Billing when patient is in “observation” status

developed 03-07-2005

• Only the physician who admitted and was responsible for the patient during his/her stay in observation may bill observation codes.
• If you are not the admitting physician and you are asked to see a patient while he/she is assigned to observation, you should use the outpatient visit or outpatient consultation codes to bill for your services. (Outpatient New 99201-99205, Outpatient Established 99211-99215, Outpatient Consult 99241-99245).
• There must be a medical observation record for the patient which contains dated and timed physician’s admitting orders on the patient’s care in observation, nursing notes and progress notes prepared by the doctor which the patient was in observation status. This record must be prepared IN ADDITION TO any emergency department or outpatient clinic department record. The physician order should reflect "Outpatient Observation" vs "Inpatient Admission".
• Observation services are not considered routine service prior to or after a diagnostic or outpatient therapeutic procedure.

FREQUENTLY ASKED QUESTIONS & ANSWERS

1. How do I bill for a patient in observation for more than two calendar days?

Bill the Initial observation care with procedure code 99218-99220. Bill subsequent days with Subsequent Office/Outpatient visit code (99212-99215).

2. How should I bill if a patient is assigned to Observation on day 1, seen in observation again on day 2, admitted to Inpatient status on day 3, seen again on day 4, and discharged on day 5?

Day 1= 99218-99220 (Observation Admission)

Day 2= 99212-99215 (Subsequent Observation Visit)

Day 3= CHP1-3 (Inpatient Admission)

Day 4- DC 1-3 (Subsequent Visit)

Day 5- DP1-2 (Discharge Planning)

As long as the patient is in observation, you should use the appropriate Observation Codes

99218-99220 or 99234-99236 Observation Admission

99212-99215 Subsequent Observation Visits

(Only use when the patient is assigned to observation > 2 calendar days)

99217 Observation Discharge

(Only Use when patient was discharged from observation on a different calendar date from observation admission and the patient was discharged home) (If the patient was admitted to Inpatient status directly from observation, you should not use the observation discharge code.)

Once the patient is admitted to Inpatient Status from Observation, you should begin using the appropriate Inpatient Admission Codes

CHP1-3 Inpatient Admission

DC1-3 Subsequent Admission Visits

DP1-2 Discharge Planning

 

***ONLY ONE VISIT CAN BE BILLED PER DAY!!!

 

3. Sometimes the patient is admitted to inpatient status and then the care coordinators come around and tell us that the admission does not meet Medicare criteria, so it needs to be changed to observation status. Should we revise the Day 1 code?

You should change your billing code to one of the observation codes.

4. Are Observation codes paid less than Admission codes (CHPs)?

Observation codes are not paid less than Admission codes (CHPs). Actually, Medicare observation visits are equivalent to or greater than the Initial Admission Visits (CHPs). See attached.

5. Are the criteria for the three levels of initial observation care the same as for the CHP1-3? If so, then how can we do a CHP on the second day, if we have already done it on the first observation day?

The CHP documentation and service requirements are the same as the Observation documentation requirements. FYI…. If a patient is admitted on a different calendar day after being assigned to observation, you can refer in your CHP note to the PFSH and ROS that you previously documented in your Observation Admission note and you do not have to re-document it again. Ex., "PFSH and ROS unchanged- See progress note dated XXXX).

DOCUMENTATION REQUIREMENTS:

CHP1 & 99218 & 99234- Detailed or Comprehensive history; Detailed or Comprehensive Exam; and Straightforward or Low Complexity Decision Making

CHP2 & 99218 & 99235- Comprehensive history, Comprehensive exam; and Moderate Complexity Decision making.

CHP3 & 99220 & 99236- Comprehensive history; Comprehensive exam; and High Complexity Decision making.

 

6. How should I bill if the patient was admitted to observation and then admitted to Inpatient status on the same calendar day?

You should use CHP1-CHP3 (initial hospital visit) code only.

 

7. When does timing for observation begin and end and what documentation is used to indicate begin and end time?

According to the Centers for Medicare & Medicaid Services (CMS) Program Memorandum (PM) A-02-129 (CR 2503), dated Jan. 3, 2003, http://www.cms.hhs.gov/manuals/pm_trans/A02129.pdf, the time begins at the clock time appearing on the nurse’s observation admission note, which should coincide with the initiation of observation care or with the time of the patient’s arrival in the observation unit. The time ends at the clock time documented in the physician’s discharge orders, or, in the absence of such documented time, the clock time when the nurse or other appropriate person signs off on the physician’s discharge order. The time should coincide with the end of the patient’s period of monitoring or treatment in observation.

03-13-2005