Practice Management Alert

Experts: Check with third-party payers on longer one-day stays.

Coding for your physician’s observations isn’t as cut and dried as some other evaluation and management (E/M) services. There are a couple of different code sets you’ll have to choose from, depending on the specifics of the encounter.

Without the proper info on what each payer considers an observation, you might report an observation code when you should be coding another E/M service. Read on to get the lowdown on all the ins and outs of observation service coding.

Use These Codes for First Day

Depending on the specifics of the encounter, you’ll choose one of the following codes when a patient is sent to a hospital observation area and is still a hospital outpatient:

• 99218, Initial observation care, per day, for the evaluation and management of a patient which requires these 3 key components: a detailed or comprehensive history; a detailed or comprehensive examination; and medical decision making that is straightforward or of low complexity
• 99219, … a comprehensive history; a comprehensive examination; and medical decision making of moderate complexity
• 99220, … a comprehensive history; a comprehensive examination; and medical decision making of high complexity.

The 99218-99220 code set is only for outpatients on their first day of admission, explains Donelle Holle, RN, a healthcare, coding, and reimbursement consultant in Fort Wayne, Ind.

Careful: The components for these E/M codes — history, exam, medical decision making (MDM) — are no different than inpatient hospital admission codes 99221 (Initial hospital care, per day, for the evaluation and management of a patient, which requires these 3 key components: a detailed or comprehensive history; a detailed or comprehensive examination; and medical decision making that is straightforward or of low complexity…) through 99223 (… a comprehensive history; a comprehensive examination; and medical decision making of high complexity…).

So when you consider reporting 99218-99220, make sure the patient is still an outpatient before settling on this code set. If encounter notes indicate that the patient has been admitted to the hospital, look toward 99221-99223.

Wait Until Discharge to Code Accurately

Another potential problem that might muddy the waters when choosing a code is that you can’t be absolutely sure of patient status until after the patient’s E/M service is complete, which could take several days.

In other words, until the service ends, there is no way of knowing whether you should use observation codes, initial hospital care codes — or both — to describe your provider’s E/M service, according to Jean Acevedo, LHRM, CPC, CHC, CENTC, president and senior consultant with Acevedo Consulting Incorporated in Delray Beach, Fla.

Example: A patient spends a calendar day in observation status, and then the physician admits him to the hospital the next day. In this example, you’ll probably report an observation code for the first day, followed by an initial hospital care code for the second day.

Best bet: Wait until after the patient is discharged from the facility before coding the encounter, if possible. That way, you’ll know whether or not you should code an observation or a hospital admit code — or both — for your provider’s observation services. Further, if you are able to wait until post-discharge before filing the claim, your provider might include more documentation that will only strengthen your claim.

Mark Discharge Day With 99217

When a patient is admitted for observation care and then is discharged on a different calendar date, the physician should report 99217 (Observation care discharge day management…) for the discharge day.

Reminder: In order to report 99217, the physician (or other qualified provider) must have a face-to-face encounter with the patient on the date of discharge.

Use These Codes If 1-Day Visit Exceeds 8 Hours

For single-day observation stays that last a certain amount of time, you’ll choose from a different observation code set for most providers

If the patient is admitted to observation, stays for more than eight but less than 24 hours, and is discharged on the same calendar date, you’ll choose from the following codes for Medicare payers, Acevedo confirms:

• 99234, 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: a detailed or comprehensive history; a detailed or comprehensive examination; and medical decision making that is straightforward or of low complexity…
• 99235, … a comprehensive history; a comprehensive examination; and medical decision making of moderate complexity…
• 99236, … a comprehensive history; a comprehensive examination; and medical decision making of high complexity…

These codes require two face-to-face visits with the patient, and the patient has to be in the observation area for at least eight hours but not more than 24, Holle says.

Example: Your physician admits a Medicare patient to observation at 7 a.m. Sunday. Notes indicate that throughout the course of the day, the physician met face-to-face with the patient three times, and she discharged the patient at 9 p.m. that Sunday night. For this service, you’ll choose a code from the 99234-99236 code set, depending on encounter specifics.

If the physician admits and discharges the patient from the observation area in less than eight hours on the same calendar date, you’ll choose from the 99218-99220 code set for Medicare payers. This coding convention might not apply to all payers, however.

Why? Some third-party payers might want you to report 99234-99236 for single-day observations regardless of the length of stay. Before coding, practices should check with their third-party payers to determine if they follow Medicare guidelines for observation care services.