Observation - Physician Coding FAQ

FAQ 1: I understand there are multiple sets of observation codes, one when all care is provided on a single calendar date and others for care that spans more than one calendar date. What are the sets of Observation codes and what are the criteria for their use for physician services?

There are currently three sets of observation codes.

A. Codes when admission to and discharge from observation status all occur on the same day include:

Observation Admission and Discharge Codes (same day) (for Medicare a minimum of 8 hours)

  • 99234-Observation or inpatient hospital care for problems of low severity. Documentation requires a detailed or comprehensive history, a detailed or comprehensive exam, and straightforward or low complexity MDM.  Typically, 40 minutes are spent at the bedside and on the patient's hospital floor or unit.

 

  • 99235-Observation or inpatient hospital care for problems of moderate severity. Documentation requires a comprehensive history, a comprehensive exam, and moderate complexity MDM.  Typically, 50 minutes are spent at the bedside and on the patient's hospital floor or unit.
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  • 99236-Observation or inpatient hospital care for problems of high severity. Documentation requires a comprehensive history, a comprehensive exam, and high complexity MDM.  Typically, 55 minutes are spent at the bedside and on the patient's hospital floor or unit.
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    B. Codes to use when total observation services span more than one calendar day include:

    Initial Observation Care Codes

    Per CPT, these codes apply to all evaluation and management services that a practitioner provides on the same date of initiating "observation status."

    • 99218-Initial observation care, per day, for problems of low severity. Documentation requires a detailed or comprehensive history, a detailed or comprehensive exam, and straightforward or low complexity MDM. Typically 30 minutes are spent at the bedside and on the patient's hospital floor or unit.

     

    • 99219-Initial observation care, per day, for problems of moderate severity. Documentation requires a comprehensive history, a comprehensive exam, and moderate complexity MDM.  Typically  50 minutes are spent at the bedside and on the patient's hospital floor or unit.

     

    • 99220-Initial observation care, per day,for problems of high severity. Documentation requires a comprehensive history, a comprehensive exam, and high complexity MDM. Typically 70 minutes are spent at the bedside and on the patient's hospital floor or unit.

     

    Subsequent Observation Care Codes

    As per CPT, utilize these codes for observation care services provided on dates other than the initial or discharge date. These codes include reviewing the medical record and reviewing the results of diagnostic studies and changes in the patient's status since the last assessment by the physician.

    • 99224-Subsequent observation care, per day, for stable, recovering, or improving patients. "Typically 15 minutes are spent at the bedside and on the patient's hospital floor or unit." Documentation requires substantiating at least 2 of 3:  a problem focused interval history, problem focused examination, and low complexity MDM.

     

    • 99225-Subsequent observation care, per day, for the patient responding inadequately to therapy or has developed a minor complication. "Typically 25 minutes are spent at the bedside and on the patient's hospital floor or unit." Documentation requires substantiating at least 2 of 3: expanded problem focused interval history, expanded problem focused examination, and moderate complexity MDM.

     

    • 99226-Subsequent observation care, per day, in which the patient is unstable or has developed a significant complication or a significant new problem. "Typically 35 minutes are spent at the bedside and on the patient's hospital floor or unit." Documentation requires substantiating at least 2 of 3: detailed interval history, detailed examination, and high complexity MDM.

     

    Observation Discharge Code

    • 99217-Observation care discharge includes services on the date of observation discharge (can only be used on a calendar day other than the initial day of observation). These services include a final exam, discussion of the observation stay, follow-up instructions, and documentation. Do not report 99217 if the patient was placed in observation and discharged on the same day.
     
    FAQ 2: What are the total RVUs for each of the observation codes compared to the higher level ED codes?

    For year 2013 the RVU's are as follows:

     

    Emergency Department Codes

     

    Initial Observation Status Service Codes

     

    Subsequent Observation Status

     

    Observation Admission and Discharge Codes

    CPT code RVUs   CPT code RVUs   CPT code RVUs   CPT code RVUs
    99283 1.76   99218 2.84   99224 1.14   99234 3.86
    99284 3.36   99219 3.87   99225 2.06   99235 4.83
    99285 4.93   99220 5.30   99226 2.97   99236 6.24
          99217 2.08            

    In the scenario where a patient was admitted to observation on one day and discharged on the following day, the 99218-99220 codes would usually be assigned with the discharge code, 99217. The combined RVUs for these code pairs would be as follows: 4.92 for 99218 and 99217; 5.95 for 99219 and 99217; and 7. for 99220 and 99217. The subsequent observation care codes (99224-99226) would be additional in the event of an observation period that spanned more than 2 calendar days.

     

    FAQ 3: What are some of the diagnoses or patient presentations that may benefit from an observation stay?

    Most clinicians and payers agree that observation services should be used to potentially forestall a lengthy inpatient admission. Given that premise, there are two basic circumstances when observation is appropriate:

    1. Lack of diagnostic certainty, where a more precise diagnosis could decide inpatient admission or discharge to home, or
    2. Therapeutic intensity, where extensive therapy has a reasonable possibility of abating the patient's presenting condition, and thereby prevent inpatient admission. Patients who require continued evaluation and treatment beyond the usual ED length of stay for certain presentations of chest pain, asthma, abdominal pain, renal calculi, dehydration, syncope, allergic reactions, drug ingestion/overdose, or alcohol intoxication, to name a few, might require observation.
     

    FAQ 4: What documentation is required in order to assign the observation codes for physician services?

    CPT documentation requirements are identified in FAQ #1. Observation services refer to the initiation of observation status, supervision of the care plan for observation and performance of periodic assessments.

    The CMS Claims Processing Manual (Medicare) indicates that for a physician to bill the initial observation care codes, there must be a medical observation record for the patient which contains dated and timed physician's admitting orders. The observation record should reflect the care the patient receives while in observation, nursing notes, and progress notes prepared by the physician while the patient was in observation status. This record must be in addition to any record prepared as a result of an emergency department or outpatient clinic encounter.

    For Medicare, same-day Observation services 99234-99236 require documentation of time in hours, with a minimum of eight hours documented. If the patient is admitted and discharged on different days of services, Medicare does not require that the patient stay a minimum number of hours in order to bill for observation services. See FAQ #8.

    (NOTE: To better appreciate the characteristics distinguishing facility coding from physician coding for Medicare Observation services, see ACEP's FAQs on OPPS/APCs and the Facility Observation FAQ.)

     

    FAQ 5: Can observation codes be used in the ED even if the patient is in a regular ED bed and not in a special observation bed or an observation unit?

    Yes observation is a "patient status" rather than a place. The observation may take place in a regular bed in the ED, in a special observation area of the ED, a formal observation unit, or even in an inpatient bed.

     

    FAQ 6: Under the CPT perspective, there are so many different site-of-service/timing scenarios that might surround an observation stay. How would you code the following, assuming each patient started out in the ED and all care is provided by a single practitioner?

    • Q1: Patient admitted to ED at 8 PM followed by an admit to observation at 2 AM (on the calendar date following the ED visit) and discharged home later that day. A: Assign the appropriate ED E/M code, 99281-99285, for day one and the appropriate observation care, code, 99234-99236, on day two. Do not assign 99217.
    • Q2: The patient is admitted to the ED at 9 AM followed by an admit to observation at 1 PM and then discharged at 7 PM, all on the same calendar date. A. Assign the appropriate same day observation code (99234-99236) for combined ED/Observation services. Do not assign 99217.  (Note that there is no 8 hour threshold for CPT observation services.)
    • Q3: What code should be reported on the middle day for a patient who continues to be in observation status for three calendar days? A: Use the subsequent observation codes for the middle day. Report CPT 99218-99220 for a patient designated as observation on Day 1, report CPT 99224-99226 on Day 2 and finally report CPT 99217 when the patient receives discharge services on Day 3.
    • Q4: Can observation care codes 99217 and codes 99218-99220 be reported on the same date of service? A: No. CPT codes 99234-99236 should be reported for patients who are admitted to and discharged from observation status on the same calendar date.  CPT code 99217 can only be reported for a patient discharged from observation status on a different calendar date.

    Note: For Medicare patients, the coding may be different - see FAQ 8.

    FAQ 7: Can our medical group bill for ED services and observation services when two different physicians are involved? What if we used a PA in observation instead of an EDMD?

    For Medicare, if both physicians are of the same specialty, in the same group, only one of the services may be billed: either the appropriate ED code or the observation code but not both. If the PA works in the ED and is employed by the physician group then the answer is the same.

    For CPT, strictly speaking the "same physician = same specialty/group" concept does not apply.  That being said, many payers have adopted this concept, so you are advised to check your local payer policy.

     

    FAQ 8: While researching the "same day" observation codes 99234-99236, I found that Medicare requires a lengthy minimum stay in  observation status. Is this true? And what about commercial payers?

    CPT specifies a mandatory time threshold of 40 to 55 minutes for observation codes 99234-99236.

    In 2001, CMS indicated that use of same-day observation admit/discharge codes 99234-99236 for Medicare patients must involve lengths of stay of at least 8 hours. For stays of less than 8 hours, the initial observation code series 99218-99220 are to be used. In this case, the discharge code 99217 cannot be used since the admission and discharge were on the same date of service.

    Other payers may set their own respective payment policies. Of course, providers are required to follow the policies of only those payers with whom the provider must comply by reason of statute, regulation, or contract. In the absence of any contrary policy, CPT coding principles pertain. See Medicare Claims Processing Manual 12-21-11. Section 30.6.8 for details.

     

    FAQ 9: What if I performed a procedure in the ED and then admitted the patient to observation (not for recovery observation following the procedure)? Can I assign the procedure code in addition to the appropriate observation code? Are there any procedures that are "bundled" into observation as in critical care? Are there any problems if the procedure had a "global period" by CMS definition?

    The code for the procedure performed in the ED may be assigned with the observation code; a -25 modifier can be appended to the observation code if appropriate.

    There are no procedure codes that CPT considers bundled into Observation.

    A global surgical fee usually includes payment for "observation" immediately following the procedure. Under certain circumstances however, observation may be paid when a procedure with a global period is performed during the same encounter. An example is an ED visit after a fall resulting in a head injury and laceration. The observation stay for the head injury evaluation (with a -25 modifier as appropriate) and the laceration repair procedure (performed in the ED) could both be submitted.

    FAQ 10: Is there a way to capture observation services that are much longer than usual?

    Yes, with the addition of typical times to the observation code sets 99218-99220, 99234-99235 and 99224-99226, they now qualify for use with the prolonged service in the inpatient or observation setting add-on codes (99356 and 99357)

    CPT offers specific guidance regarding the Observation Prolonged Service codes. Prolonged service refers to direct patient contact, is face-to-face and includes additional non-face-to-face services on the patient's floor or unit in the hospital or nursing facility during the same session, even if the time spent is not continuous. (NOTE:  Eligible unit/floor time for prolonged services includes time the practitioner establishes and/or reviews the patient's chart, examines the patient, writes notes, and communicates with other professionals and the patient's family.)  It is reported in addition to the designated evaluation and management services at any level and any other services provided at the same session as evaluation and management services.

    The inpatient or observation prolonged code descriptors read as follows:

    +99356 Prolonged service in the inpatient or observation setting requiring unit/floor time beyond the usual service; first hour (Use 99356 in conjunction with 99218-99220, 99221-99233, 99224-99226, 99231-99233, 99234-99236, 99251-99255, 99304-99310, 90822, 90829)

    + 99357 each additional 30 minutes (List separately in addition to 99356)

     

     

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