Determining the Time of Observation Care

Question: Proper coding for observation services (e.g., initial observation care 99218-99220 and observation care, including discharge, 99234-99236) depends upon the time the patient spends under observation, but when does the service officially start? Is it when the patient begins to receive services at the hospital? Is it from the time the order is written? Is it from the time the physician sees the patient?

Answer: Per the Medicare Claims Processing Manual, chapter 4, section 290.2.2, Reporting Hours of Observation, observation time begins, “at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order.”

By this definition, the physician must first see the patient and give the formal order for observation care. Only when the ordered observation begins does the observation care clock start to run. For example, time in the emergency department prior to the initiation of observation care doesn’t count toward observation time. Observation care ends when the patient is discharged to home, per the Centers for Medicare & Medicaid Services guidelines.

Your timekeeping needn’t be absolutely precise. Per the Medicare Claims Processing Manual, when determining the total time in observation:

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Hospitals should round to the nearest hour. For example, a patient who began receiving observation services at 3:03 p.m. according to the nurses’ notes and was discharged to home at 9:45 p.m. when observation care and other outpatient services were completed, should have a “7” placed in the units field of the reported observation HCPCS code.

John Verhovshek

John Verhovshek

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.
John Verhovshek

About Has 404 Posts

John Verhovshek, MA, CPC, is Managing Editor at AAPC. He has covered medical coding and billing, healthcare policy, and the business of medicine since 1999. He is an alumnus of York College of Pennsylvania and Clemson University, and a member of the Asheville-Hendersonville AAPC Local Chapter.

4 Responses to “Determining the Time of Observation Care”

  1. Neverstoplearning says:

    Glad this was brought up, however what do you do when the observation has on the order 03/14/2014 at 10:00pm and the discharge order is for 3/15/2014 at 11:30pm, the provider however was not able to first see the patient and perform thier initial documentation on 3/14/2014, they performed it on 3/15/2014 in the morning and then did a discharge later. Would you then bill a same day/admit/discharge for this patient because first face-to-face encounter is 3/15/2014? Or do you still go by order and only bill 99220?

  2. ACA says:

    bill same day/admit/discharge for this patient because first face-to-face encounter is 3/15/2014

  3. CD says:

    if one physician sees the patient initially at 2 a.m. and then the second physician discharges the patient same day at 9:45 a.m. is that still less than 8 hours or does the time get rounded up?

  4. marcelino thibodaux says:

    Practical writing – I was fascinated by the analysis – Does someone know if my business would be able to get ahold of a fillable DA 759-1 version to use ?

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