Otolaryngology Coding Alert

Observation services expansion eliminates payer coding variation.

In 2011, coders will have a new option when reporting the middle day of observations that last longer than normal. Check out this expert advice on how CPT additions will affect your otolaryngologist's observation care services coding starting on Jan. 1, 2011.

New Codes Offer Clarity

Before 2011, coding for the "middle days" of an observation service was a problem. Although not the norm, there are situations where a patient is admitted to observation and remains in that status for three or more days.

The CPT 2011 E/M section addresses these middle days with new codes. The three new codes parallel the hospital subsequent care series in terms of component requirements and time frames. The new codes include:

• 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. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the patient is stable, recovering, or improving. Physicians typically spend 15 minutes at the bedside and on the patient's hospital floor or unit.
• 99225 -- ... an expanded problem focused interval history; an expanded problem focused examination; Medical decision making of moderate complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the patient is responding inadequately to therapy or has developed a minor complication.
• Physicians typically spend 25 minutes at the bedside and on the patient's hospital floor or unit.
• 99226 -- ... a detailed interval history; a detailed examination; Medical decision making of high complexity. Counseling and/or coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the patient is unstable or has developed a significant complication or a significant new problem.

Physicians typically spend 35 minutes at the bedside and on the patient's hospital floor or unit. 99224-99226 Stamp Out Insurer Variances There has been some confusion about how to report the middle day for those cases when an observation period transcends three calendar days. The introduction of the new CPT codes resolves that dilemma.

Prior guidance for these "extended" observation and middle day observation stays created some confusion and led to several different policies, such as the Spring 1993 edition of CPT Assistant, which instructed coders to "use the unlisted evaluation and management service code (99499, Unlisted evaluation and management service) to report these services." Payers often took their own path, however, when setting policy on "middle day" observation coding. Payers would often call for 99499; some carriers, however, preferred 99231- 99233 (Subsequent hospital care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: ...) or 99211-99215 (Office or other outpatient visit for the evaluation and management of an established patient, ...). Technically, observation codes are outpatient codes.

Prepare for Disappointing Reimbursement Coders and physicians who were excited about the new subsequent care observation codes won't be jumping for joy when they hear the accepted payments for these codes. The Relative Value Update Committee had compared new codes 99224-99226 for subsequent observation care to subsequent hospital care and had requested the same work value. The Center for Medicare, however, disagreed with the proposal. "Instead, to recognize the differences in patient acuity between the two settings, we have removed the pre- and post-services times from the values, reducing the values to 75 percent of the value for subsequent hospital care codes," says Kenneth B. Simon, MD, MBA, CMS senior medical officer, in "Medicare Physician Payment Schedule 2010 Changes and Beyond" at the AMA CPT and RBRVS 2010 Annual Symposium in Chicago.

At first, you might be disappointed with the accepted lower values, but you cannot disagree with the rationale that observation services do not have the same diagnostic severity and risk associated with morbidity between patient-physician encounters as hospital care services forcing me to begrudgingly agree with the Center for Medicare decision.

Beware: Many insurers have lists of ICD-9 codes that they allow for observation care. If the diagnosis is not on the approved list, your observation care service will be denied. Query your payers for such lists.