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Answers to (complicated) questions on observation
Plus, what time counts toward billing a higher-level discharge code

Keywords: ICD-9 coding for complex observation and discharge services


by Kristy Welker, CPC



Published in the September 2009 issue of Today's Hospitalist

GIVEN THE QUESTIONS that readers send in, it’s clear that hospitalists need some clarification in two key billing areas: observation and discharge services. Here’s a look at some of those issues.


Keep up with the latest coding changes: May 2014 - Coding News & Strategies


Observation status

Q: I have seen conflicting information on how to bill for observation patients. How should I use 99211-99215 (outpatient visit codes) for subsequent visits when a patient is assigned to observation for more than two calendar days?

A: According
Patients in observation are considered outpatients no matter how many days they remain.

to Medicare guidelines, physicians caring for patients who continue in observation status beyond the first day and who are not discharged or admitted as an inpatient should bill outpatient visit codes 99211-99215 for services on those subsequent days. (For a patient’s first day in observation, bill an initial observation care code, 99218-99220.) Patients in observation are considered outpatients no matter how many days they remain.

Q: Medicare recently denied some claims in which I used initial observation codes (99218- 99220) for a patient first admitted to the observation unit, then admitted to the hospital two days later.

Here are the codes that I billed:

  • 99220: Initial observation care, first day
  • 99212: Outpatient visit, second day
  • 99222: Hospital admission, third day

According to the explanation that came with the denials, Medicare has clarified the use of codes for observation services, and observation codes 99217-99220 should be used only if patients are in observation the entire time that they’re in the hospital. If, however, patients come in with observation status and are then admitted as an inpatient, claims should be billed using first outpatient codes 99201-99205 (office or outpatient visit codes for new patients), then hospital admission codes (99221-99223).

Have other hospitalist groups had these claims denied? I resubmitted the charge using the suggested codes but don’t know yet how that bill will be processed. And would the physician who admits the patient to the hospital need to provide a new history and physical?

A: I have not encountered any denials for the scenario you describe, and an industry source that I use is also not aware of any such billing change.

In the latest update of the Medicare claims processing manual, which was revised in April 2009, chapter 12- 30.6.8-D (admission to inpatient status from observation) states that you are able to bill both the observation service and the hospital admission, as long as they are not on the same calendar date. I suggest you ask the Medicare carrier to provide you with the language it is referencing.

And unless a physical was performed while the patient was in observation on the same date as the hospital admission, the admitting physician would need to complete—and document—a physical exam. The history is the only E/M component that can be referenced and updated (and not actually repeated) if it is not performed on the same date as the admission service. The history of the present illness, however, would need to be re-documented.

Q: I admitted a patient for 23-hour observation who, at the end of that period, qualified for full inpatient admission. I am the same physician discharging from observation and admitting to inpatient status on the same calendar date. Assuming I adequately document both services, may I charge for both the discharge from observation (99217) and the inpatient admission (99221-99223)? And what if one hospitalist discharges the patient from observation and another admits the patient to the hospital?

A: You cannot bill a discharge from observation for patients being admitted to the hospital, no matter which day that occurs. (You can bill an observation discharge only if patients are discharged home, not to an inpatient bed.) That would still be the case if the “discharge” and the admission were performed by different physicians in the same group practice.

Q: How should we bill for a patient admitted to observation status by a resident on day 1 at 9:00 p.m. but not seen by an attending until day 2 at 8:00 a.m.? (The patient is ready for discharge on day 2 as well.) The attending saw the patient only that one calendar date. Should the attending bill the second day as a same-day admit and discharge (99234-99236)? Or as initial observation care (99218-99220) on that second day and an observation discharge (99217)?

A: You must base your claim on the supervising physician’s date of service, so you can’t bill for the first day when only the resident saw the patient. Use the observation admit and discharge same-day codes (99234-99236) and bill day 2 as the only date of service.

Discharge services
Q: Does only an attending physician’s time count toward code 99239 (hospital discharge, more than 30 minutes)? Housestaff often spend hours getting a discharge ready. But because the patients’ prescriptions are in attendings’ names, we attendings ultimately complete all the paperwork, usually after the date of discharge.

A: For time-based codes, only the attending or supervising physician’s time counts. You cannot include residents’ time when billing for a discharge.

Q: For some complex discharges, the discharge code 99239 (hospital discharge, more than 30 minutes) doesn’t capture all the time and effort I put into the service. Is it OK to bill a discharge using a subsequent visit code (99231-99233) and add on a prolonged service code (99356–99357, inpatient prolonged codes, face to face)? If not, could I bill the 99239 discharge code with a prolonged service code?

A: According to CPT guidelines, you must bill the code that most appropriately represents the service you’re performing. In this case, that would only be a discharge code, not a code for a subsequent visit.

As for inpatient prolonged service codes (99356- 99357), CPT guidelines do not indicate that you can add them to discharge codes. The 99239 code covers any discharge “greater than 30 minutes,” so you cannot bill for any additional amount of time.

Kristy Welker is an independent medical coding consultant based in San Diego. Email your documentation and coding questions to her at kristywelker@hotmail.com. We’ll try to answer your questions in a future issue of Today’s Hospitalist.
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