Inpatient Facility Coding & Compliance Alert

Question: Occasionally we place a patient in observation status for one to three days. We are having trouble getting reimbursed for same-day admission and discharge. How should we properly bill for this?

Alabama Subscriber

Answer: The problem could be that you are reporting two observation codes on the same day. A common mistake is to report an initial observation care code (99218-99220, New or established patient initial hospital observation care services) along with the observation discharge code (99217, Observation care discharge day management…). Most insurers will not pay for both codes reported on the same day.

Do this: Use the same-day admission and discharge codes (99234-99236, Observation or inpatient care services [including admission and discharge services]) to report the services you described.

Remember: Although CPT® does not refer to a minimum length of stay as a factor in reporting 99234-99236, Medicare does. For non-Medicare payers, please check with the payer to see if you can report the same-day observation and discharge codes regardless of the length of the stay. If the payer does not follow Medicare rules, they may allow 99234-99236 as long as the documentation shows that the provider performed both of the services. The main key with these insurers is that two services occur on the same calendar day.

Medicare requires that the patient stay in observation for a minimum of eight hours on one calendar day. So, what if the observation is shorter than eight hours? In this case, you should report initial observation care codes 99218-99220 only. For stays that are longer than eight hours but still limited to one calendar day, report the same-day admission and discharge codes (99234-99236). The cause for this discrepancy is that Medicare reasons that when the stay is less than eight hours the physician probably did not provide both admission and discharge services. Therefore, Medicare will only pay for one service.

Here’s more: You should only report same-day admission and discharge codes when the provider visits the patient at two separate encounters. The physician must show in documentation that he performed two separate services.