Advanced Search

Oncology & Hematology Coding Alert

Observation Codes:

Usage Depends on Discharge and Admission

Published on Sat Dec 01, 2001

When billing for observation of a patient in a hospital (99218-99220), oncology practices must consider whether the patient was discharged or had a subsequent admission.
 
And observation can occur in a hospital outpatient unit as well as in a hospital room normally used for inpatients, says Margie Hickey, MS, MSN, RN, OCN, CORLN, an independent coding consultant based in New Orleans. Oncology practices can still use observation codes if the patient is not in an "observation unit," and should not feel compelled to use other codes such as office visit codes (99212-99215.)
 
Observation often occurs following an office visit when the oncologist finds it necessary to send the patient to the hospital for observation. Diagnoses such as dehydration (276.5) and severe pain are commonly associated with observation. The oncology practice has the option of billing for the office visit or the initial observation visit in the hospital, says Lillie McAlister, CPC, president of Double Diamond Enterprises, a coding and billing consulting firm in Conroe, Texas. Choosing between the two depends on which provides the greatest reimbursement, but both cannot be billed.
 
For example, if a cancer patient presents for a scheduled visit and the patient is diagnosed as being severely dehydrated, the oncologist should code only for observation and not for the office visit. To show medical necessity of the observation stay, 276.5 should be listed as the primary condition, and cancer codes 143.0-199.0 should be listed as the secondary condition. Any other illness that is present should also be reported.

Initial Observation

 If the observation codes are used, the visit must meet the following requirements:
 

  • Initial observation care, 99218-99220, may be billed only by the physician who admitted the patient to hospital observation and was responsible for the patient during his or her stay.
     
    Practices are encouraged to keep a medical observation record. It should include the date and time of admission. The admitting order must contain a description of the care the patient will receive while in observation, such as hydration therapy, 90780 (IV infusion for therapy/diagnosis, administered by physician or under direct supervision of physician; up to one hour), as well as nursing and progress notes prepared by the physician while the patient is in observation status.
     
    Other physicians who see the patient while in observation must bill the office and other outpatient service codes or outpatient consultation codes, 99241-99245. Those physicians must adhere to the key components of an E/M visit and bill accordingly. For example, if an oncologist admits a patient to observation and asks another doctor in the practice to consult on the patient's condition, only the admitting physician may bill the observation code. The consulting oncologist must bill 99241-99245.

  • Payment for a hospital observation code is for all the care rendered by the admitting physician on the date the patient was admitted to observation. 
     
    Codes 99218-99220 cover one 24-hour period. In the rare instance when a patient is held in observation status for more than two calendar dates, the physician must bill subsequent services furnished before the date of discharge using the outpatient/office visit codes. The physician may not use the subsequent hospital care codes because the patient is not an inpatient. Payer guidelines vary, and their requirements must be followed for subsequent observation day coding.

    Same-Day Observation and Discharge

  • Use initial observation codes when billing for observation and discharge on the same day.
     
    If the patient is discharged on the same date as admission to observation, physicians can bill only 99218-99220. These codes describe the E/M of a patient in the observation setting, including admission and discharge on the same date.
     
    If the patient remains in observation after the first census following the admission to observation, the patient will likely be discharged that subsequent calendar date. In this instance, the physician must bill 99217 (observation care discharge) for the last date of service in observation and 99218-99220 for the previous calendar day.
     
    For example, for a patient who was admitted for observation at 5 p.m. Monday and discharged on Tuesday, the practice would bill 99218-99220 for care on Monday and 99217 for discharge on Tuesday.

    Observation Followed by Admission

  • Use initial hospital care codes when observation status is changed to inpatient status.
     
    If a patient is admitted to inpatient status before the end of the 24-hour period, the physician must bill initial hospital care, 99221-99223, for the E/M services that day rather than the observation codes.
     
    Medicare payment for the initial hospital care includes all services provided to the patient on the date of admission by that physician, regardless of the site of service.
     
    If the patient is admitted to inpatient status from observation subsequent to the date of admission to observation, the physician must bill an initial hospital care for the services provided on that date. Therefore, 99221-99223 are appropriate.

    Hospital Observation During the Global Period

    If the observation admission follows a surgery, the global surgical fee includes payment for 99218-99220 services unless the criteria are met for the use of modifiers -24 (unrelated E/M service by the same physician during a postoperative period), -25 (significant, separately identifiable E/M service by the same physician on the same day of the procedure or other service) or -57 (decision for surgery). Payment may be made for observation services in addition to the global surgical fee only if both of two requirements are met: 

  • To use modifiers -24 and -25 during the global surgical periods, physicians must show that the condition is related to the disease, not the surgery. To use modifier -57, physicians must document the factors that led to the decision to perform surgery following an E/M visit.  

  • The hospital observation service furnished by the surgeon must meet all of the criteria for the hospital observation code billed.

    • Other Articles in this issue of

    Oncology & Hematology Coding Alert

    View All