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 is admitted for inpatient hospital care for less than eight hours and is then discharged on the same day, you should use codes 99221-99223 (initial hospital care, per day, for the evaluation and management of a patient) to report the admission, and do not report a discharge code.

When a patient is admitted for inpatient hospital care and discharged on a different date, you should use codes 99221-99223 to report the admission, and codes 99238-99239 (hospital discharge day management; 30 minutes or less and hospital discharge day management; more than 30 minutes) to report the discharge.

Higher Reimbursement for 99234-99236

At first, the new Medicare policy appears to increase reimbursement. As stated in sections 15504.b and 15505.1(c) of the Medicare Carriers Manual (MCM), the previous policy had allowed the reporting of only an admission code for observation/inpatient hospital stays when the patient was admitted and discharged on the same day.

Under the new policy, however, observation or inpatient hospital stays in which the patient was admitted and then discharged more than eight hours later on the same day will be coded as 99234-99236. Because these observation or inpatient hospital care codes include both an admission and a discharge in their descriptions, they have higher relative value units (RVUs) than the initial observation or hospital care codes.

I think this will have a positive effect, explains David McKenzie, director of the reimbursement department of the American College of Emergency Physicians (ACEP). I think it is a step in the right direction. ACEP appreciates HCFAs consideration of our comments and not reducing the work values for this series of codes.

With the new Medicare policy, for example, an ED physician may admit a patient for observation for a possible allergic reaction, take a detailed patient history, perform a detailed examination and perform medical decision-making of low complexity. The patient is discharged more than eight hours later, but on the same day. The ED physician may then report code 99234, which has a 2001 transitioned facility relative value unit (RVU) of 3.38.

Note: Addendum B of the Nov. 1, 2000, edition of the Federal Register is incorrect because it uses the work RVUs for 99234-99236 from the proposed rule and not the final rule. HCFA is aware of the misprint and will be correcting it, McKenzie notes. The above example uses the correct RVUs from the final rule.

Medicare Policy Is at Odds With CPT

Expect some coding confusion because the policys revision, which is at odds with CPT coding instructions, states that codes 99234-99236 should be used to report observation or inpatient hospital care services provided to patients admitted and discharged on the same date of service.

CPT doesnt differentiate by time, or require the stay to be eight hours or more in order to bill codes 99234-99236, says Catherine A. Brink, CMM, CPC, president of Healthcare Resource Management Inc., a physician consulting firm in Spring Lake, N.J. If the stay goes into the next calendar day, then CPT says to report both an admission and a discharge.

Some Carriers Allow 99234-99236 for All One-day Stays

Many local Medicare carriers follow these CPT coding instructions and allow ED physicians to report codes 99234-99236 when a patient is admitted and discharged on the same day, regardless of the amount of time spent in observation.

Georgia Medicare will reimburse the physician for codes 99234-99236 when the patient is under care less than eight hours. Under the new national Medicare policy, the patient must be managed for at least eight hours before the admission/discharge code can be billed.

In addition to Georgia Medicare, many other local carriers have local medical review policies (LMRP) that stipulate a more generous payment policy than the national Medicare policy. The LMRP of Empire Medicare Services of New Jersey states, Codes 99234-99236 should be reported when observation care is provided to patients admitted and discharged on the same date of service.

Nationwide Medicare Services, the carrier for Ohio and West Virginia, has a similar policy to Empire Medicare Services of New Jersey, except that it extends its LMRP to include the inpatient and outpatient setting. The Nationwide policy states, 99234-99236 are acceptable when the patient is admitted and discharged from either an inpatient or outpatient setting on the same date, which is the same as the CPT instructions.

Because the carriers have final discretion over their payment policies, it is unclear whether the local payers will revise their policies to be in line with the new national ruling or maintain their LMRPs as now stated.

Local carriers have been given the discretion to interpret national policy, Brink says, which is why physicians should always check their local carriers policy before reporting the service.

Document Time Spent to Bill Codes 99234-99236

The new national ruling also requires ED physicians to document the length of time spent in observation care or inpatient hospital status in order to report codes 99234-99236. In addition, the physician must meet the existing requirements for documenting the patients medical history, physical examination, and the level of medical decision-making that occurred.

For more information on billing for observation, see the April 1999 ED Coding Alert Maximize Use of Observation Codes to Get Paid for Long-term ED Care, page 29.