    Outpatient observation services are not covered when they are provided according to the following:

  • • In addition to a surgical procedure, unless the observation is monitoring or treatment beyond the community standard for the surgical procedure
  • • For the convenience of the recipient, recipient’s family or provider
  • Billing

    Effective for dates of service on or after July 1, 2015, E&M services are priced using a composite rate when there are eight or more hours of observation. Refer to CMS MLN Matters MM8653 and MM9486.

    Refer to the following billing requirements:

  • • MHCP will deny an entire outpatient claim if one line of the claim is denied.
  • • Bill outpatient hospital claims using type of bill (TOB) 13X or 14X
  • • Bill outpatient authorized services on a separate claim from non-authorized services
  • • When more than one clinic visit (distinctly separate E/M service) is provided, bill with condition code G0 on the same or separate claims
  • • Urgent care facilities must follow Medicare guidelines for the facility charge
  • • Identify the place of service (POS) with either 19 (Off-Campus-Outpatient Hospital) or 22 (On-Campus-Outpatient Hospital)
  • Copay Policies

    Copays apply to some services provided to MA recipients. Copay guidelines are listed in the Billing the Recipient section, under Copays and Family Deductible.

    The copay for a nonemergency visit to a hospital-based emergency department will be deducted from the outpatient hospital facility claim. MHCP will use the type of admission in conjunction with the revenue code to determine whether the visit was considered an emergency visit or a nonemergency visit. MHCP will consider a type of admission equal to “1” in conjunction with revenue code 45X to be an emergency.

    Direct Admission Billing Policy

    MHCP uses Medicare criteria for billing direct admission observation care. Follow these requirements:

  • • Bill the facility component of observation services on the 837I (institutional format)
  • • Report the revenue code with procedure codes and the appropriate units of service (one hour equals one unit). Round fractions of time less than 30 minutes down. Round fractions of time greater than 30 minutes up
  • Observation Billing Policy

    Observation requires a physician’s order and must be part of the recipient’s records.
    MHCP uses Medicare criteria for billing observation status care. Follow these requirements:

  • • Bill the facility component of observation services in the 837I (institutional format) using the appropriate revenue code and procedure code
  • • Bill observation services separately from surgical services
  • • When observation services continue from one day to the next (over midnight), bill the beginning observation service date
  • • When observation services are provided on two consecutive days, interrupted by a discharge, bill two distinct line items, each reflecting the specific service dates
  • • If the recipient’s coverage changes, from FFS to PMAP or PMAP to FFS you must split bill the services and bill the appropriate payer
  • • When observation services are provided on two consecutive days but separate months, bill the beginning observation service date
  • • For observation, one hour equals one unit. Round fractions of time less than 30 minutes down. Round fractions of time greater than 30 minutes up
  • • Bill fetal monitoring using the appropriate revenue code and procedure code
  • Unusual Circumstances Observation

    Bill the unusual observation service with modifier "22," and include an explanation of the unusual circumstances.

    Blood Transfusions

    Multiple units are not reported when the number of units included in the code description is multiple and the number of units used is equal to or below the unit measurement of the code (this is reported as one unit).

    Pulse Oximetry

    Pulse oximetry is part of the Ambulatory Payment Classification (APC) payment. Pulse oximetry can be separately billed only when an E/M visit is the only other service provided.

    Mental Health Partial Hospitalization

    Bill mental health partial hospitalization using one of the following HCPCS codes:

  • • H0035–adult
  • • H0035 with modifier HA–adolescent
  • One unit equals one hour.


    Refer to Definitions section of Hospital Services home page.

    Legal References

    Minnesota Statutes 144.50 (Hospital, Licenses; Definitions)
    Minnesota Statutes 256B.0625
    , subd.4 (Outpatient and Physician-directed clinic services)
    Minnesota Statutes 256B.32
    (Facility Fee Payment)
    Minnesota Statutes 256.969
    ; 256.9695

    42 CFR 410.27 – (Outpatient hospital or CAH services and supplies incident to a physician or nonphysician practitioner service: Conditions)
    42 CFR 410.49 (b)(3)(ii)
    – (Cardiac rehabilitation program and intensive cardiac rehabilitation program)
    42 CFR 440.20
    - (Outpatient hospital services and rural health clinic services)

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