# Observation codes



## Colliemom

I am preparing a summary for my physicians, who are struggling to understand how/when to use observation codes.  I need some opinions, is this information correct and clear?
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We have added some new codes to be used in the hospital setting.  These codes are for patients who have been admitted to observation status in the hospital.  When you are submitting billing for any of the observation codes you need to identify the service you are providing as follows:

The short version - an explanation of how to submit your billing

Observation admission - low, moderate or high 
Observation admission and discharge - low, moderate or high
Observation follow-up, level 2 - 5
Observation discharge 
The key to billing for these services is to indicate on your billing "Observation."


The detailed version - an explanation of the codes

99218, 99219 and 99220 - Initial observation care
These codes are used on the day the patient is admitted to observation status.  
99218 - detailed history, detailed examination, MDM straightforward/low complexity
99219 - comprehensive hx, comprehensive exam, MDM moderate complexity
99220 - comprehensive hx, comprehensive exam, MDM high complexity

If the patient is admitted to observation status and discharged/expired the next day you would bill 99217 for the discharge.  (If the patient is discharged LESS than 8 hours after admission, you do not bill this discharge code, you would bill only the 99218 - 99220 code.)

If the patient is admitted to observation status and then discharged, or expired, on the SAME day you would bill using:
99234, 99235 and 99236 - Observation or Inpatient Care Services, including admission and discharge. 
(If the patient is discharged LESS than 8 hours after admission, you do not bill this discharge code, you would instead bill ONLY the 99218-99220 code.)
99234 - detailed history, detailed examination, MDM straightforward/low complexity
99235 - comprehensive hx, comprehensive exam, MDM moderate complexity
99236 - comprehensive hx, comprehensive exam, MDM high complexity


If the patient remains in Observation status for a few days you would bill for the subsequent visits using the office/outpatient codes 99212 - 99215.
Day 1 - pt admitted to observation status, 99219
Day 2 - pt seen in follow-up/subsequent visit, 99213
Day 3 - pt is discharged home from observation, 99217

Additional guidelines:
If a patient is admitted to inpatient status in the hospital on the same day as the Observation admission you do NOT bill for the observation code.  You would only bill for the hospital inpatient admission, 99221 - 99223.

If you are billing for any of the observation codes the place of service will be 2, for outpatient.


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## fredabrinson

*Quick review*

Hey Katkia222,

I've only done a very quick read of your document, but I did want to respond back with just a few comments.  

First thing I noticed is the use of the word "status".  (I guess I should also state that I work in a hospital, but do have experience on the physician side).  CMS advises hospitals that Observation is a service not a status.  I know that is a minor word difference, but it has sort of been drilled into me, so I thought it might bear repeating.

Also, hospitals have very specific criteria for Observation Services, and we are charged with making sure all physicians understand these criteria.  Per CMS, the purpose of Observation is to be when the physician needs mroe time in determining the patient's needs.  That is, they may get better pretty quickly (less than 48 hours) on a certain treatment plan, or they may not respond.  So Observation is used to allow the time to make that decision.  (This probably has nothing to do with your document, but I just wanted to explain "service" a little!)

The other thing that sort of jumped out at me was using one of the admit/discharge on same day codes if the patient expires.  According to the CPT description for discharge codes, "expired" is not included anywhere in the description.  I don't think I have ever used a discharge CPT code on a patient that expires.

One last comment regarding subsequent observation visits, as a facility we hope patients are either admitted as an inpatient or discharge (all depending on medical necessity as per the physician, of course!), within that 48 hour period.  Most managed care contracts are written in such a way that a facility may not be reimbursed for those additional days.  Of course if a patient does not meet medical necessity but the physician doesn't feel they are ready for discharge, an inpatient admission is not appropriate.  Cases like that are a completely separate discussion!

You wrote a great document, and I do plan to read it more carefully!


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## Colliemom

Freda,

Thank you for you responding, as this is new to both my physicians and to me.  I'm sure your suggestions will help me to clarify this for the physicians as they are pretty confused. 

This issue came up because a patient was at a local hospital and our physician was asked to see her.  Her status was SP, where IP or OP are what we typically see. (IP - inpatient, OP outpatient, SP short stay)

She was there in the hospital overnight and sent home the next day.  So originally my physician billed this as a consult on day 1 and subsequent visit on day 2.  But when I went into the hospital's computer system I saw she was not formally admitted to the hospital as an inpatient.  So after some discussion, and clarification from the hospital, we ended up billing the observation codes. 

Does your hospital also use the IP, OP, SP designations for the patient's status?  Are all of your SP status patients actually considered observation?

As far as the being able to bill a discharge summary by the attending for a patient who has expired, that was told to me at a recent AGA conference.  We haven't actually had this issue come up yet, and I am guessing it won't really be an issue with the patient's being seen for observation.  (since if they aren't sick enough to admit to the hospital the chance that they may expire from their illness isn't high, unlike the patients who are inpatient.)  I think I will take the word "expire" out of my document, as there is no need to make this more complicated than it already is for the physicians.  

I am curious, has anyone else has heard of billing a discharge summary for a patient, inpatient in the hospital, who has expired? (when your physician is the attending)


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## FTessaBartels

*Was your physician the attending/admitting physician?*

You write: This issue came up because a patient was at a local hospital and our physician was asked to see her. Her status was SP, where IP or OP are what we typically see. (IP - inpatient, OP outpatient, SP short stay)

She was there in the hospital overnight and sent home the next day. So originally my physician billed this as a consult on day 1 and subsequent visit on day 2. 

If this was truly a consultation and the patient was in short-stay status, they you would code the appropriate level *out*patient consult code (9924x).  An established outpatient visit (9921x) would be the code for day 2 with POS 22.

If your physician admitted the patient s/he should have no question of how the admission order was written.  Either the physician admitted patient as an inpatient, or admitted to observation. If admitted as inpatient, then day two would be a discharge 99238 or 99239. If admitted to observation, then day two would be observation discharge 99217.

Hope that helps.

F Tessa Bartels, CPC, CEMC


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## Colliemom

Thanks, and it should have been that simple.  Unfortunately, this wasn't, as the physician thought he was performing one service when he was actually performing another. The physician then thought he was admitting the patient for overnight observation - as an inpatient - but the hospital never accepted the patient as an inpatient she actually ended up as an outpatient observation patient.  The hospital had the patient listed, according to them, as observation status not inpatient.  So we ended up billing 99219 instead of a 99223.  

So this whole issue raised a lot of questions, and I am trying to explain the observation codes to my physicians.  But the root of the problem was that they did not know this patient was admitted to observation and they are unsure how to recognize these patients in the future.  

From what you and Freda have said, they should be able to make this determination easily as:

1) they have to DECIDE to admit the patient to observation instead of either sending the patient home or admitting him/her as an inpatient.  So there shouldn't be any confusion on their part, because in a normal situation they are the ones making the call about the observation admission, not the hospital.
2) then later, after treating the patient and ordering and reviewing any necessary tests, the physician has to decide to either admit the patient to inpatient status, continue to "observe" him/her or send the patient home.
3) if asked to see a patient in consultation, who is in observation, they would bill the appropriate 99241 - 99245, not the inpatient consult codes 99251 -99255. (I am sure they will ask, so how will they be certain this patient is an outpatient observation patient and not an inpatient consult?  If they looked at the patient's medical record would the patient's status be OP for outpatient?)

So just to be certain we understand these codes, do we have this correct?

Day 1
A patient comes into the ER and Dr Smith is called down to see her for her chest pain, possibly GI related.  At this point the physician can choose to bill for the ER consult and send the patient home, admit the patient for observation (99218-99220) or admit the patient to the hospital as an inpatient (99221 -99223). And if the patient is admitted for observation and then sent home later that same day, but after 8 hours, the physician would bill 99234, 99235 or 99236   
Day2
If the patient was admitted to observation, on day 2 the physican would either bill the appropriate outpatient established pt visit (99212 - 99215) or admit the patient to the hospital (99221 - 99223) or send the patient home  (99217).

Does this sound correct?


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## LLovett

As to the discharge for expired patients, only the doctor that does the prouncement gets to bill this.

Laura, CPC, CEMC


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## Colliemom

Would this typically be the attending? (typically, but not always)


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## LLovett

I really don't know. It probably depends on the setup of the hospital.

I know that my doctors rarely do the prouncement for a billable discharge. My primary care providers are not onsite so the odds of them being here when a death occurs are not good. It is usually a hospitalist or specialist they call in. When my specialist do a prouncement it is usually after or during a procedure so we can't bill the discharge.

Laura, CPC, CEMC


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## FTessaBartels

*"overnight observation - as an inpatient"*

Katkia ...
I can see how the hospital got confused if an admitting physician wrote "admit for overnight observation as inpatient." (emphasis added by FTB)

I think the ideal would be to educate the physicians to AVOID the word "observation" UNLESS they intend to admit for observation. I think some of the confusion might also be that observation status isn't a particular place or ward or clinic.  It really describes the intent of the physician to "observe" for 24-48 hours to see if patient requires admission to hospital or can be safely released to home. 

Hope that helps.
F Tessa Bartels, CPC, CEMC


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## Colliemom

thank you all for the help!  I am meeting with my physicians tomorrow night and will hopefully be able to educate them on how to correctly use these codes.


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## Jakkia

*admit discharge same day - different physicians*

Question, I have a patient admitted to outpt observation by a physician, then discharged to another hospital on the same day by a different physician, because intake physician was in his office during decision to discharge.  How can this be billed as same day?


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