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Changes from Inpatient to Outpatient Observation

Provider Administrative Policy

Policy Date
August 2010
New/August 2010
Provider Type(s)
All Providers   Hospitals  


Our provider administrative policies contain information regarding claims submission, reimbursement, and other information in order to achieve an efficient relationship with our providers. These policies are not an authorization or explanation of benefits. Blue Cross of Idaho retains the right to add to, delete from and otherwise modify this policy in accordance with our provider contracts.


Changes from Inpatient to Outpatient Observation

Most facilities submit inpatient claims based upon the attending physician's written orders. Blue Cross of Idaho may deny payment for inpatient admission services not demonstrating medical necessity. Inpatient claims not supported by clinical criteria are eligible for reconsideration under outpatient reimbursement when resubmitted as a new claim for observation or outpatient services.

Use the following steps when resubmitting a claim for observation or outpatient services:  

  1. Indicate the bill type as outpatient 13x
  2. Do not include revenue codes for room and bed charges
  3. Include charges for observation hours under revenue code 76x
  4. Include ancillary charges omitted from the original inpatient claim
  5. Include HCPCS/CPT codes on outpatient claim

Submit corrected claims electronically to Blue Cross of Idaho

Policy History

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