Practice Management Alert

Codes differ for single-, multi-day stays.

Coding for your physician’s observations can get tricky fast, as there are different code sets for different types of observation services. You’ll need to check the calendar, and the clock, before you can choose the correct code.

Further, there might be differences between observation coding for Medicare and private payers. Mix all that together, and you have a potential E/M mess.

Untangle the observation coding knot with this expert advice, and straighten out your observation coding once and for all.

Caution: The following rules for coding observations are for Medicare, and payers that follow Medicare policies. “Practices need to check with third-party payers to determine if they follow Medicare guidelines for observation,” advises Mary I. Falbo, MBA, CPC, CEO of Millennium Healthcare Consulting, Inc. in Lansdale, Pa.

Use 99218-99220 For Initial Day 

There are two observation code sets, and which set you choose from will depend on the encounter.

Employ the observation code set 99218-99220 (Initial observation care, per day, for the evaluation and management of a patient ...) in the following instances:

1. When the physician admits a patient for observation care, and then discharges the patient on a different calendar date, you’ll report a code from the 99218-99220 range for the first date of service, confirms Falbo.

Example: The physician admits a patient with a history of angina to observation at 5 p.m. Monday with chest pains. The physician decides to keep the patient in observation overnight. On the claim, you’ll report a code from the 99218-99220 range for this initial service, depending on encounter specifics.

2. When the physician admits and discharges a patient from observation care in less than eight hours on the same calendar date, you’ll also employ 99218-99220, confirms Falbo.

For example, your physician admits a patient with a history of diabetes to observation at 6:30 a.m. Monday. The physician then discharges the patient at 12:13 p.m. that day. Since the service was less than eight hours, choose a code from 99218-99220 for the observation.

Take note: You’ll need to make sure that the physician who admits the patient for observation is also the one that cares for the patient during his stay, Falbo says. Otherwise, you shouldn’t be coding for an observation service of any kind.

Use Separate Discharge Code On Multi-Day Observations

When the physician keeps a patient in observation overnight, and then releases him on the next calendar day, you should report 99217 (Observation care discharge day management…) for the discharge services, says Falbo.

Example: A patient reports to the hospital for observation at 7 p.m. Thursday; symptoms include severe nausea and vomiting, sharp stomach pain, and blood in the patient’s stool. The physician decides to keep the patient overnight. At 11 a.m. Friday, the physician discharges the patient. Notes indicate a level-two observation service.

On the claim, you would report 99219 ( … a comprehensive history; a comprehensive examination; and medical decision making of moderate complexity …) for the observation care and 99217 for the discharge service.

Pointer: Most observation services last one to two days at the most; after that much time, the physician will typically admit or release the patient. There might be instances, however, when a patient is in observation care for more than two calendar days. When this occurs, contact your payer before coding the service.

Change Coding When 1-Day Observations Hit 8 Hours

If the physician provides a single-day observation service that lasts more than eight hours on the same calendar date, your coding choices change, confirms Falbo.

For these longer single-day observations, choose from the 99234-99236 (Observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date ...) code set.

Example: A patient presents to the emergency department (ED) at 9 a.m. Thursday and the physician admits her to observation care an hour later. The physician discharges her at 8 p.m. that evening. Since the visit exceeded eight hours, you should report a code from the 99234-99236 range, depending on encounter specifics.

When the length of stay is eight hours or longer, providers should report codes 99234-99236 for Medicare, says Falbo. “However, CPT^® does not mention the minimum time requirement, and states that providers may use these codes as long as the admission and discharge occur on the same date of service.”

Best bet: Once again, you’ll have to check with third-party payers before coding for these observation services — as they might not all follow Medicare’s prescription for these codes.