General Surgery Coding Alert

Coders in general surgeons offices tend not to use observation codes very often. However, these relatively new and largely under-utilized codes can be very useful. Coders need to be aware of their options so they can examine their documentation and make informed decisions about which codes to use when admitting patients to the hospital.

In the past, patients usually were admitted directly to the hospital and billed with the hospital admit codes (99221-99223). However, patients often are admitted to an outpatient observation unit in the hospital, and there are special codes and criteria that must be met to bill for such services (99218-99220). In addition, new codes introduced in 1998 for same-day observation and discharge (99234-99236) are reimbursed at a higher level than regular hospital admission codes.

Furthermore, many carriers will not authorize an inpatient admission but will authorize an observation stay because the hospital reimbursement is less, says Kathleen Mueller, RN, CPC, CCS-P, a physician reimbursement specialist in the office of Allan L. Liefer, MD, a general surgeon in Chester, IL. Any subsequent admission to the hospital would have to be authorized by the carrier and then billed accordingly, she says.

Hospital stays fall into one of three place of service categories: outpatient hospital, inpatient hospital, and ER. These roughly correspond with observation, hospital admission and ER admission. Mueller says its important that surgeons offices recognize, for example, that observation is considered outpatient hospital. To enter a charge into the billing system, patient/physician information, the name of any referring physician, and the place of service must be entered. If the place of service (outpatient hospital) does not match the classification of service (observation) the claim will be denied.

Mueller cites the following three scenarios to illustrate the utility of the observation codes.

Same-day Observation and Discharge

Scenario 1: A 10-year-old boy comes to the ER with general abdominal pain. The surgeon sees the child and admits him to observation. The patient is kept NPO (nothing by mouth) and given IV fluids. When the physician returns later that afternoon, the boy is much improved and is discharged. The physician does a comprehensive exam and history, with moderate decision-making.

The correct code for this scenario, Mueller says, is
E/M code 99235 (observation or inpatient hospital care), which includes admission and discharge on the same day (whether admission or observation) and requires the physician to take a comprehensive history of the patient, perform a comprehensive examination, and make medical decisions of moderate complexity. The 99235, which is formulated to include the work of both the discharge summaries [...]