Reader Question:
Outpatient Observation
Published on Tue Jan 01, 2002
Question: An oncologist in our practice admitted a patient for observation. He was told that he could not bill Medicare for any E/M services. Can he bill for prolonged services?
Tennessee Subscriber
Answer: Occasionally, an oncologist is required to admit a patient to a hospital observation unit. For example, the patient may have an adverse reaction to chemotherapy or supportive-care drugs, which requires hospital attention but is not serious enough to warrant inpatient admission.
While the physician is allowed to bill observation services (99218-99220), he or she cannot bill for a separate E/M service because it would be like billing for an E/M service twice. All services performed on the day of outpatient admission including those E/M services in the office should be included in the codes for the initial observation care. Much of this care may have been performed in the office with follow-up only when the patient entered the hospital setting. Still, only one code can be used 99218-99220.
Outpatient observation coding is governed by six guidelines:
Initial observation care may only be billed by the physician who admits the patient to hospital observation and is responsible for the patient during his or her observation stay.
Payment for a hospital observation code includes all care rendered by the admitting physician on the date the patient is admitted to observation.
Use only initial observation codes, 99218-99220, when discharge is not on the same day as the initial observation. Use E/M service guidelines to determine the appropriate level of service.
Use 99234-99236 (observation or inpatient care services [including admission and discharge services]) when a patient is admitted to observation or to inpatient hospital care and discharged on the same date of service.
For a patient admitted to inpatient status from observation status, all E/M services provided by the physician for that admission should be included in codes 99221-99223 (established patient).
If the observation admission follows a surgery, the global surgical fee includes payment for 99218-99220 unless the criteria are met for the use of 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).
The prolonged service codes (99354-99357) are add-on codes and must be attached to another procedure code to be paid. Medicare allows the addition of 99354-99357 to E/M services, including outpatient observation.
However, prolonged service must be a function of additional care that falls outside what is normally "usual service." Also, prolonged service must describe face-to-face contact between physician and patient.
To determine whether a prolonged service code is justified, follow some basic rules:
The codes may be added to any [...]
