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 to use 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. 
  • 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. 

 

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

C. 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.

Note:  CMS has stated: “In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours.”

http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM4259.pdf  But, of course, 48 hours can extend over 3 calendar days.

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 2015 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

1.74

99218

2.81

99224

1.11

99234

3.76

99284

3.31

99219

3.81

99225

2.05

99235

4.75

99285

4.90

99220

5.22

99226

2.95

99236

6.12

 

 

99217

2.04

 

 

When a patient is admitted to observation on one day and discharged on the following day, the 99218-99220 code set would typically be assigned with the observation discharge code, 99217. The combined RVUs for these code pairs would be as follows: 4.85 for 99218 and 99217; 5.85 for 99219 and 99217; or 7.26 RVU for 99220 and 99217. The subsequent observation care codes (99224-99226) would be additional in the event an observation period 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 prevents 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) describes:  For a physician to bill observation care codes, there must be a medical observation record for the patient which contains dated and timed physician’s orders regarding the observation services the patient is to receive, nursing notes, and progress notes prepared by the physician while the patient received observation services. 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 duration of care is less than eight hours, then the 99218-99220 code set is appropriate.  99217 is not assigned when the patient is admitted and discharged from Observation during the same calendar date.  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. Observation services 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?

Note: For Medicare patients, the coding may be different - see FAQ 4 & 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,  either an ED service 99281-99285 or  Observation may be billed,  but not both. If a qualified health care professional 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® describes typical times of 40 minutes for 99234, 50 minutes for 99235 and 55 minutes for observation code 99236.  These times include bedside care, reviewing ancillary studies, documentation and other cognitive services related to the patient’s observation care. 

Same-day observation admit/discharge codes 99234-99236 for Medicare patients must include minimum stay of at least 8 hours. For duration of less than 8 hours, the initial observation code series 99218-99220 are used. In this case, the discharge code 99217 is not 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 in addition to the observation code. A -25 modifier may be appended to the Observation code when appropriate to indicate a distinct, separately identifiable service.

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).

 

FAQ 11:  What is the Two-Midnight Rule, and how does it affect Observation services?

In August 2013, CMS (Medicare) originally established a two-midnight benchmark for physicians to use in determining patient admission status for inpatient or outpatient care under the Inpatient Prospective Payment System for hospitals. CMS stipulates that when a physician anticipates the patient will require care that crosses two midnights and orders inpatient admission based upon that expectation, inpatient status is generally appropriate.   At this writing, time spent in Observation or other Outpatient status via an Emergency Department encounter may be retroactively combined with inpatient status to reach the two-midnight Inpatient threshold.   

For Observation Care Payments to Hospitals FAQ, see http://www.acep.org/Clinical---Practice-Management/Observation-Care-Payments-to-Hospitals-FAQ/

Last Updated 05/06/2015 

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