Primary Care Coding Alert

As most family practice coders anticipated, Medicare revised its payment policy for several observation and inpatient hospital care services, effective Jan. 1, 2001. However, one component of the revision that had been proposed by HCFA in July 2000 a decrease in work relative value units (RVUs) was not implemented.

The new policy affects how 99217 (observation care discharge), 99218-99220 (initial observation care), 99221-99223 (initial hospital care), 99234-99236 (observation or inpatient hospital care) and 99238- 99239 (inpatient hospital discharge) are assigned (see box at the end of this article for complete code descriptions). The changes, which were announced in November, are designed to clarify conflicts between Medicare payment practice and policies that appear in the Medicare Carriers Manual (MCM).

New National Policy for Observation Care Codes

As published in the Nov. 1, 2000, edition of the Federal Register, the revised national Medicare policy for observation care services is as follows:

Report 99218-99220 when a patient is admitted for observation care for fewer than eight hours and is then discharged on the same calendar date. No discharge code should be reported.

Report 99234-99236 when a patient is admitted for observation care for eight or more hours and discharged on the same calendar date. These codes have both an admission and discharge component and therefore no discharge code would be assigned.

Report 99218-99920 when a patient is admitted for observation care and discharged on a different date. In addition, 99217 would be used to report the subsequent discharge.

New National Policy for Inpatient Hospital Stays

The revised national Medicare policy for inpatient hospital care services is as follows:

Report 99221-99223 when a patient is admitted for inpatient hospital care for fewer than eight hours and is then discharged on the same calendar date. No discharge code should be reported.

Report 99234-99236 when a patient is admitted for inpatient hospital care for eight or more hours and is then discharged on the same day. These codes have both an admission and discharge component and so no discharge code would be assigned.

Report 99221-99223 when a patient is admitted for inpatient hospital care and discharged on a different date. In addition, codes 99238-99239 should be used to report the subsequent discharge.

Changes Correct Policy Discrepancies

In short, the policy changes rectify discrepancies between Medicare reimbursement policy and Medicare payment practice.

In the past, Medicare reimbursement policy disallowed payment for both observation admission and discharge services on the same date of service. However, Medicare reimbursement practice was an entirely different matter. HCFA policy, outlined in sections 15504.b and 15505.l(c) of the MCM, states that physicians could report codes with an admission component only for observation /inpatient hospital stays when the patient was admitted and discharged on the same date (whether they stayed four hours or 23 hours). However, in practice, HCFA allowed family practice coders to report these services with 99234-99236, which include work RVUs for both admission and discharge. In effect, Medicare paid for both services, despite its policy to the contrary.

This inconsistency, besides creating confusion among family practices and coders, also resulted in occasions where two physicians providing identical services would be reimbursed at different levels.

For instance, under the 2000 policy, a family physician who admitted a patient to observation at 8 a.m. and discharged him at 8 p.m. was allowed payment only for the admission services. However, a physician who admitted a patient at 8 p.m. and discharged him at 8 a.m. the following morning was allowed payment for both admission and discharge services because the two activities occurred on different calendar dates.

This scenario is rectified with the 2001 policy, explains Kathy Pride, CPC, CCS-P, coding specialist for Martin Memorial Medical Group, a practice with 57 primary care physicians located in Stuart, Fla. HCFA notes that the 2001 changes will create a consistent payment policy for physicians who admit patients into observation up to 24 hours regardless of the time at which they were admitted.

Payment Lowered for Stays Less Than Eight Hours

A second outcome of the changes can be seen in how stays of eight or fewer hours will be billed, she adds. In the past, coders would have assigned a code from 99234-99236, which includes both admission and discharge components. The new policy requires coders to report observation services of fewer than eight hours with 99218-99220, which are admission only codes carrying lower work RVUs.

As a result, these changes may ultimately lower the level of reimbursement when family physicians admit patients into observation for fewer than eight hours.

Pride adds that the new national ruling requires family physicians to document the length of time spent in observation care or inpatient hospital status in order to report codes 99234-99236. Of course, the physician must also satisfy existing E/M requirements for documenting the patients medical history, the results of the physical examination, and the level of medical decision-making that occurred during the admission process.

Final Rule Reverses HCFAs Proposed RVU Cuts

When it presented preliminary policy changes in July, HCFA proposed decreasing the discharge work RVUs from 1.28 to 0.67 to reduce rates for 99234-99236. The proposal noted that the decrease would have made the discharge work equal to the work in 99213 (office or other outpatient visit). However, after hearing input from coding and reimbursement professionals throughout the summer and fall, HCFA determined that the RVUs for 99234-99236 would remain unchanged.

Medicare Policy at Odds With CPT

Despite the revisions, Medicare policy continues to be at odds with CPT coding instructions, which state use 99234-99236 to report observation or inpatient hospital care services provided to patients admitted and discharged on the same date of service.

CPT doesnt differentiate by time, doesnt require the stay to be eight hours or more, in order to bill codes 99234-99236, points out Catherine A. Brink, CMM, CPC, president of Healthcare Resource Management Inc., a physician practice management consulting firm in Spring Lake, N.J. If the stay goes into the next calendar day, then CPT says to report both an admission and a discharge.

Traditionally many local Medicare carriers have followed these CPT coding instructions and allowed family physicians to report 99234-99236 when a patient is admitted and discharged on the same day, regardless of the amount of time spent in observation or inpatient hospital care.

Georgia Medicare, for instance, reimburses codes 99234-99236 even when the patient was under care for less than eight hours. Likewise, other carriers have local medical review policies (LMRP) that stipulate a more generous payment policy. The LMRP of Empire Medicare Services of New Jersey states, Codes 99234-99236 should be reported when observation care is provided to patients admitted and discharged on the same date of service. Nationwide Medicare Services, the carrier for Ohio and West Virginia, has a similar policy to Empire, except that it extends its LMRP to include the inpatient and outpatient setting. The Nationwide policy states codes 99234-99236 are acceptable when the patient is admitted and discharged from either an inpatient or outpatient setting on the same date, echoing the CPT instructions.

However, coding experts expect these LMRPs to be brought into line with the national policy soon because local carriers have discretion to establish policy only in absence of a national policy. Where national policy exists, local Medicare carriers are expected to abide by it.

CPT Definitions for Observation and Inpatient Hospital Care Codes 99217 observation care discharge day management (This code is to be utilized by the physician to report all services provided to a patient on discharge from "observation status if the discharge is on other than the initial date of observation status. To report services to a patient designated as observation status or inpatient status and discharged on the same date, use the codes for Observation or Inpatient Care Services [including Admission and Discharge Services, 99234-99236 as appropriate.]) 99218-99220 initial observation care, per day, for the evaluation and management of a patient 99221-99223 initial hospital care, per day, for the evaluation and management of a patient 99234-99236 observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date 99238 hospital discharge day management; 30 minutes or less 99239 hospital discharge day management; more than 30 minutes