Neurology & Pain Management Coding Alert

E/M Coding:

Use Keen Eye, Coding Smarts to Tackle Observation Coding

Published on Fri Oct 22, 2021

Remember different codes for different payers, types of stays.

Reporting observation services is a bit more involved than coding for some other evaluation and management (E/M) services, particularly since the rules (and codes) may change depending on how long the patient is there.

Further, Medicare and private payers differ on how to code one specific type of observation, so you’ll need to be ready for that curveball as well.

Help’s here: To get a handle on how to report these services, we talked to Mary I. Falbo, MBA, CPC, CEO of Millennium Healthcare Consulting Inc. in Lansdale, Pennsylvania. Check out this quick review of observation reporting to keep you on the straight and narrow.

Visit Must Meet 3 Requirements

Make sure you have an order, a patient reassessment, and a discharge component. The provider should clearly communicate in the chart that the patient is being placed in observation status. Of note, observation is an outpatient status, so it is acceptable to document that the patient is being placed in observation rather than “admitted to observation.” To support the facility, the record should also include the reason for observation and clinically appropriate reassessment. Performing providers should also sign, date, and time the record.

What about verbal orders? Verbal orders aren’t forbidden; they’re just governed by some extra guidance. “Verbal orders are permitted but must be documented by the individual receiving the order. The ordering practitioner must review and confirm the verbal order when they see the patient,” explains Falbo.

However, “verbal orders should be the exception; not the rule,” she cautions.

Also, remember that “day” is defined by the date on the calendar, not each 24-hour block. For example, if a patient is admitted at 3 a.m. October 10 and discharged at 9 p.m. October 10, it is a single-day observation. Conversely, if a patient is admitted at 11 p.m. on October 10 and released at 4 a.m. on October 11, it would be a two-day observation stay.

Mark Multi-Day Stays With 99218-99220

If the patient is in observation for multiple calendar days, you’ll choose from these codes for the first date of service:

99218 (Initial observation 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 …)
99219 (…a comprehensive history; a comprehensive examination; and Medical decision making of moderate complexity …)
99220 (… A comprehensive history; A comprehensive examination; and Medical decision making of high complexity …)

You should also roll other work related to the observation admission into the observation code, Falbo relays. “Any evaluation and management services by the same provider or someone in the same group practice of the same specialty in another setting, such as the office or an emergency department, that are related to the admission to observation status cannot be billed separately, as they are considered part of the initial observation care service,” she says.

Medicare Differs on Shorter 1-Day Stays

Medicare also wants you to use 99218-99220 for certain single-day observation services. When reporting to Medicare (and other payers that follow Medicare guidelines), you should also use 99218-99220 for patients admitted and discharged from observation status for less than eight hours on a calendar date, reminds Falbo.

So, let’s say a Medicare patient is admitted to observation at 7 a.m. on October 10 and discharged at 1 p.m. on October 10. Notes indicate comprehensive history and exam, along with moderate medical decision making (MDM). For this patient, you’d report 99219.

Warning: This is only for Medicare and its adherents. There are payers who don’t want you to report 99218-99220 for any single-date observation services. You’ll have to check with each non-Medicare payer to get a bead on where they stand concerning this issue.

Discharge Date = 99217

When a patient is discharged on a different calendar date, you’ll need to change coding gears; ditch 99218-99220 for the final day of observation service and report 99217 (Observation care discharge day management) instead.

So, let’s say a patient is admitted on October 10 and receives level-three observation services. The patient is discharged on October 11. For this patient, you’d report:

99220 for the October 10 services (admit day)
99217 for the October 11 services (discharge day).

Remember These Codes for Subsequent Observation Days

So what about coding for a patient that is in observation for more than two calendar days? It doesn’t happen often, but CPT^®has you covered in case it does.

Solution: In this situation, you’ll need to rely on another code set. You’ll report the “middle” day with these subsequent observation codes:

99224 (Subsequent observation care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: problem focused interval history; problem focused examination; medical decision making that is straightforward or of low complexity ...)
99225 (... an expanded problem focused interval history; an expanded problem focused examination; medical decision making of moderate complexity ...)
99226 (... a detailed interval history; a detailed examination; medical decision making of high complexity ...).

Remember: Unlike the other observation care codes, you can report the subsequent observation codes based on two of the three key components for each code level. So, if notes indicated that the subsequent observation day involved a detailed interval history and exam with moderate-complexity MDM, you could still report 99226.

So, let’s say that a patient receives level-three observation care on October 10, level-two care on October 11, and is discharged on October 12. For this claim, you’d report:

99220 for the October 10 service (admit day)
99225 for the October 11 service (subsequent day)
99217 for the October 12 service (discharge day).

Single-Day Observations Call for These Codes

Finally, there’s the matter of coding observations that occur entirely on a single calendar date. For these services, you’ll choose from the following codes:

99234 (Observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, 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 …)
99235 (… A comprehensive history; A comprehensive examination; and Medical decision making of moderate complexity …)
99236 (… A comprehensive history; A comprehensive examination; and Medical decision making of high complexity …)

For Medicare and those that follow its payment rules, the visit must exceed eight hours in order to report 99234-99236. Query payers that don’t follow Medicare rules if you need clarity on their single-day observation coding requirements. CPT^®is silent on this issue.

Documentation alert: Falbo stresses the importance of specific documentation on 99234-99236 claims. “In addition to meeting the documentation requirements for history, examination, and medical decision making [MDM], documentation in the medical record shall include:

“Documentation stating the stay for observation care or inpatient hospital care involves eight hours, but less than 24 hours,
“Documentation identifying the billing physician was present and personally performed the services, and
“Documentation identifying the admission and discharge notes were written by the billing physician.”