ED Coding and Reimbursement Alert

If you have questions about documenting observation services, you need to be familiar with this advice.

In August 2011, CMS released Transmittal 2282, Pub 100-04 Medicare Claims Processing, dealing with clarification of many aspects of Evaluation and Management Payment Policy. The transmittal contains direction related to critical care, and observation services. Guidance is also provided for the reporting of certain E/M services following the CMS elimination of payment for all consult codes with the exception of telehealth consultations, says Michael A. Granovsky, MD, FACEP, CPC, President of LogixHealth, an ED coding and billing company in Bedford, MA.

Pay Attention to Observation Orders and Progress Notes

Clear and reinforcing directions regarding key Observation documentation components are included. The Transmittal states, "There must be a medical observation record for the patient which contains dated and timed physician's orders regarding the observation services the patient is to receive, nursing notes, and progress notes prepared by the physician while the patient received observation services." (MCM 2282 p. 8)

In this case, CMS has reiterated the need for an "Observation order "as well as progress notes. As in the past, the timing of such progress notes is not mandated but should be clinically appropriate for the condition being evaluated, says Granovsky. The full Transmittal 2282 can be found at this link: https://www.cms.gov/transmittals/downloads/R2282CP.pdf

See These Qualifying Services Provisions

Who can report observation services? The Transmittal offers these instructions:

Initial observation care can be billed by only the physician who ordered hospital outpatient observation services and was responsible for the patient during his/her observation care.

A physician who does not have inpatient admitting privileges but who is authorized to furnish hospital outpatient observation services may bill these codes.

This last item is important as most ED physicians do not have admitting privileges, and at times this has been a source of confusion for some carriers and internal compliance staff. We now have clear primary source direction that although the ED physicians do not have inpatient admitting privileges they are recognized as able to place the patient in observation status, says Granovsky.

Take a look at the following ED example from the transmittal:

An emergency department physician orders hospital outpatient observation services for a patient with a head injury. A neurosurgeon is called in to evaluate the need for surgery

The surgeon would bill a new or established office or other outpatient visit code as appropriate with the -57 modifier to indicate that the decision for surgery was made during the evaluation. The surgeon must bill the office or other outpatient visit code because the patient receiving hospital outpatient observation services is not an inpatient of the hospital. Only the physician who ordered hospital outpatient observation services (in this case the ED physician) may bill for observation care.

Global Package issues are included as well.

The subsequent observation codes were added to the list of services that fall under the global surgical package and would only qualify for separate payment if the appropriate modifier is appended. The Transmittal states that global surgical fee includes payment for hospital observation (codes 99217, 99218, 99219, 99220, 99224, 99225, 99226, 99234, 99235, and 99236) services unless the criteria for use of CPT® modifiers -24, -25, or -57 are met.

Coding example: An example of a billable hospital observation service on the same day as a procedure is when a physician repairs a laceration of the scalp in the emergency department for a patient with a head injury and then subsequently orders hospital outpatient observation services for that patient. The physician would bill the observation code with a CPT® modifier 25 as well as the appropriate procedure code.

3- Day Observation Stays Made Simple

Similar to initial observation codes, payment for a subsequent observation care code is for all the care rendered by the treating physician on the day(s) other than the initial or discharge date. All other physicians who furnish consultations or additional evaluations or services while the patient is receiving hospital outpatient observation services must bill the appropriate outpatient service codes, says Granovsky.

Transmittal 2822 says, "On the rare occasion when a patient remains in observation care for 3 days, the physician shall report an initial observation care code (99218-99220) for the first day of observation care, a subsequent observation care code (99224-99226) for the second day of observation care, and an observation care discharge CPT® code 99217 for the observation care on the discharge date." MCM 2282

Critical Care with an ED E/M is singled out for non-payment

When a hospital inpatient or an office outpatient E/M service are furnished on the same calendar date and the patient subsequently requires critical care, both the critical care services and the previous E/M service may be paid on the same date of service.

However, hospital emergency department services are not paid for the same date as critical care services when provided by the same physician to the same patient, says Granovsky. This is different from CPT®, which specifically states that critical care and the other E/M services may be provide to the same patient on the same date by the same physician, he adds.