Observation Followed by Discharge
If a patient is placed under observation status and is discharged on the same date of service, proper coding will depend on whether the observation status lasted fewer than, or more than, eight hours.
— For observation status lasting fewer than eight hours, report initial observation care (99218-99220 Initial observation care, per day, for the evaluation and management of a patient) at the documented level of care.
— For observation status lasting more than eight hours, report choose the appropriate level of service from codes 99234-99236 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… for observation care, including discharge.
For example, a pregnant patient presents at 37.5 weeks gestation thinking she is in labor. It had been a very hot day, and she hadn’t been drinking much water. An external fetal monitor was applied, which demonstrated that she was having contractions every 10-15 minutes. The provider evaluated her at admission and found no cervical changes. After some fluids and rest, her contractions ceased. She was sent home after nine hours of observation care. You would choose the appropriate code from range 99218-99220. Because the physician did not have a face-to-face with the patient to discharge her, you may bill Initial Observation Care only. If the physician had returned to the hospital to perform and document a discharge service, you would use the appropriate code from range 99234-99236, instead.