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ED Coding and Reimbursement Alert

Observation Codes:

Details to Note

Published on Wed Jan 01, 2003

Reporting observation codes requires more than just designating the code. Watch out for the other factors influencing payment:

  • The patient does not have to be in the hospital's designated observation unit to use "observation status" codes, says James Blakeman, senior vice president of Healthcare Business Resources in Bala Cynwyd, Pa.
  • Time is not the key component of this E/M service, Blakeman states. Time matters only when you're deciding whether to use same-day observation codes for Medicare, in which case the physician must have provided observation care for at least eight hours on that date. The amount of hours after that is not important unless the care extends into another day, and in that case you just switch to 99217 and the 99218-99220 series.
  • Include same-date E/M services rendered by the same physician in the observation codes, Blakeman says. You can't bill an E/M service including inpatient admission and discharge with observation care rendered by the same physician during that same day, Blakeman says. In those cases, don't report the E/M service, he adds. Note that this exclusion is only true on the professional side.
  • Don't worry too much about the diagnosis codes. The diagnosis does not affect physician payment for observation codes, says Kathy Pride, CPC, CCS-P, coding supervisor for the Martin Memorial Medical Group, a 57-physician group practice in Stuart, Fla. However, keep in mind that the hospital may not receive reimbursement for certain diagnoses that CMS deems inappropriate for observation status, even though the diagnosis does not matter for physician work.
  • Don't use a separate observation chart, unless your local carrier says otherwise. Many Medicare carriers don't require a separate observation chart; as long as the physician documents providing observation care, an ED chart will suffice, Blakeman says. Note that observation care recorded in the ED chart is inadequate for another attending, he adds.
  • Remember, "same physician" means any physician in a group who bills under the same group provider number,according to the CPT Panel and Medicare carriers, Blakeman says.
  • Don't use modifier -21 (Prolonged evaluation and management services) or prolonged service codes (99354-99359) in the emergency department for observation care, Blakeman says.
  • Global surgery rules apply with observation care, as they do with any E/M service, he clarifies. Separately bill any provided procedures in addition to the observation code. Don't forget to append modifier -25 (Significant, separately identifiable evaluation and management service by the same physician on the same day of the procedure or other service) on the E/M code in these cases.

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