Effective July 1, 2026, PacificSource will implement updates to its policies regarding hospital outpatient observation services. Key considerations when billing for these services include the following:
- HCPCS code G0378 must be billed with revenue code 0762 on a UB-04 claim form, or its electronic equivalent, in accordance with CMS outpatient billing requirements.
- Observation services must be billed on a single claim line.
- Units must represent the total number of hours in observation care, rounded to the nearest whole hour.
- The date of service must reflect the date the observation care began.
- Date spans and multiple claim lines are not permitted, even when observation services span multiple calendar days.
- Observation services billed with HCPCS code G0378 are eligible for reimbursement only when the total observation time meets or exceeds eight hours.
HCPCS code G0378 must be reported in conjunction with at least one of the following services provided on the same date of service or the preceding day:
- Emergency department visit (CPT 99281–99285)
- Hospital outpatient clinic visit (HCPCS G0463)
- Critical Care services (CPT 99291)
- Direct admission to observation (HCPCS G0379)
HCPCS code G0379 may be reported only when observation services result from a direct referral or admission without an associated emergency department visit, clinic visit, or critical care service on the same date of service.
HCPCS code G0379 is not separately reimbursable when billed on the same date of service as emergency department services, outpatient clinic visits, critical care services, or services assigned CMS IOCE status indicators T or V.
Observation services are not separately reimbursable when:
- Observation is integral to, or included in payment for a surgical, diagnostic, or therapeutic procedure.
- Observation is provided for routine preoperative or postoperative monitoring.
- Observation is billed in conjunction with procedures assigned CMS IOCE status indicators J1, T, or V.
- Observation services are otherwise considered inclusive under CMS OPPS or IOCE edits.
Questions?
Call us at 888-977-9299, TTY: 711 (we accept all relay calls), from 8:00 a.m. to 5:00 p.m., Monday through Friday. Or send us an email at CS@PacificSource.com.