Q&A: Calculating observation time with bundled services

Q: How do we report total observation time when during the encounter the patient also received bundled services that include observation?

A: Medicare considers some observation services to be bundled to other services described by HCPCS codes. Like any other bundled service, observation should not be reported if it is considered bundled to (or part of) another service. Common situations where observation is bundled to other services include the following:

• Observation provided concurrently with diagnostic or therapeutic services for which active monitoring is already part of the service
• Routine preparation for and recovery from diagnostic tests
• Postoperative monitoring during a standard recovery period (e.g., 4–6 hours)

Subtract time spent providing these services from the overall time in observation to prevent reporting observation during times when it is bundled to other services on the claim. When determining the amount of time to subtract from the overall observation time, the provider may choose to document the
beginning and end times for services with active monitoring or subtract an average length of time for the service with active monitoring.

For more information, see Patient Status Training Toolkit for Medicare Utilization Review, Second Edition.