Oncology & Hematology Coding Alert

Now that ambulatory payment classifications (APCs) have become part of everyday hospital activities, oncology physicians who occasionally admit patients to the hospital for observation could begin to see some changes. For now, the rules for physicians remain the same, but APCs likely will affect the way hospitals do business.

There are a lot of changes with hospital observation services, 99217-99220, says Cindy Parman, CPC, CPC-H, principal and founder of Coding Strategies Inc., a Dallas, Ga.-based coding consulting firm. Under APCs, observation services are no longer payable.

Because of this, some hospitals may choose to close observation units, says Parman. But until then, physicians with admitting privileges still can bill for hospital observation services. If, for example, a cancer patient has an adverse reaction to chemotherapy or supportive care drugs that requires hospital attention, but is not serious
enough to be admitted for a hospital stay, the physician can bill 99218-99220 for initial observation care.

Guidelines for Billing Observation Codes

According to Parman, physicians must adhere to the following guidelines when billing observation codes:

1. Initial observation care may be billed only by the physician who admitted the patient to hospital observation and was responsible for the patient during his or her observation stay. To bill the observation codes, there must be a medical observation record. The record should include the date and time of the admission by the physician. The admitting order must contain a description of the care the patient is to receive while in observation as well as nursing notes and progress notes prepared by the physician while the patient was in observation status.

The medical observation record should be prepared in addition to any emergency department record, says Parman.

2. Payment for a hospital observation code is for all the care rendered by the admitting physician on the date the patient was admitted to observation. Other physicians who see the patient while he or she is in observation must bill the office and other outpatient services or outpatient consultation codes (99241-99245, office or other outpatient consultations). Of course, those physicians must adhere to the key components of an evaluation and management (E/M) visit and bill accordingly.

For example, if an oncologist admits a patient to observation and asks another oncologist in his or her practice to consult on the patients condition, only the admitting oncologist may bill the observation code. The consulting oncologist must bill using outpatient consultation codes 99241-99245.

3. Use only initial observation codes when billing for observation and discharge on the same day. If the patient is discharged on the same date as admission to observation, the admitting physician can bill only 99218-99220.

If the patient stays in observation after the first midnight census following the admission to observation, however, the patient likely will be discharged on the subsequent calendar date. Here, the physician must bill 99217 for the last day of service in observation. This code is to be used for discharge from inpatient status or from observation status.

In the rare instance when a patient is held in observation status for more than two calendar days, the attending physician must bill subsequent services furnished before the date of discharge using the outpatient/office visit codes (99201-99215). The physician may not use the subsequent hospital care codes because the patient is not an inpatient of the hospital. Individual payer requirements vary and must be followed for subsequent observation day coding.

For example, if a cancer patient comes into the office for a scheduled visit and the staff determines that the patient has become severely dehydrated during treatment, the dehydration may be serious enough to warrant an observation stay. In this case, the oncologist should code for observation only and not code for an office visit. To show medical necessity of the observation stay, the diagnosis code for dehydration (276.5) should be listed as the primary condition and cancer codes (140.0-208.9x) should be listed as the secondary condition, says Margaret M. Hickey, RN, MSN, MS, OCN, an independent healthcare consultant and former clinical director at Tulane Cancer Center in New Orleans. Any co-morbidities should be listed as well.

4. Use initial hospital care codes when observation status is changed to inpatient status. If a patient is admitted to inpatient status from observation before the end of the date on which the patient was admitted to observation, the physician must bill an initial hospital visit for the E/M services provided on that date.

Medicare payment for the initial hospital visit includes all services provided to the patient on the date of admission by that physician, regardless of the site of service. The physician may not bill an initial observation care code for services on the date that the patient is admitted to inpatient status.

If the patient is admitted to inpatient status from observation subsequent to the date of admission to observation, the physician must bill an initial hospital visit for the services provided on that date. The physician may not bill the hospital discharge day management code 99217 or an outpatient/office visit code for the care provided in observation on the date of admission to inpatient status.

An additional point physicians need to remember when billing observation codes is that no other E/M visit code can be billed on the same day as an observation code, says Hickey.

Observation During the Global Surgical Period

If admission to the observation unit follows a surgery, the global surgical fee includes payment for 99218-99220. Payment may be made for these services in addition to the global surgical fee only if both of the following requirements are met:

1. The hospital observation service meets the criteria needed to justify billing it with CPT modifiers -24
(unrelated E/M service by the same physician
during a postoperative period), -25 (significant,
separately identifiable E/M service by the same physician on the same day of the procedure or other service), or -57 (decision for surgery). To use modifiers -24 and -25 during the global surgical periods, the physician must show that the condition is related to the disease, not the surgery. To use modifier -57, the physician must document the factors that led to the decision to perform surgery
following an E/M visit; and

2. The hospital observation service furnished by the
surgeon meets all of the criteria for the hospital
observation code billed.

For now, oncologists can continue to bill for initial observation services, using codes that reflect the length of the patients stay in observation. Following the above guidelines will ensure accurate coding and proper reimbursement for patients admitted to observation.