Medicare states that the admitting physician is the only one to use the initial observation codes, subsequent observation codes can be used by any physician during the stay:
Initial Observation Care
The physician supervising the care of the patient designated as "observation status" is the only physician who can
report an initial Observation Care CPT code (99218-99220). It is not necessary that the patient be located in an
observation area designated by the hospital, although in order to report the Observation Care codes the physician
must:
Indicate in the patient's medical record that the patient is designated or admitted as observation status;
Clearly document the reason for the patient to be admitted to observation status; and
Initiate the observations status, assess, establish and supervise the care plan for observation and perform periodic
reassessments.
The CPT codebook states that "When "observation status" is initiated in the course of an encounter in another site of
service (e.g., hospital emergency department, office, nursing facility) all evaluation and management services
provided by the supervising physician or other qualified health care professional in conjunction with initiating
"observation status" are considered part of the initial observation care when performed on the same date. The
observation care level of service reported by the supervising physician should include the services related to initiating
"observation status" provided in the other sites of services as well as in the observation setting."
Subsequent Observation Care
In the instance that a patient is held in observation status for more than two calendar dates, the supervising physician
should utilize a subsequent observation care CPT code (99224-99226). Physicians other than the supervising
physician providing care to a patient designated as "observation status" should report subsequent observation care.
According to the CPT codebook, “All levels of subsequent observation care include reviewing the medical record and
reviewing the results of diagnostic studies and changes in the patient's status (i.e., changes in history, physical
conditions, and response to management) since the last assessment.”
Observation Care Discharge Services
Per CPT, Observation Care discharge day management CPT code 99217 "includes final examination of the patient,
discussion of the hospital stay, instructions for continuing care and preparation of discharge records."
Observation Care discharge services include all E/M services on the date of discharge from observation services and
should only be reported if the discharge from observation status is on a date other than the date of initial Observation
Care.