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The finer points of billing for observation

The change in Medicare consult codes makes a complicated area even trickier

April 2010

Published in the April 2010 issue of Today’s Hospitalist

READERS CONTINUE TO HAVE QUESTIONS about how to bill for observation services. That entire area just got more confusing now that hospitalists “consulting” for a Medicare patient in observation can no longer bill a consult code.

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

Let’s take a look at some of your questions, with my suggestions as to how to proceed.

Same day admit/discharge
Q: I have a question about a response you gave in a previous column on observation billing. A resident admitted the patient to observation on day 1, but the attending did not see the patient until day 2, the same day the patient was discharged. You recommended billing the service with a 99234-99236 (observation, admit and discharge on the same date) and using only the date of day 2 as the service date.

But the scenario indicates two distinct dates of service. How should we document such a scenario to justify using a same-day admission and discharge code?

And I’ve been told that if we bill as you recommend, the attending needs to document that he or she saw the patient twice to be able to bill 99234-99236; otherwise, only 99218-99220 (initial observation) can be used on day 2. Has something changed that I’m unaware of?

A: I agree with you: The documentation needs to support that the MD performed an admission and discharge on the same day to support billing 99234- 99236. The issue is complicated by the fact that the Centers for Medicare and Medicaid Services (CMS) hasn’t really weighed in with guidance, so we’re left with carrier-specific interpretations “and different carriers have different opinions.

As you know, residents’ notes can’t stand on their own, but must be supported with attending documentation. But this scenario isn’t necessarily resident-specific. Sometimes, patients may be admitted to observation (with no resident involvement) but not seen by a physician until the next calendar day.

I have asked two respected industry contacts for their opinion on how to bill, and both recommend ” as I did “basing claims on the supervising physician’s date of service.

Because the attending’s initial visit and discharge service both occurred on the same day, the experts agreed that you should bill an observation same-day admit/discharge code (99234-99236). As for documentation, the attending can state in the record that, “Patient admitted yesterday and seen by resident, but first attending encounter with patient took place” on day 2’s date. Two commonly referred-to sources “a Noridian Administrative Service (NAS) FAQ dated May 24, 2007, and a September 2003 TrailBlazer Part B bulletin ” also support this approach.

But ask your local carrier for guidance. If you’re unable to get clear direction from the carrier, have your group decide how to handle this situation and document that decision as part of its compliance plan.

If you bill with a same-day admit/discharge code and the claim is denied because of a conflicting initial date of service, submit your documentation that the date of service you billed for was the date the physician actually saw the patient.

As for needing to see a patient twice on the same day to bill 99234-99236, NAS “which helps administer the Medicare program in several states “issued guidance in a Dec. 12, 2006, newsletter on how to bill.

The bulletin states: “NAS recommends the use of CPT 99234-99236 (observation or inpatient care services including admission and discharge services) if the patient is seen on at least two separate occasions on day 2 and these separate occasions are at least 8 hours apart.”

Inpatient to observation status
Q: How would you code this scenario: A Medicare patient discharged from the hospital on Jan. 4 fell at home and was back in the ED on Jan. 5, put on 23- hour observation status and then discharged from observation on Jan. 6?

A: Bill your Jan. 4 services with a hospital discharge service code (99238-99239). Because the patient was then admitted to observation status, code the Jan. 5 visit service with an initial observation care code (99218-99220) and then use the observation discharge code (99217) on Jan. 6. The hospital’s records should support both the inpatient discharge and the observation services.

Observation “consults”?
Q: How should I code now for a “consult” for a new patient under observation status: 99201-99205 (initial office visit) or 99218-99220 (initial observation)?

A: Because observation patients have outpatient status, you would use outpatient consult codes. Here’s where it gets tricky: Under new Medicare guidelines, you can no longer submit outpatient consult codes (or inpatient ones, for that matter). Instead, use the initial office visit codes (99201-99205).

For private carriers that may not have adopted Medicare’s prohibition on consult codes, use outpatient consultation codes (99241-99245).

Q: A physician who is not part of our group admitted a Medicare patient to observation on a Sunday. Our physician did not see that patient until Monday, when he performed an H&P. He later discharged the patient. How should we bill for our physician’s services?

A: It is not quite clear to me why your physician was seeing this patient. If he was called in to consult, he could bill an outpatient consult code (99241-99245) if the patient is not covered by Medicare or an outpatient visit code (99201-99215) for a Medicare patient. If he was instead being asked to treat the patients, he would use the same outpatient codes (99201-99215) for either a Medicare or non-Medicare patient.

You can’t use observation codes in this case because according to CPT and Medicare guidelines, only the physician or group that admitted the patient to observation can use these codes.

Kristy Welker is an independent medical coding consultant based in San Diego. E-mail 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.