Observation initial services

September 8th, 2009 - Codapedia Editor
Categories:   Coding   Evaluation & Management (E/M)   Primary Care|Family Care  
0 Votes - Sign in to vote or comment.

Observation services are a status of admission to the hospital.  Patients who are admitted to the hospital are admitted either to inpatient status or observation status.  The status is determined by the physician, although often the case manager at the hospital will have significant input into the status of the patient, so that the hospital follows facility rules about selecting the status for the patient.  The physician payment is almost the same --  it doesn't matter to the physician in terms of payment what the patient status is.  However, the hospital is paid for inpatient status for all medically necessary admissions, but there are only a few separately reimbursable observation status diagnoses that are paid by Medicare to the hospital.

The physician bill (inpatient or observation) should match the status of the patient in the facility.  The place of service should also match.   That is, for patients admitted to inpatient status, use codes in the 99221--99223, 99231--99233, and 99238 and 99239 series of codes, and place of service 21.  For patieints in Observation status, use codes 99218--99220 for the initial service, office/outpatient visits for the subsequent days (99212-99215) and 99217 for the discharge, and place of service 22, outpatient hospital.

A patient who is admitted to observation status is billed with codes 99218--99220.  If the patient is discharged the next day, use observation discharge code 99217.   There is only one level of discharge visit from observation.  Both services must be documented in order to bill for both services.

A patient who is admitted and discharged from the hospital (either OBS status or inpatient status) within the same calendar date is billed using codes 99234--99236.  These codes pay a higher amount, because the discharge service is included in the payment.  For Medicare, the patient must be in OBS or inpatient status for longer than 8 hours to bill using these codes.  Also, there must be two face-to-face services: the admission and the discharge, and both must be documented.  If the physician admits the patient, but then calls in the discharge order because the patient is better, and the physician does not go to the hospital and see the patient, bill only for codes 99218--99220.  Many physicians miss this: if using codes 99234--99236, document two visits, and two notes, one for the admission and one for the discharge.

If a patient is admitted to OBS status and later that same day is converted to inpatient status, bill only for the inpatient admission codes, 99221-99223. If a patient is admitted to OBS status on one day, and converted to inpatient status the next day, bill for the service performed and documented using inpatient codes.  If a complete H&P is done, bill with 99221--99223. More typically, a subsequent hospital visit is documented, and then bill with codes 99231--99233.  The discharge service is reported with codes 99238 or 99239.

If a patient is admitted to OBS status on Wed night, is still in OBS status on Thursday and is discharged on Friday, CMS tells us to bill with 99218--99220 on the Wed, office/outpatient codes on Thursday, using codes 99211-99215, and OBS discharge on Friday, 99217.  CPT® suggests using an unlisted E/M code on Thursday, 99499.  Many groups find that their commercial payers follow CMS rules in this.

A physician who consults on a patient in OBS status should use outpatient consult codes, 99241--99245.  That consultant who continues to see patients in OBS bills with office/outpatient codes, 99212--99215.

A surgeon may not bill for observation status admission or discharge, when the patient had a surgery, planned to go home that day, but stayed for pain management or other post op reason.  The surgeon's E/M services are part of the global payment, and should not be billed separately.  The admission may be billed if the service meets the requirements to use modifiers 25 or 57. 


Questions, comments?

If you have questions or comments about this article please contact us.  Comments that provide additional related information may be added here by our Editors.

Latest articles:  (any category)

Things to Consider Before Upgrading Medical Billing Software
August 11th, 2022 - Find-A-Code
Your practice has utilized the same medical billing software for years. The medical billing staff says it is time for a change. You don't necessarily disagree, but you also don't know where to begin your search for new software. There are so many vendors offering so many products that making sense of it all can be challenging.
Calendar Year 2023 Medicare Advantage and Part C & D Payment Policies
August 9th, 2022 - Aimee L. Wilcox, CPMA, CCS-P, CST, MA, MT
Each year CMS publishes an Advance Notice of the upcoming years Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies and asks for comments related to it. Each of the comments are carefully reviewed and responded to and often are impactful to changes seen between the Advance Notice and final publication referred to as the Rate Announcement. With health equity as a primary focus for 2023, CMS announced some policy changes that may impact your organization.
How CMS Determines Which Telehealth Services are Risk Adjustable
August 9th, 2022 - Aimee L. Wilcox, CPMA, CCS-P, CST, MA, MT
Medicare Advantage Organizations (MAOs) have gone back and forth on whether or not to use data collected from telehealth, virtual Care, and telephone (audio-only) encounters with Medicare beneficiaries for risk adjustment reporting, but the following published documents from CMS cleared that up once and for all by providing an answer to a question specifically related to this question.
OIG Investigates SCAN Health for Risk Adjustment Overpayments With Surprising Results
July 26th, 2022 - Aimee L. Wilcox, CPMA, CCS-P, CST, MA, MT
We’ve seen a number of OIG risk adjustment data validation (RADV) audits recently where the independent review contractor was simply looking for any codes the payer reported that were not supported by the documentation, in an effort to declare an overpayment was made and monies are due to be repaid. However, it was refreshing to read this RADV audit and discover that the independent review contractor actually identified HCCs the payer failed to report that, while still resulting in an overpayment, was able to reduce the overpayment by giving credit for these additional HCCs. What lessons are you learning from reading these RADV audit reports?
Addressing Trauma and Mass Violence
July 21st, 2022 - Amanda Ballif
After events of mass violence, it’s easy to feel helpless, like there is little we can do. In fact, we can help individuals, families, and communities build resilience and connect with others to cope together. The SAMHSA-funded National Child Traumatic Stress Network has developed a range of resources to help children, families, educators, and communities including the following which you can access via links in this article.
The 'Big 2' HIPAA Rules Medical Billing Companies Must Follow
July 20th, 2022 - Find-A-Code Staff
HIPAA covers nearly every aspect of how medical and personal information is collected, utilized, shared, and stored within the healthcare industry. Title II of the rules is applied directly to medical billing companies and independent coders. The 'Big 2' rules that medical billing companies must adhere to revolve around privacy and security.
The Beginning of the End of COVID-19-Related Emergency Blanket Waivers
July 19th, 2022 - Aimee L. Wilcox, CPMA, CCS-P, CST, MA, MT
It appears that the end of the 1135 waivers related to the COVID-19 public health emergency (PHE) has begun. According to CMS, the residents of skilled nursing facilities, long-term care facilities, and inpatient hospice centers have struggled due to the effects of some of the 1135 waivers. CMS is focusing primarily on removing the 1135 blanket waivers that pertain to certain aspects of care, training, and maintenance of these facilities to ensure the weakest of our citizens are guaranteed adequate care.

Home About Contact Terms Privacy

innoviHealth® - 62 E 300 North, Spanish Fork, UT 84660 - Phone 801-770-4203 (9-5 Mountain)

Copyright © 2000-2022 innoviHealth Systems®, Inc. - CPT® copyright American Medical Association