Observation Care: Evaluation and management services provided to patients designated as “observation status” in a hospital.
This refers to the initiation of observation status, supervision of the care plan for observation and performance of periodic reassessments.
Same Specialty Physician or other Qualified Health Care Professional: Physicians and/or other qualified health care professionals of the same group and same specialty reporting the same Federal Tax Identification number.
a. Observation Care: CPT Codes—
•CPT 99217 (observation care discharge day management (this code is to be utilized to report all services provided to a patient on discharge from ‘‘observation status’’ if the discharge is on other than the initial date of ‘‘observation status.’’ To report services to a patient designated as ‘‘observation status’’ or ‘‘inpatient status’’ and discharged on the same date, use the codes for observation or inpatient care services [including admission and discharge services, 99234–99236 as appropriate.]));
• CPT 99218 (initial observation care, per day, for the evaluation and management of a patient which requires these three key components: A detailed or comprehensive history; a detailed or comprehensive examination; and medical decision making that is straightforward or of low complexity.
Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually, the problem(s) requiring admission to ‘‘observation status’’ are of low severity. Typically, 30 minutes are spent at the bedside and on the patient’s hospital floor or unit);
• CPT 99219 (initial observation care, per day, for the evaluation and management of a patient, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of moderate complexity.
Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually, the problem(s) requiring admission to ‘‘observation status’’ are of moderate severity. Typically, 50 minutes are spent at the bedside and on the patient’s hospital floor or unit);
• CPT 99220 (initial observation care, per day, for the evaluation and management of a patient, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of high complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually, the problem(s) requiring admission to ‘‘observation status’’ are of high severity. Typically, 70 minutes are spent at the bedside and on the patient’s hospital floor or unit);
• CPT 99224 (subsequent observation care, per day, for the evaluation and management of a patient, which requires at least two of these three key components: Problem focused interval history; problem focused examination; medical decision making that is straightforward or of low complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually, the patient is stable, recovering, or improving. Typically, 15 minutes are spent at the bedside and on the patient’s hospital floor or unit);
•CPT 99225 (subsequent observation care, per day, for the evaluation and management of a patient, which requires at least two of these three key components: An expanded problem focused interval history; an expanded problem focused examination; medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually, the patient is responding inadequately to therapy or has developed a minor complication. Typically, 25 minutes are spent at the bedside and on the patient’s hospital floor or unit);
• CPT 99226 (subsequent observation care, per day, for the evaluation and management of a patient, which requires at least two of these three key components: A detailed interval history; a detailed examination; medical decision making of high complexity.
Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually, the patient is unstable or has developed a significant complication or a significant new problem. Typically, 35 minutes are spent at the bedside and on the patient’s hospital floor or unit);
•CPT 99234 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these three key components: A detailed or comprehensive history; a detailed or comprehensive examination; and medical decision making that is straightforward or of low complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually the presenting problem(s) requiring admission are of low severity. Typically, 40 minutes are spent at the bedside and on the patient’s hospital floor or unit);
• CPT 99235 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually the presenting problem(s) requiring admission are of moderate severity. Typically, 50 minutes are spent at the bedside and on the patient’s hospital floor or unit);
• CPT 99236 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of high complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient’s and family’s needs. Usually the presenting problem(s) requiring admission are of high severity. Typically, 55 minutes are spent at the bedside and on the patient’s hospital floor or unit);
Observation care is a well-defined set of specific, clinically appropriate services, which include:
• Ongoing short term treatment,
• Assessment,
• Reassessment
These
are furnished while a decision is being made regarding whether patients
will require further treatment as hospital inpatients or if they are
able to be discharged from the hospital. Observation services are
commonly ordered for patients who present to the emergency department
and who then require a significant period of treatment or monitoring in
order to make a decision concerning their admission or discharge. In
only rare and exceptional cases do reasonable and necessary outpatient
observation services span more than 48 hours.
In the
majority of cases, the decision whether to discharge a patient from the
hospital following resolution of the reason for the observation care or
to admit the patient as an inpatient can be made in less than 48 hours,
usually in less than 24 hours.
If another provider admits a patient into Observation Care and I provide a consult, can I bill the observation care code?
Answer:
Medicare pays for initial observation care billed by only the physician who ordered hospital outpatient observation services and was responsible for the patient during his/her observation care. All other physicians who furnish consultations or additional evaluations or services while the patient is receiving hospital outpatient observation services must bill the appropriate outpatient service codes.
REIMBURSEMENT GUIDELINES
Initial Observation Care
The physician supervising the care of the patient designated as “observation status” is the only physician who can report an initial Observation Care CPT code (99218-99220). It is not necessary that the patient be located in an observation area designated by the hospital, although in order to report the Observation Care codes the physician must:
** Indicate in the patient’s medical record that the patient is designated or admitted as observation status;
** Clearly document the reason for the patient to be admitted to observation status; and
** Initiate the observations status, assess, establish and supervise the care plan for observation and perform periodic reassessments.
The CPT codebook states that “When “observation status” is initiated in the course of an encounter in another site of service (e.g., hospital emergency department, office, nursing facility) all evaluation and management services provided by the supervising physician or other qualified health care professional in conjunction with initiating “observation status” are considered part of the initial observation care when performed on the same date. The observation care level of service reported by the supervising physician should include the services related to initiating “observation status” provided in the other sites of services as well as in the observation setting.”
Oxford follows the Centers for Medicare and Medicaid Services’ (CMS) Claims Processing Manual which provides the instructions, “for a physician to bill the initial observation care codes [99218-99220], there must be a medical observation record for the patient which contains dated and timed physician’s admitting orders regarding the care the patient is to receive while in observation, nursing notes, and progress notes prepared by the physician while the patient was in observation status. This record must be in addition to any record prepared as a result of an emergency department or outpatient clinic encounter.”
Consistent with CMS guidelines, Oxford requires that an Initial Observation Care CPT code (99218-99220) should be reported for a patient admitted to observation care for less than 8 hours on the same calendar date.
Subsequent Observation Care
In the instance that a patient is held in observation status for more than two calendar dates, the supervising physician should utilize a subsequent observation care CPT code (99224-99226). Physicians other than the supervising physician providing care to a patient designated as “observation status” should report subsequent observation care.
According to the CPT codebook, “All levels of subsequent observation care include reviewing the medical record and reviewing the results of diagnostic studies and changes in the patient’s status (i.e., changes in history, physical conditions, and response to management) since the last assessment.”
Observation Care Discharge Services
Per CPT, Observation Care discharge day management CPT code 99217 “includes final examination of the patient, discussion of the hospital stay, instructions for continuing care and preparation of discharge records.”
Observation Care discharge services include all E/M services on the date of discharge from observation services and should only be reported if the discharge from observation status is on a date other than the date of initial Observation Care.
Oxford follows CMS guidelines that physicians should not report an Observation Care discharge Service when the Observation Care is a minimum of 8 hours and less than 24 hours and the patient is discharged on the same calendar date.
Observation Care Admission and Discharge Services on Same Date
Physicians who admit a patient to Observation Care for a minimum of 8 hours, but less than 24 hours and subsequently discharge on the same calendar date shall report an Observation or Inpatient Care Service (Including Admission and Discharge Services) CPT code (99234-99236).
In accordance with CMS’ Claims Processing Manual, when reporting an observation care admission and discharge service CPT code (99234-99236) the medical record must include:
** Documentation meeting the E/M requirements for history, examination and medical decision making;
** Documentation stating the stay for hospital treatment or observation care status involves 8 hours but less than 24 hours;
** Documentation identifying the billing physician was present and personally performed the services; and
** Documentation identifying that the admission and discharge notes were written by the billing physician.
Observation Care Services During a Surgical Period
Observation care codes are not separately reimbursable services when performed within the assigned global period as these codes are included in the global package.
Refer to the policy titled Global Days for guidelines on reporting services during a global period.
Who May Bill Initial Observation Care
Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short-term treatment, assessment and reassessment, that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.
Observation services are commonly ordered for patients who present to the emergency department and who then require a significant period of treatment or monitoring to make a decision concerning their admission or discharge.
In only rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in fewer than 48 hours, usually in fewer than 24 hours.
* Payment may only be made to the physician who ordered hospital outpatient observation services and was responsible for the patient during his observation care.
* A physician who does not have inpatient admitting privileges but who is authorized to furnish hospital outpatient observation services may bill these codes.
* There must be a medical observation record for the patient that contains dated and timed physician’s orders regarding the observation services the patient is to receive, nursing notes and progress notes prepared by the physician while the patient received observation services. This record must be in addition to any record prepared as a result of an emergency department or outpatient clinic
encounter.
* Payment for an initial observation care code is for all the care rendered by the ordering physician on the date the patient’s observation services began. All other physicians who furnish consultations or additional evaluations or services while the patient is receiving hospital outpatient observation services must bill the appropriate outpatient service codes.
Example:
If an internist orders observation services and asks another physician to additionally evaluate the patient, only the internist may bill the initial observation care code. The other physician who evaluates the patient must bill the new or established office or other outpatient visit codes as
appropriate.
Physician Billing for Observation Care Following Initiation of Observation Services
When a patient receives observation care for less than eight hours on the same calendar date, the initial observation care from CPT code range 99218–99220 should be reported by the physician. The observation care discharge service, CPT code 99217, should not be reported for this scenario.
When a patient is admitted for observation care and then is discharged on a different calendar date, the physician shall report initial observation care from CPT code range 99218–99220 and CPT observation care discharge CPT code 99217.
When a patient receives observation care for a minimum of eight hours but less than 24 hours and is discharged on the same calendar date, observation or inpatient care services (including admission and discharge services) from CPT code range 99234–99236 should be reported. The observation discharge, CPT code 99217, cannot also be reported for this scenario.
QUESTIONS AND ANSWERS
1 Q: Can Observation Care codes 99217 and codes 99218-99220 be reported on the same date of service ?
A: No. CPT codes 99234-99236 should be reported for patients who are admitted to and discharged from observation status on the same calendar date for a minimum of 8 hours but less than 24. An initial Observation Care code (99218-99220) should be reported for patients admitted and discharged from observation status for less than 8 hours on the same calendar date. CPT code 99217 can only be reported for a patient discharged on a different calendar date.
2 Q: Does the patient need to be in an observation unit in order to report the Observation Care codes ?
A: It is not necessary that the patient be located in an observation area designated by the hospital as long as the medical record indicates that the patient was admitted as observation status and the reason for Observation Care is documented.
3 Q: What code should be reported for a patient who continues to be in observation status for a second date and has not been discharged ?
A: A subsequent Observation Care CPT code (99224-99226) should be reported in the instance a patient is held in observation status for more than 2 calendar dates. When observation discharge services are provided to the patient, report CPT code 99217 on that calendar date. For example, report CPT 99218- 99220 for a patient designated as observation on Day 1, report CPT 99224-99226 on Day 2 and finally report CPT 99217 when the patient receives discharge services on Day 3.
4 Q: Why are Observation Codes G0378 and G0379 not addressed in this policy ?
A: These HCPCS codes are not to be reported for physician services. These codes are to be billed by facilities on a UB-04 claim form.
Q: Should a facility use condition code 44 on a claim if the admitting physician decides the patient should be in observation rather than an inpatient setting, without prompting by the utilization review (UR) committee or case management and prior to the discharge of the patient/submission of the claim?
A: No. When a physician orders a patient to be placed under observation, the patient’s status is that of an outpatient. The purpose of observation is to determine the need for further treatment or for inpatient admission.
Condition code 44 is used when an inpatient admission is being changed to outpatient. According to the Centers for Medicare & Medicaid Services (CMS) internet-only manual (IOM), Publication 100-04, Medicare Claims Processing Manual, Chapter 1 — General Billing Requirements external pdf file, condition code 44 is:
• For use on outpatient claims only, when the physician ordered inpatient services, but upon internal utilization review performed before the claim was originally submitted, the hospital determined that the services did not meet its inpatient criteria.
• Note: For Medicare, the change in patient status from inpatient to outpatient is made prior to discharge or release while the patient is still a patient of the hospital.
• Additionally, concurrence of the UR committee and the physician must be documented in the medical record.
Who May Bill
• Contractors pay for initial observation care billed by only the physician who ordered hospital outpatient observation services and was responsible for the patient during his/her observationcare. A physician who does not have inpatient admitting privileges but who is authorized to furnish hospital outpatient observation services may bill these codes.
• For a physician to bill observation care codes, there must be a medical observation record for the patient which contains dated and timed physician’s orders regarding the observation services the patient is to receive, nursing notes, and progress notes prepared by the physician while the patient received observation services. This record must be in addition to any record prepared as a result of an emergency department or outpatient clinic encounter.
• Payment for an initial observation care code is for all the care rendered by the ordering physician on the date the patient’s observation services began. All other physicians who furnish consultations or additional evaluations or services while the patient is receiving hospital outpatient observation services must bill the appropriate outpatient service codes.
Subsequent Observation Care (CPT code range 99224 – 99226):
• All levels of subsequent observation care include:
– Reviewing the medical record
– Reviewing the results of diagnostic studies
– Changes in the patient’s status (ie, changes in history physical condition, and response to management) since the last assessment.
• When observation care continues beyond three days, report subsequent observation care for each day between the first day of observation care and the discharge date
• When a patient receives observation care for a minimum of 8 hours, but less than 24 hours, and is discharged on the same calendar date, observation or inpatient care services (including admission and discharge services) CPT code range.
Initial Observation Care (CPT code range 99218-99220)
• Included in Initial Observation Care:
– Initiation of observation status
– Supervision of the care plan for observation
– Performance of periodic reassessments
• When a patient receives observation care for less than 8 hours on the same calendar date, the Initial Observation Care, from CPT code range 99218 – 99220, shall be reported by the physician.
• When a patient is admitted for observation care and then is discharged on a different calendar date, the physician shall report Initial Observation Care, from CPT code range 99218 – 99220, and CPT observation care discharge CPT code 99217.
• To report services provided to patient who is admitted to the hospital after receiving hospital observation care services on the same date, see initial hospital care notes on page 15 of2015 CPT Professional Edition.
• To report hospital admission on a date subsequent to the date of observation status, use appropriate initial hospital care codes (CPT 99221 – 99223)
• Observation status that is initiated in the course of an encounter in another site of service (eg. hospital emergency department, office, nursing facility) all E/M services provided by the supervising physician or other qualified health care professional in conjunction with initiating “observation status” are considered part of the initial observation care when performed on the same date.
– The level of service reported should include the services related to initiating “observation status” provided in the other sites of service as well as in the observation setting
• On the rare occasion when a patient remains in observation care for 3 days, the physician shall report an initial observation care code (99218-99220) for the first day of observation care, a subsequent observation care code (99224-99226) for the second day of observation care, and an observation care discharge CPT code 99217 for the observation care on the discharge date.
• Admitted and discharges from observation or inpatient status on the same date report CPT codes 99234-99236 as appropriate; do NOT report observation discharge in conjunction with a hospital admission.
• These codes may NOT be utilized for post-operative recovery if the procedure is considered part of the surgical “package.”
Discharge Observation Care (CPT code 99217):
• Included in CPT code 99217
– Final Examination of the patient
– Discussion of the hospital stay
– Instructions for continuing care
– Preparation of discharge records
• For observation or inpatient hospital care including the admission and discharge of the patient on the same date see CPT codes 99234 – 99236.
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