Here is what Medicare says:
Question 4: Please help me to better understand outpatient observation to acute inpatient. If the patient is admitted to observation status on Monday, admitted to an inpatient history on Tuesday, and then discharged from inpatient status on Wednesday. How would we bill these services?
Answer: The admission of a patient in observation status is procedure codes 99218 - 99220. The admission of the patient to inpatient status on Tuesday is procedure codes 99221 - 99223. The discharge on Wednesday is procedure codes 99238 - 99239. The code chosen is based on where the service is provided and the level of care provided. You can find more information on observation services in the CMS IOM Publication 100-04, Chapter 12, Section 30.6.8.D.
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