Hospital observation services: billing and reimbursement policy updates

By June 15, 2026: Billing team must implement the following changes in billing software and training: (1) Configure system to require G0378 billing with revenue code 0762 on UB-04 claims as single claim line only—no date spans or multiple lines permitted even for multi-day observation; (2) Add validation rule requiring minimum 8 hours observation time for G0378 reimbursement eligibility; (3) Program system to enforce that G0378 units equal total observation hours rounded to nearest whole hour, with date of service reflecting observation start date; (4) Require G0378 to be paired with at least one qualifying service (CPT 99281-99285, G0463, CPT 99291, or G0379) on same date of service or preceding day; (5) Configure G0379 to be billed only for direct admissions without concurrent ED, outpatient clinic, critical care, or procedures with status indicators T or V; (6) Implement blocking logic to deny observation billing when integral to surgical/diagnostic/therapeutic procedures, routine pre/post-operative monitoring, or procedures with IOCE status indicators J1, T, or V. Update provider documentation templates and encounter forms to capture observation start/end times and qualifying service type. Conduct staff training on new rules. Failure to comply will result in claim denials and revenue loss.