Otolaryngology Coding Alert

Question: We have a long-standing argument in our office regarding the proper use of observation codes. Specifically, when should we report initial observation (99218-99220) with discharge (99217) versus observation or inpatient care (99234-99236)? What if the surgeon admits a patient to observation at 9 p.m. and releases her the next day at 1 a.m.?


New York Subscriber
Answer: Three rules govern observation coding:

1. You should report 99218-99220 with 99217 (Observation care discharge day management) if the physician admits the patient to observation and releases her on a different date of service, unless the total duration of observation stay equals fewer than eight hours. For stays lasting multiple days, you may report one unit of 99218-99220 for the initial date of service and one unit of 99211-99215 (Office or other outpatient visit for the evaluation and management of an established patient ...), as appropriate, for each additional date of service (not counting the date on which the physician discharges the patient).

Remember: Because observation is technically an outpatient setting, you must use outpatient codes (in other words, 99211-99215) when reporting additional E/M services.

2. For stays of less than eight hours when the admission and discharge occur on different dates of service, you should report 99218-99220 (Initial observation care, per day, for the evaluation and management of a patient) only, without a discharge service.

3. For observation stays that take place within a single date of service, you should report the observation/inpatient hospital care E/M codes 99234-99236 (Observation or inpatient hospital care, for the evaluation and management of patient including admission and discharge on the same date). You should not report a separate discharge code with 99234-99236. In your case, for example, the patient observation stay spans two dates of service but lasts only four hours total. Therefore, you should choose just the appropriate-level initial observation care code (99218-99220).

If the observation care had spanned two dates of service with a total duration of more than eight hours (for instance, the surgeon admits the patient at 9 p.m. and discharges her the next day at 9 a.m.), you could report both the initial observation care (99218-99220) and the discharge service (99217).

In a third scenario, the surgeon admits the patient at 9 p.m. on Thursday and does not discharge the patient until 9 a.m. on Saturday. In this example, you may report one unit of 99218-99220 for Thursday, one unit of 99211-99215 (as appropriate) for Friday, and the discharge (99217) on Saturday.

Finally, consider the case in which the physician admits a patient at 6 a.m. and discharges her that day at 8 p.m. Because the admission and discharge occur on the same date, you should report 99234-99236, as appropriate to the documented level of service.