General Surgery Coding Alert

E/M:

Follow This Expert Advice for Inpatient/Observation Codes

Published on Wed May 17, 2023

See when office care leads to ‘subsequent’ hospital care.

With the overhaul of hospital inpatient/observation evaluation and management (E/M) codes ranging from 99221 to 99239 in CPT^®2023, you’ve already lived through a few months’ adjustment for coders and payers using the new codes. If the experience has left you with some questions, we have some answers.

Help is here: We asked some E/M experts for their takes on the revised inpatient/hospital E/M services. Here’s what they had to say.

Change to MDM or Time

One major change for hospital inpatient or observation care (99221 through 99239) deals with eliminating the requirement that you need three key components to report inpatient/hospital E/M codes: history, examination, and medical decision making (MDM). CPT^®updated the components in these descriptors to add language indicating that the coder could use time or MDM as the sole deciding factor when choosing an inpatient/hospital E/M code.

Old way: The descriptor for 99221 used to read: “Initial hospital care, per day, for the evaluation and management of a patient, which requires these 3 key components: A detailed or comprehensive history; A detailed or comprehensive examination; and Medical decision making that is straightforward or of low complexity...”

New way: Now, the descriptor for 99221 reads: “Initial hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and straightforward or low level medical decision making. When using total time on the date of the encounter for code selection, 40 minutes must be met or exceeded.”

Because coders have already adjusted to similar changes in office E/M codes in 2021, we’re not seeing as many questions about this part of the change. However, coders have struggled with other aspects of the revisions, such as the following:

Challenge: POS Updates for Observation Codes

One of the biggest challenges using the updated codes involves confusion about the place of service (POS). This has been a challenge for coders and payers, says Jill Young, CPC, CEDC, CIMC, owner of Young Medical Consulting in East Lansing, Michigan.

Prior to January, you used codes 99221-99239 only for hospital inpatient services. Now the codes state, “hospital inpatient or observation,” dramatically broadening when you can use the codes.

Gone: CPT^®2023 also eliminates initial inpatient observation codes 99218-99226, directing you instead to use the revised codes 99221-99233.

Place: Hospitals don’t necessarily have a designated “observation” unit. That has led to some coder confusion. Revised CPT^®2023 guidelines clarify that for patients admitted or designated as “observation status” in the hospital do not need to be located in a designated observation area for you to use the revised codes.

Problems: Confusion about the revision can stem from physicians or staff incorrectly identifying the POS for patients in observation status. Other trouble comes when payers have not updated their computers “to recognize and accept observation as a place of service for these codes that used to be for just hospital locations for patients,” explains Young.

Best bet: Make sure your physicians and other providers are identifying POS correctly with observation patients. Also, be on the lookout for any denials based on POS; the payer might not have updated its systems yet and issued an incorrect denial.

Challenge: Adjusting to New 99221-99223 Rules

Another adjustment coders are having to make concerns how to report initial hospital care when multiple providers from the same specialty see the patient during the admission.

Historically, only the admitting physician was able to use the initial hospital care codes 99221-99223, explains Mary I. Falbo, MBA, CPC, CEO of Millennium Healthcare Consulting Inc. in Lansdale, Pennsylvania.

CPT^®2023 E/M guidelines now state: “An initial service may be reported when the patient has not received any professional services from the physician or other qualified health care professional (QHP) or another physician or QHP of the exact same specialty and subspecialty who belongs to the same group practice during the stay.”

Falbo says CPT^®considers advanced nurse practitioners (NPs) and physician assistants (PAs) who are assisting a physician “to be of the same specialty and subspecialty as that physician and, therefore, may not separately bill for their services.”

This means a single initial hospital observation code per patient, no matter the number of providers from the same specialty and practice treated the patient. “CPT^®clarifies in the 2023 E/M guidelines that a hospital admission is from when the patient is admitted until when the patient is discharged,” says Falbo. “That’s one course of admission, so [the payers] would expect to see only one initial code for that course of stay from practitioners of the same specialty and subspecialty who belong to the same group practice. This is an adjustment,” Falbo concludes.

Best bet: Make sure you aren’t double-dipping on initial observation care claims and be sure your payers are processing your claims as per the 2023 inpatient/hospital E/M rules.

Challenge: Using Subsequent Care Codes Correctly

Another confusing aspect of the code revisions is how to use the subsequent care codes for patients who have already started a continuum of care with your provider.

This might be a scenario “where their physician or NP or PA have seen the patient for the problem or a related one the day before or the day of the patient’s admission to either observation or hospitalization status,” explains Young. “Per CPT^®guidelines, their visit to the patient who is now in the hospital can only be billed with a subsequent care code, not an initial. This is for non-admitting providers.”

Best bet: Be sure you’re looking at the entire claim for evidence of where your provider began caring for the patient; sometimes, it will lead you to coding for subsequent hospital care, not initial.

Study These Final Thoughts

When asked what other advice they had for coders concerning the revamped hospital/inpatient E/M codes, our experts had this to say:

“Remember that if a patient is in observation status and transitions to hospital status, it is still one continuous episode of care. The physician can only bill one Initial care code for this patient, even though their status changed. Also remember, per CPT^® guidelines NP’s and PA’s that work with a specialty or subspecialty physician are considered as being a provider of that same specialty as their physician,” says Young.

“During an inpatient or observation stay, the group may bill only one initial service, and follow-up services are billed with subsequent visits. This is not a change in how groups are reporting inpatient or observation services. When partners are covering for one another, the practitioner who does the initial service bills for the initial service and on subsequent days covering physicians report a subsequent visit. It is aligned with the Medicare rule that physicians in the same group of the same specialty should bill and be paid as if they were one physician,” Falbo concludes.