ED Coding and Reimbursement Alert

Medicare has revised its payment policy for observation and inpatient hospital care services when the patient is admitted and then discharged more than eight hours later, but still on the same day. Previously, physicians would have reported 99218-99220 (initial observation care, per day, for the evaluation and management of a patient) for this service. But effective Jan. 1, 2001, they should report 99234-99236 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date). This is important because codes 99234-99236 have a higher relative value unit (RVU) than codes 99218-99220.

If a patient is suffering from chest pain from a cardiac problem or gastrointestinal distress an ED physician may place him or her in observation. This status is also used for a patient who has swallowed an unknown substance and must be watched for several hours to see whether adverse effects show up.

Note: Just because you have the person in observation doesnt mean that you necessarily have to bill for observation, explains John Turner, MD, PhD, medical director for documentation and coding of healthcare financial services at TeamHealth, an ED staffing firm in Knoxville, Tenn. You can always default to the evaluation and management (E/M) level. But when you look through the E/M levels, they will usually pay less than 99218-99220.

Before billing these new observation and inpatient hospital care services, ED physicians should check with their local carrier to see if it has adopted the national policy or if it has a local policy with different billing instructions.

New National Policy for Observation Care Codes

According to the Nov. 1, 2000, edition of the Federal Register, the revised national Medicare policy for observation care services is as follows:

When a patient is admitted for observation care for more than eight hours and is then discharged on the same day, you should code 99234-99236.

When a patient is admitted for observation care for less than eight hours and is then discharged on the same day, you should report codes 99218-99220 for the admission, and do not report a discharge code.

When a patient is admitted for observation care and discharged on a different date (24 hours or more), you should use codes 99218-99220 to report the admission, and code 99217 (observation care discharge day management) to report the discharge.

New Policy for One-day Inpatient Hospital Stays

According to the previously cited edition of the Federal Register, the revised national Medicare policy for hospital care services is as follows:

When a patient is admitted for inpatient hospital care for more than eight hours and is then discharged on the same day, you should report codes 99234-99236.

When a patient [...]