Practice Management Alert

Depending on the level of service, you can recoup $10, $20 or even $30 more per claim by billing the appropriate observation service code rather than a new or established patient E/M code. Use this simple recipe to make sense of observation service codes:

1. Know the patient's status. The patient does not have to be in a specified observation area designated by the hospital, only admitted to "observation status," according to CPT. But do not bill observation care once the physician admits the patient to inpatient status.

2. Look for documentation of the patient's "status" (for example, the medical chart may say "patient under observation status"). This is crucial to billing observation care codes. If this documentation is not present, you should use other outpatient codes such as new or established outpatient visits.

3. Use codes for initial observation care (99218-99220, Initial observation care, per day ...) to report E/M services the physician provides to patients admitted to observation status in locations such as hospital emergency departments or other areas of the hospital. "These codes apply to all evaluation and management services that are provided on the same date of initiating 'observation status,' " CPT states.

4. Report 99217 for discharge services on a day other than the initial date of observation status. Code 99217 (Observation care discharge day management) includes the final examination, discussion of the stay, instructions for continuing care, and preparation of discharge records.

5. Use codes for observation or inpatient care services (99234-99236) when the physician admits a patient to observation status and then discharges him on the same date of service.