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Confused about observation billing?

March 2013

Published in the March 2013 issue of Today’s Hospitalist

WHEN IT COMES TO BILLING for initial hospital care, most of the wrinkles caused by Medicare eliminating consultation codes have been ironed out. But many people are still confused by some of the billing nuances around the timing of admissions, transfers and multiple visits in one day. Here are some questions from readers and my answers.

Observation status and transfers of care
A hospitalist sees a patient admitted to observation for two days, but then decides to admit the patient to inpatient status. The hospitalist references the history and physical exam from his note for the initial observation visit to support billing initial hospital care. Is this OK? I know that Medicare guidelines specify that a previous review of systems (ROS) and past, family and social history (PFSH) can be referenced in a note by stating the date and location that those occurred in the medical record. Can you clarify?

According to Medicare’s evaluation and management guidelines. “A ROS and/or a PFSH obtained during an earlier encounter does not need to be re-recorded if there is evidence that the physician reviewed and updated the previous information.” But Medicare does not allow you to refer to an exam and/or history of present illness performed on another date of service.

In the scenario you described, it would not be appropriate to use the history of present illness and/or exam for coding the initial hospital visit because they were not performed on the day the patient was admitted. Instead, you would need to document the history of present illness and the exam on the date of service you’re using to bill the initial hospital visit code (99221-99223).

If, however, you admitted the patient to inpatient status on the same calendar date that you performed the observation history and exam, you could reference those when billing initial hospital care. The observation visit would be bundled into the initial hospital visit, with documentation supporting the history and exam requirement on the same date of service.

Occasionally, a specialist will admit a Medicare patient and bill a 99221-99223 with modifier AI (principal physician of record). But if the patient’s admitting chest pain diagnosis turns out to be something noncardiac, the specialist will transfer the patient’s care to one of our hospitalists. At this point, the hospitalist becomes the principal physician of record, although he or she was not the admitting physician. Should the hospitalist report his or her initial visit with the modifier AI, or will that skew everyone’s reimbursement?

Let me refer to the “Medicare Claims Processing Manual,” chapter 12, section 30.6.9: “Contractors consider only one M.D. or D.O. to be the principal physician of record (sometimes referred to as the admitting physician.)”

Based on this information, I’d say that if the specialist admits and bills an initial hospital visit before transferring care, the hospitalist should not append the AI modifier to the claim. If the hospitalist is billing under Medicare guidelines and if it’s his or her first visit with the patient, the hospitalist should also bill an initial visit without using a modifier. If the hospitalist has already seen the patient during the hospital stay, however, he or she should bill a subsequent visit.

Timing questions
I have a twist on the “around midnight” scenario. Say the hospitalist and the ED doctor discuss a patient at 11: 30 p.m., with the hospitalist entering computer orders to admit the patient at that time. But the hospitalist doesn’t see the patient until 12:15 a.m., when the patient arrives on the floor. Should we bill the initial hospital care on the day the admit order was entered, or on the date when most of the workup (and face-to-face contact) took place?

The date of service should be that of the face-to-face encounter.

My partner admits a patient at 12:01 a.m. and submits a bill for initial hospital care. I round on the patient at noon, document the visit on our usual progress note forms and spend 45 minutes doing the exam, reviewing past records and outlining a treatment plan. I document all of those carefully, including time. I know I can’t bill a subsequent visit on the same day as initial care, so I’ve been billing a 99356 (the first hour of prolonged inpatient face-to-face services) on all these patients. Is this correct?

In this situation, you should not bill a 99356 prolonged service code. Such codes are considered a companion or add-on code, so they can’t be billed alone without a primary code, such as for an initial hospital visit (9922199223) or subsequent visit (99231-99233). According to prolonged service guidelines, you should use code 99356 to bill for the first hour of face-to-face inpatient time beyond the designated “threshold” time duration of the service provided. (See “Time thresholds for prolonged services.”)

Guidelines also state that you cannot include the time you spend reviewing charts, discussing the patient with housestaff or any other non-face-to-face services.

But assuming that you and your partner are part of the same group, your partner may appropriately bill the prolonged service code along with his or her initial hospital visit code. I’m basing that advice on the “Medicare Claims Processing Manual,” chapter 12, section 30.6.5, which requires physicians in the same group practice of the same specialty to bill and be paid as though they were a single physician. All physicians in the same group and same specialty on one calendar day should combine their evaluation and management services for individual patients.

If the combined records from both you and your partner for that date meet the prolonged service guidelines, it would be appropriate to bill for both services “under the physician that performed the initial visit (or “primary” service).

That said, Medicare and other insurers don’t expect prolonged service codes to be used routinely. In my experience, insurers often initially deny these claims or request documentation to justify the code’s extra reimbursement. Make sure your documentation supports the total duration of time and the medical necessity for using a prolonged service code.

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

Prolonged services codes are add-on codes, so they can’t be billed alone.