Hospital Observation Services
By Emily Hill, PA-C
New Medicare guidelines have made coding for hospital observation
services even more challenging.
Your patient, Mr. Jennings, presents to the emergency department at 5 p.m.
with complaints of severe headache, paresthesias, visual changes and difficulty
concentrating. He is on medication for mild hypertension and has no history
of migraines or other neurologic disorders. You order a computed tomography
scan and lab studies. The physical exam does not reveal any focal deficits.
The patients headache persists, and he has now developed nausea
and vomiting. Other neurologic symptoms have resolved. You order I.V.
medications for the
pain and nausea, and decide to monitor Mr. Jennings to assure that his symptoms
resolve and that all study results are negative. He is placed in the observation
unit of the hospital. You reassess him on several occasions, and at 9 p.m.
discharge him, with an appointment to see you in the office the following afternoon.
Your next challenge is how to code for the services youve provided
Mr. Jennings. There is a category in Current Procedural Terminology (CPT) that
describes observation services, including admission, discharge, and same-day
admission and discharge services. Understanding how to appropriately use these
codes can be challenging. In addition, Medicare has released new guidelines
for their proper use.
Understanding the Codes
The codes for hospital observation services are used to report evaluation
and management (E/M) services provided to patients placed under "observation
status." Although many hospitals have designated areas for observation,
it is not required to specify them to report these codes.
There are three main groups of codes to describe these services:
care discharge services
care services with same-day admission and discharge
Only one observation care code should be reported per day. These codes are
to be utilized only by the physician who initiated observation status.
Other physicians providing services to the patient should report their
care using outpatient E/M codes.
As with initial hospital care codes, all E/M services provided in conjunction
with initiating observation status are considered part of the initial observation.
In other words, the E/M services provided to Mr. Jennings in the emergency
department are included in the initial observation care code and are not reported
Coding Observation Services
Codes 9921899220 refer to the initiation of observation status
and include supervision of care plan and performance of periodic reassessments.
It is important
to recognize that all codes require the performance of detailed or comprehensive
histories and physical exams. Brief admission notes that do not document that
level of work would not support the reporting of observation care services.
Code 99217 should be used to report services provided to the patient
on discharge from observation, if the discharge is on a date other
than the initial date
of "observation status." It includes the final exam, discussion of
the stay, instructions and the preparation of discharge records. If Mr. Jennings
had been discharged at 1 a.m. instead of 9 p.m., you would have reported one
of the initial observation care codes for the first day of the encounter and
the discharge code for the following date of service.
Because Mr. Jennings was admitted and discharged from observation status
on the same date, one of the codes in the series 9923499236 should
be reported. These codes can be used if the patient was admitted and
discharged from inpatient
status on the same day. As with the other admission codes, all levels of service
require documentation of detailed or comprehensive histories and physical exams.
Observation Time Period
CPT does not define a minimum or maximum time for a patient in observation
status. However, some insurance companies may define the observation care period,
and that may differ from your local hospital guidelines. In the November 1,
2000, Federal Register, Medicare outlined its guidelines for the use
of observation codes, in particular those regarding same-day admission and
These guidelines state that for a physician to appropriately report
the patient must be in observation care for a minimum of eight hours. The physician
must satisfy documentation requirements for both admission to and discharge
from observation care and document the length of time the patient was in observation.
Services to patients admitted to observation status for less than eight hours
should be reported using the initial care codes only.
Reporting Observation Services
With CPT definitions, the services provided for Mr. Jennings would
be reported using a code in the 9923499236 group, as noted earlier.
However, if he is a Medicare patient, only the initial observation
codes are reported.
Lets suppose that Mr. Jennings was admitted to the hospital rather
than being discharged. In this case, only an initial hospital care
code would be
reported, since all E/M services provided in conjunction with the admission
are included in the inpatient code. If the hospital admission had occurred
on a different date, both the admission to observation and the admission to
inpatient status could be reported. Both services would have to be documented
in the medical record and meet the requirements for the history, exam and medical
decision-making associated with the selected code.
Using Observation Care Codes
Based on clinical scenarios, there are a number of coding options for reporting
services to patients placed in observation status. It is important to read
the definitions and instructions in CPT and the guidelines released by Medicare
to assure that services are properly reported and appropriate reimbursement
Emily Hill, PA-C, is president of Hill & Associates,
a national healthcare consulting firm specializing in coding and compliance
for physician practices. Her e-mail address is Emily@codingandcompliance.com.
This article is derived from the McMahon Archives. This
information may be time sensitive and was archived on 8/7/2001