Otolaryngology Coding Alert

Watch the dates to hone in on the correct code.

Physicians often admit patients to a hospital for observation, but that doesn’t mean the associated coding is always quick and easy. Be sure you’re making solid code choices by following the expert tips below.

Tip 1: Pay Attention to the Descriptor Differences 

CPT® includes two sets of codes for observation services. 

Codes 99218, 99219, and 99220 (Initial observation care, per day, for the evaluation and management of a patient which requires these 3 key components …) represent initial observation care when the observation crosses over two calendar days. 

By contrast, codes 99234, 99235, and 99236 (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 …) apply to patients who are admitted and discharged on the same day.

As with most other E/M codes, you’ll base your choice on the history, exam, and medical decision making, while also considering the amount of time your provider spends with the patient. These factors will help you pinpoint the best code within a group. 

Tip 2: Only Report One Observation Code Per Day

When submitting your claim, verify that you aren’t reporting two observation codes on the same day. A common mistake is to report an initial observation care code (99218-99220) along with the observation discharge code (99217, Observation care discharge day management …). Payers should not cover both codes reported on the same day. 

 AMA CPT® created codes specifically for same day admission and discharge from observation.  As a result, you must be sure to use the same-day admission and discharge codes (99234-99236, Observation or inpatient care services [including admission and discharge services]) to report the services. Use a code from 99234-99236 when the patient is admitted and discharged to and from observation on the same calendar date.  Once the patient’s observation stay crosses midnight and the stay includes two dates of service, you revert back to the 99218-99220 for the admission on the first date and 99217 for the discharge.

Tip 3: Follow the Time Requirements 

This is where things can become tricky. CPT® does not refer to a minimum length of stay as a factor in reporting 99234-99236, but Medicare has instituted a minimum time requirement. For non-Medicare payers, check with the insurer to see if you can report the same-day observation and discharge codes regardless of the length of the stay. If the payer does not follow Medicare rules, they may allow 99234-99236 as long as the documentation shows that the otolaryngologist performed both of the services. The key with these payers is that two services occur on the same calendar day. Some payers may only allow you to bill an outpatient E/M service if the patient is admitted and discharged on the same calendar date.  Your only choices then become 99201-99205 or 99212-99215 depending on whether the patient is new to your practice/physician or established with your practice/physician.

Medicare requires that the patient stay in observation for a minimum of eight hours on one calendar day. If the observation time is shorter than eight hours, report only the initial observation care codes (99218-99220). For stays that are longer than eight hours but still limited to one calendar day, report the same-day admission and discharge codes (99234-99236). The cause for this discrepancy is that Medicare reasons that when the stay is less than eight hours the physician probably did not provide both admission and discharge services. Therefore, Medicare will only pay for one service.

Plus: You should only report same-day admission and discharge codes when the physician visits the patient at two separate encounters and the documentation shows that he performed two separate services.

Note: One reason you may be getting denials for observation services even after you assured all the above rules have been followed is because your hospital is not classifying the patient as observation status even though the physician did not admit the patient as a full inpatient admission.  The hospital makes more money for full inpatient admissions and case management might be “managing” your patients into statuses which are inconsistent with your coding.

Tip 4: Prepare for More Changes in 2016

Last fall, President Obama signed into law the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act that would require hospitals to fully inform patients who spend more than 24 hours in observation without being admitted as an inpatient. The goal was to address of some drawbacks to observation status, including obstacles to Medicare payment for subsequent skilled nursing facility (SNF) stays. 

The law will become effective in August 2016. 

What it means: According to the (NOTICE) Act, hospitals are required to provide “written notification” to patients under observation in hospitals for more than 24 hours, and adequate oral and written notification within 36 hours of the differences between their status and inpatient status. The notice must be clear about the implications for cost-sharing as an outpatient and for subsequent eligibility for SNF coverage. 

Must do: The notification must be written in “plain language” and be signed by the patient or his or her representative. Should the patient or representative refuse to sign the notification, the hospital staff member who presented it must sign it in their place to demonstrate that the requirement was satisfied, says Michael Granovsky, MD, FACEP, CPC, president of LogixHealth, a national ED coding and billing company based in Bedford, MA. 

The legislation was prompted by continued concerns about the “two-midnight rule,” which was passed in 2013 and established the rule of thumb that a patient reasonably expected to require necessary hospital care for a time period that would span at least two midnights would  be presumptively considered appropriate for inpatient services and, therefore, payable under Medicare Part A. Similarly, a hospital stay not spanning at least two midnights would be presumed as an outpatient stay and more correctly reported as observation rather than an inpatient admission, Granovsky explains.

Bottom line: CMS also is looking at potentially making changes to the two-midnight rule and other issues related to observation stays. Talk with your carrier representatives for the latest information so you can file accurate claims.