Are observation codes underused for emergency psychiatric patients with an extended length of stay? A retrospective commercial claims analysis from 2016 to 2022.

Priest KC, Havlik J, Wilson MP, Jo B, Humphreys K. Are observation codes underused for emergency psychiatric patients with an extended length of stay? A retrospective commercial claims analysis from 2016 to 2022. General hospital psychiatry. 2025 Oct 27; 97:209-217, DOI: 10.1016/j.genhosppsych.2025.10.015.

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Abstract:

STUDY OBJECTIVE: To compare observation billing patterns among psychiatric vs. non-psychiatric patients presenting to emergency departments (ED) with extended lengths of stay (LOS). METHODS: Analysis of commercially insured claims and encounters from the Merative™ Marketscan® Commercial Database (2016 - 2022). The cohort included patients ages 18 to 64 with an ED claim, service dates occurring on two calendar dates, and a non-null billing code. Analytic methods included descriptive/inferential statistics with effect size estimation. The primary outcome was observation code frequency. Claims and encounters were compared within psychiatric and non-psychiatric patient groups. RESULTS: There were 40,441 psychiatric and 1,133,496 non-psychiatric encounters. Fifteen percent of psychiatric encounters had an observation billing code as compared to 32% of all non-psychiatric encounters (18%). When analyzed by specific LOS category, larger differences were observed between the two groups for LOS 2 (36%), LOS 3 (36%), LOS 4 (35%), and LOS 5 (29%), as compared to LOS 1 (14%). CONCLUSION: In this study of commercially insured patients with extended ED LOS, we observed a difference between the frequency of psychiatric and non-psychiatric observation encounters, which increased in magnitude when analyzing encounters with longer LOS. Our findings may suggest underbilling for extended stay psychiatric patients.