Cardiology Coding Alert


Take Stock of How You Are Handling 2023 Inpatient/Hospital E/M Revisions

Hint: Ensure providers are identifying POS correctly with observation patients.

You’ve had a while to get used to the revisions to the 2023 inpatient/hospital evaluation and management (E/M) codes ranging from 99221 to 99239. Let’s check in and make sure you are reporting these codes correctly.

See what our E/M experts say.

Keep Changes in Mind

For those who don’t remember, the major changes for 99221 through 99239 were concerned with eliminating the requirement that three key components are needed to report inpatient/hospital E/M codes: history, examination, and medical decision making (MDM). The components in these descriptors were updated to add language indicating that the coder could use time or MDM as the sole deciding factor when choosing an inpatient/hospital E/M code.

Old way: The descriptor for 99221 used to read: “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...

New way: Now, the descriptor for 99221 reads: “Initial hospital inpatient or observation care, per day, for the evaluation and management of a patient, which requires a medically appropriate history and/or examination and straightforward or low level medical decision making. When using total time on the date of the encounter for code selection, 40 minutes must be met or exceeded.

This new reliance on either MDM or time only means the traditional history and physical exam requirements are no longer factors contributing to the level of observation service selected. Experienced ED coders will recall that the higher requirement for past medical, family, or social history (PFSH) was three out of three for the highest level of observation services rather than two out of three for comprehensive level ED codes — a requirement that often resulted in downcoding on audits.

In 2023, that should no longer be a problem; however, E/M services require a medically-appropriate history and physical exam to be documented.

CPT® also made similar changes in the descriptors for observation/inpatient hospital care codes 99234-99236.

Also, it eliminated initial inpatient observation codes 99218 through 99220 and discharge management codes 99217, 99238, and 99239.

Challenge: Choosing POS for Observations

According to Jill Young, CPC, CEDC, CIMC, owner of Young Medical Consulting in East Lansing, Michigan, one of the biggest challenges using the updated codes concerns place of service (POS) confusion. This has been a challenge for coders and payers, she says.

“I see issues with both physicians identifying the place of service correctly to staff when a patient is in observation status. … and with payers updating their computers to recognize and accept observation as a place of service for these codes that used to be for just hospital locations for patients,” explains Young.

Best bet: Make sure your physicians and other providers are identifying POS correctly with observation patients. Also, be on the lookout for any denials based on POS; the payer might not have updated its systems yet and issued an incorrect denial.

Challenge: Using 99221-99223 With New Rules

Another adjustment coders are having to make concerns about how to report initial hospital care when multiple providers from the same specialty see the patient during the admission.

Historically, only the admitting physician was able to use the initial hospital care codes 99221-99223, explains Mary I. Falbo, MBA, CPC, CEO of Millennium Healthcare Consulting Inc. in Lansdale, Pennsylvania.

CPT® 2023 E/M guidelines now state: “An initial service may be reported when the patient has not received any professional services from the physician or other qualified health care professional (QHP) or another physician or QHP of the exact same specialty and subspecialty who belongs to the same group practice during the stay.”

Falbo says CPT® considers advanced nurse practitioners (NPs) and physician assistants (PAs) who are assisting a physician “to be of the same specialty and subspecialty as that physician and, therefore, may not separately bill for their services.”

CPT® policy has been significantly revised for 2023. Per CPT®, “When the patient is admitted to the hospital as an inpatient or to observation status in the course of an encounter in another site of service (e.g., hospital emergency department, office, nursing facility), the services in the initial site may be separately reported. Modifier 25 may be added to the other evaluation and management service to indicate a significant, separately identifiable service by the same physician or other qualified health care professional was performed on the same date.”

This means a single initial hospital observation code per patient, no matter the number of providers from the same specialty and practice treating the patient. “CPT® clarifies in the 2023 E/M guidelines that a hospital admission is from when the patient is admitted until when the patient is discharged,” says Falbo. “That’s one course of admission, so they [the payers] would expect to see only one initial code for that course of stay from practitioners of the same specialty and subspecialty who belong to the same group practice.

“This is an adjustment,” Falbo concludes.

However, while the CPT® policy has changed, the Centers for Medicare & Medicaid Services (CMS) policy has not. Per CMS, “We also propose, however, to retain our current policy that when a patient is admitted to outpatient observation or as a hospital inpatient via another site of service (such as hospital ED, physician’s office, nursing facility), all services provided by the physician in conjunction with that admission are considered part of the initial hospital inpatient or observation care when performed on the same date as the admission. (Refer to the Medicare Claims Processing Manual, IOM 100-04, Chapter 12, This policy differs somewhat from the instructions provided in the 2023 CPT® Codebook.”

Best bet: Make sure you aren’t double-dipping on initial observation care claims and be sure you are coding as to your payers’ preferences.

Challenge: Reporting Subsequent Care Codes

Young pointed out another challenge with the new code descriptors, specifically for patients who have already started a continuum of care with their provider.

This might be a scenario “where their physician or NP or PA have seen the patient for the problem or a related one in the ED the day before or the day of the patient’s admission to either observation or hospitalization status,” explains Young. Per CPT® guidelines, their visit to the patient who is now admitted can only be billed with a subsequent care code, not an initial. This subsequent code should be used for non-admitting providers.

Best bet: Be sure you’re looking at the entire claim for evidence of where your provider began caring for the patient; sometimes, it will lead you to code for subsequent hospital care, not initial.

Final Thoughts:

When asked what other advice they had for coders concerning the revamped hospital/inpatient E/M codes, our experts had this to say:


“Remember that if a patient is in observation status and transitions to hospital status, it is still one continuous episode of care. The physician can only bill one Initial care code for this patient, even though their status changed. Also remember, per CPT® guidelines NPs and PAs that work with a specialty or subspecialty physician are considered as being a provider of that same specialty as their physician.”


“During an inpatient or observation stay, the group may bill only one initial service, and follow-up services on different calendar dates are billed with subsequent visit codes. This is not a change in how groups are reporting inpatient or observation services. When partners are covering for one another, the practitioner who does the initial service bills for the initial service and on subsequent days covering physicians report a subsequent visit. It is aligned with the Medicare rule that physicians in the same group of the same specialty should bill and be paid as if they were one physician.”