ED Coding and Reimbursement Alert

Timing, E/M elements are crucial for correct claims

Guidelines for reporting observation can be tricky - so if you're confused about when you can report observation services, when you can report an emergency department E/M code, and when you can report both, debunk these common myths before dropping your next 99234 claim.
 
Myth #1: If the physician provides observation care for fewer than eight hours on one calendar date, we can only bill an ED evaluation and management (E/M) code.

Reality: Not only can you bill for fewer than eight hours of observation care, but if you're submitting the claim to a private payer, you have no time restrictions for patients who are admitted and discharged from observation on the same day.
 
For government payers, you should report observation services of fewer than eight hours with codes 99218-99220 (Initial observation care, per day, for the evaluation and management of a patient). However, in practice, many emergency department groups, seeing the patient initially as an ED patient, will then default to the 99281-99285 standard ED E/M codes.  
 
Tip: Keep in mind that for private payers, there is no minimum time threshold for same-day observation services.
 
And since there are no time restrictions for non-government payers, you can report same-day observation care with 99234-99236 (Observation or hospital inpatient care, for the evaluation and management of a patient including admission and discharge on the same date), whether the physician observed the patient in the emergency department or an observation unit, says Laurel Green, CPC, coding support manager at MedData in Seattle, Wash. And remember, discharge services are included in these codes, so you don't need to report a separate discharge code.
 
Warning: If all the observation care took place on the same day the physician saw the patient in the ED, then you can bill either an ED E/M code or observation care, but not both.
 
Myth #2: Because the patient was in observation for fewer than eight hours - from 10:30 one evening to 6:00 the following morning - we should report a code from the 99218-99220 (Initial observation care, per day) set.

Reality: This assumption is partly correct - you should report a code from the 99218-99220 set. But that's not the end of the story. For the services on the first calendar day (10:30 to midnight), you should report a code from 99218-99220. For the second day's work (midnight to 6:00), you should report 99217 (Observation care discharge day management), says Joan Gilhooly, CPC, CHCC, president of Medical Business Resources.
 
Remember: CPT instructs you to roll all the E/M work from the same day into the observation code.

Myth #3: Regardless of the patient's condition, we can bill for observation care if the physician performed it.

Reality: The patient's condition has everything to do with whether you can get reimbursed for observation care.
 
To make observation care medically necessary, the physician must include his decision to admit or transfer the patient. If the patient's condition has no likelihood of admission to observation, you can't bill for it. Similarly, if the condition means admission is a shoe-in, it's inappropriate to report observation care.
 
Generally these observation patients fall into two clinical categories: therapeutic intensity and clinical uncertainty. For example, an asthmatic who receives a brief intensive course of treatment with several hours of continuous nebulizer treatments may ultimately not require admission to the hospital, or a patient with uncertain abdominal pain, whom the physician observes with serial exams and repeat lab work, may receive a safe discharge in the end.
 
You can report the observation code if the patient's primary-care physician ultimately decides to admit the patient following an observation period. But make sure that in the medical decision-making portion of the service, the physician documents his concerns with the decision.
 
This information will show the payer why the patient needed observation and why the doctor needed time to make the decision. If the ED physician decides to admit the patient, you should report an inpatient admission code.