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Which codes do you use when observation spans several days?
Plus answers to your questions on discharge billing and modifiers
by Tamra McLain, CPC, CPC-H, CMC



Published in the June 2007 issue of Today's Hospitalist.

Several readers have written in with questions about using observation codes and billing for discharge. Here are some of the questions I’ve received:

Observation codes
Q: If I place someone in observation on Monday, I assume I’d use one of the 99234-99236 codes for the initial visit.

But what codes do I use on Tuesday when I discharge the patient from observation status? Plus, in rare cases, patients may be in observation for up to 48 hours. Do I bill day 1 with a 99234-99236 code, then bill observation follow-up on day 2 and
To avoid being flagged for an audit, vary your use of discharge codes.

observation discharge at the 45th hour?

A: Actually, if you admit and discharge a patient in observation on two separate calendar dates, you would not use a 99234-99236 code. Instead, refer to 99218-99220 for admitting to observation.

Then code the discharge as a 99217. For calendar dates in between when you round on the patient, use the outpatient codes 99211-99215 because the patient is technically not admitted.

Here’s an example where observation status spans three calendar days, with different codes that are billed:

  • Admit, Monday 9 a.m.: 99220
  • Rounds, Tuesday: 99214
  • Discharge, Wednesday, 6 a.m.: 99217


Q: When talking about observation status and same-day vs. next-day discharge, my understanding is that the distinction is based purely on the actual calendar dates of admission and discharge, not the total time spent in the hospital.

So if a patient is admitted at 11:59 p.m. on June 1 and discharged at 1 a.m. on June 2, we would use a 99218- 99220 code, plus 99217. Is this correct?

And is the admission time based on when I or a resident perform the history and physical? Or is the admission time based on when the admission office does the paperwork?

A: It is my understanding that payers accept the time recorded at the admissions office as the time of admission. Make sure your admit date coincides with the one the hospital states is the date of admission. Because this is a gray area, I recommend setting a policy for your group and consistently adhering to that timing method.

And yes, for the patient admitted at 11:59 p.m. on one day and discharged at 1 a.m. the next day, you would use a 99218-99220 code, plus 99217.

Q: A patient is admitted through the ED late at night, with the call to admit coming to one of my covering partners.

I do the first visit the next morning and decide the patient should be discharged. I bill a 99235 (observation—admit/discharge on the same date). But I also ask the hospital to change the patient to an observation status, and the hospital refuses.
Is there a problem billing an observation discharge on a patient with an admission status?

A: If the hospital has classified the patient as an admission spanning two days, the admit would be dated the first date, and you would provide the discharge (99238 or 99239) on the second date.

Do not bill an observation CPT code when the hospital has listed the patient as admitted. That will cause problems during the reimbursement process with the payer.

Discharge billing
Q: In your December 2006 column on time requirements for coding an inpatient discharge, you say that you can add up time spent preparing discharge, even if that work was done on a different calendar day. I recall hearing that I could count only work done on the same calendar day as discharge. Which approach is correct?

A: Hospitalists typically begin some discharge planning a day prior to discharge, just to make the process go more smoothly. You can factor that time spent on the previous day into the amount of time you report spending on discharge.

What you need to guard against, however, is factoring some of the time you spend in a subsequent visit on that day prior to discharge into the total discharge time. Make sure you separate today’s service from the time you’re spending on tomorrow’s discharge.

Q: An E/M utilization benchmarking calculator that I use claims the following: According to CMS data, the 99238 discharge code is used about 80% of the time while 99239 is reported in 20% of discharges.

Is that trend changing? And if hospitalists count the time they spend dictating the discharge summary, do they qualify to report 99239 more frequently?

A: As I have pointed out in previous articles, you can factor in time spent dictating a discharge summary as part of the total minutes spent preparing for discharge.

I do see a trend in physicians starting to use 99239 more and, yes, including dictation time would qualify you to report 99239 more often.

But once physicians get some education in coding, they come to rely exclusively on the higher discharge code—a practice that I don’t recommend. You should vary your use of discharge codes, based on the amount of time spent and on patient acuity. If you consistently use only one code to report all your discharge services, that could get you flagged for an audit.

Using the -25 modifier
Q: I’m hoping you can clarify the use of the -25 modifier. Should it be used only in the context of an invasive procedure, such as a central line insertion for a hypotensive patient? That would allow us to bill for both the procedure as well as the hypotension E/M service.

Or is the modifier designed to be used for a new diagnosis in a patient admitted for another condition? Say a patient admitted for a COPD exacerbation develops constipation. Can I bill at 2 p.m. for the COPD, and then use the -25 modifier to bill at 10 p.m. for treating the patient’s constipation?

And what about the same scenario, but with a primary care physician billing for COPD, while I bill for constipation or some other new diagnosis?

A: The key factors to keep in mind here are what kind of service are you providing and who is providing it.

If you see a patient again the same day to provide critical care, then yes, it would be appropriate to use the modifier -25. If the service is not related to critical care, however, you need to combine all your work on any given calendar day and choose a particular level of E/M service. In that case, you would not use the -25 modifier.

If you and a primary care physician see a patient on the same day to treat different issues, you and the other physician have different federal tax ID numbers. You would also bill with different diagnosis codes to support medical necessity, and would not be required to add a -25 modifier in that case.

And as to using a modifier to bill for a procedure: You would need to use a modifier for a procedure billed with an E/M service. Depending on the procedure, you would use either -25 or -57.

Tamra McLain is an independent coding consultant in Southern California. E-mail her your documentation and coding questions, or send a fax to 888-202-1601. We’ll answer your questions in a future issue of Today’s Hospitalist.


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