Internal Medicine Coding Alert

Answer: You should use CPT codes 99218-99220 (Initial observation care, per day) and 99217 (Observation care discharge day management) to report E/M services the internist delivers to patients designated as in "observation status." A physician may admit a patient to observation status to be watched for a period of time when, for example, there is a question whether the patient has a serious problem, such as a heart attack, or merely has indigestion. Medicare includes all E/M services provided on the same date as the observation status initiation in the observation codes.

Most commercial payers have established time limits for observation care. The general rule is that any patient remaining in the facility longer than 36-48 hours is no longer in observation status and should be admitted to the facility. This could be one reason that you are having difficulty receiving reimbursement from the carrier.

You are also using the wrong code for the second day. Code 99232 (Subsequent hospital care, per day) should not be used for a patient admitted to observation status. You should use this code only for inpatients.

If the internist discharges the patient on the second day in observation, you should bill only the discharge code (99217) for that day, according to the Medicare Carriers Manual, Section 15504.

If your patient stayed in observation status for more than two calendar days, however, MCM, Section 15504, paragraph B, states that you should use the admission codes (99218-99220) for the first day, the office/outpatient visit codes (99212-99215) for the second day, and the observation discharge code (99217) for the third day (or day of discharge).

Because your payer is a commercial carrier, you may want to contact the company to determine if it follows Medicare's lead or has its own policies for observation care.