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2012 Texas Medicaid Provider Procedures Manual

Inpatient and Outpatient Hospital Services Handbook : 4. Outpatient Hospital (Medical/Surgical Acute Care Outpatient Facility) : 4.2 Services, Benefits, Limitations, and Prior Authorization : 4.2.4 Outpatient Observation Room Services : Client Status Change
When a client's status changes from outpatient observation to inpatient admission, both the outpatient observation service and the inpatient admission must be submitted as separate details on the same inpatient claim. The date of the inpatient admission is the date on which the client was admitted to inpatient status. The practitioner's order for a change in client status from outpatient observation to inpatient admission must be written, dated, and timed before the client's discharge.
When a client is admitted to the hospital as an inpatient and a subsequent internal utilization review (UR) determines that the services did not meet inpatient criteria, the hospital may change the client's status from inpatient to outpatient observation. The order to change from an inpatient to outpatient observation admission is effective for the same date and time as the inpatient order. This practice is acceptable under Texas Medicaid if all of the following conditions are met:
When the hospital has determined that it may submit an outpatient claim according to the conditions described above, the entire episode of care should be submitted as an outpatient episode of care.

Texas Medicaid & Healthcare Partnership
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