Neurology & Pain Management Coding Alert

Question: We have a long-standing argument in our office regarding the proper use of observation codes. Specifically, when should we report initial observation (99218-99220) with discharge (99217) rather than  observation or inpatient care (99234-99236)? What if the surgeon admits a patient to observation at 9 p.m. and releases her the next day at 1 a.m.?


New York Subscriber

Answer: In your case, the patient observation stay spans two dates of service but lasts only four hours total. Therefore, you should choose just the appropriate-level initial observation care code (99218-99220, Initial observation care, per day, for the evaluation and management of a patient).

Three main rules govern observation coding:

1. You should report 99218-99220 with 99217 if the physician admits the patient to observation and releases her on a different date of service, unless the total duration of observation stay equals fewer than eight hours. For stays lasting multiple days, you may report one unit of 99218-99220 for each date of service (not counting the date on which the physician discharges the patient).

2. For stays of fewer than eight hours when the admission and discharge occur on different dates of service, report 99218-99220 only, without a code for the discharge service.

3. For observation stays that take place within a single date of service, you should report the observation/inpatient hospital care E/M codes 99234-99236 (Observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date). You should not report a separate discharge code with 99234-99236.