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Observation Care

From: The Hospitalist, July 2010

Detailed notes, correct codes critical to charge capture

by Carol Pohlig, BSN, RN, CPC, ACS

Many conditions once treated during an “inpatient” hospital stay are currently treated during an “observation” stay (OBS). Although the care remains the same, physician billing is different and requires close attention to admission details for effective charge capture.

Let’s take a look at a typical OBS scenario. A 65-year-old female with longstanding diabetes presents to the ED at 10 p.m. with palpitations, lightheadedness, mild disorientation, and elevated blood sugar. The hospitalist admits the patient to observation, treats her for dehydration, and discharges her the next day. Before billing, the hospitalist should consider the following factors.

Physician of Record

The attending of record writes the orders to admit the patient to observation; indicates the reason for the stay; outlines the plan of care; and manages the patient during the stay. The attending reports the initial patient encounter with the most appropriate initial observation-care code, as reflected by the documentation:¹

Downgraded Stays

In cases when a hospital utilization review committee determines that an inpatient admission does not meet the hospital’s inpatient criteria, Medicare allows the hospital to change the patient status from inpatient to outpatient and submit an outpatient claim for medically necessary services that were furnished, as long as the following requirements are met:⁵

The patient status change is made prior to patient discharge;
The hospital has not submitted a claim to Medicare for the inpatient admission;
A physician concurs with the utilization review committee’s decision; and
The physician’s concurrence with the utilization review committee’s decision is documented in the patient’s medical record.

The entire stay can then be treated as observation, and physicians should report the appropriate observation-care codes to reflect each service provided. Private payor guidelines are contractual and might vary, but they often follow Medicare guidelines. It is best to query non-Medicare payors for their specific change-of-status policies.

Since “downgrades” occur with some frequency, it is advisable to temporarily hold claims until the correct patient status can be confirmed by the utilization review team and communicated to the physician. This will save time having to resubmit or appeal incorrectly reported services.—CP

99218: Initial observation care, requiring both a detailed or comprehensive history and exam, and straightforward/low-complexity medical decision-making. Usually, the problem(s) is of low severity.
99219: Initial observation care, requiring both a comprehensive history and exam, and moderate-complexity medical decision-making. Usually, the problem(s) is of moderate severity.
99220: Initial observation care, requiring both a comprehensive history and exam, and high-complexity medical decision-making. Usually, the problem(s) is of high severity.

While other physicians (e.g., specialists) might be involved in the patient’s care, only the attending physician reports codes 99218-99220. Specialists typically are called to an OBS case for their opinion or advice but do not function as the attending of record. Billing for the specialist (consultation) service depends upon the payor.

For a non-Medicare patient who pays for consultation codes, the specialist reports an outpatient consultation code (99241-99245) for the appropriately documented service. Conversely, Medicare no longer recognizes consultation codes, and specialists must report either a new patient visit code (99201-99205) or established patient visit code (99212-99215) for Medicare beneficiaries.

Selection of the new or established patient codes follows the “three-year rule”: A “new patient” has not received any face-to-face services (e.g., visit or procedure) in any location from any physician within the same group and same specialty within the past three years.² There could be occasion when a hospitalist is not the attending of record but is asked to provide their opinion, and must report one of the “non-OBS” codes.

The attending of record is permitted to report a discharge service as long as this service occurs on a calendar day different from the admission service (as in the listed scenario). The attending documents the face-to-face discharge service and any pertinent clinical details, and reports 99217 (observation-care discharge-day management).

Length of Stay

Observation-care services typically do not exceed 24 hours and two calendar days. Observation care for more than 48 hours without inpatient admission is not considered medically necessary but might be payable after medical review. Should the OBS stay span more than two calendar days (as might be the case with “downgraded” hospitalizations), hospitalists should report established patient visit codes (99212-99215) for the calendar day(s) between the admission service (99218-99220) and the discharge service (99217).³ The physician must provide and document a face-to-face encounter on each date of service for which a claim was submitted.

A more likely occurrence is the admission and discharge from OBS on the same calendar date. The attending of record reports the code that corresponds to the patient’s length of stay (LOS). If the total LOS is less than eight hours, the attending only reports standard OBS codes (99218-99220). The hospitalist does not separately report the OBS discharge service (99217), even though the documentation must reflect the attending discharge order and corresponding discharge plan. If the total duration of the patient’s stay lasts more than eight hours and does not overlap two calendar days, the attending reports the same-day admit/discharge codes:¹

99234: Observation or inpatient care, same date admission and discharge, requiring both a detailed or comprehensive history and exam, and straightforward or low-complexity medical decision-making. Usually the presenting problem(s) is of low severity.
99235: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and moderate-complexity medical decision-making. Usually the presenting problem(s) is of moderate severity.
99236: Observation or inpatient care, same date admission and discharge, requiring a comprehensive history and exam, and high-complexity medical decision-making. Usually the presenting problem(s) is of high severity.

OBS discharge service (99217) is not separately reported with 99234-99236 because these codes are valued to include the discharge component (e.g., the comprehensive service, 99236 [4.26 wRVU, $211], is equivalent to its components, 99220 [2.99 wRVU, $148] and 99217 [1.28 wRVU, $68]). The attending must document the total duration of the stay, as well as the face-to-face service and the corresponding details of each service component (i.e., both an admission and discharge note).³ TH

Carol Pohlig is a billing and coding expert with the University of Pennsylvania Medical Center in Philadelphia. She is also on the faculty of SHM’s inpatient coding course.

References

Abraham M, Beebe M, Dalton J, Evans D, Glenn R. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2010:11-16.
Medicare Claims Processing Manual: Chapter 12, Section 30.6.7A. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
Medicare Claims Processing Manual: Chapter 12, Section 30.6.8C. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
Medicare Claims Processing Manual: Chapter 12, Section 30.6.8D. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c12.pdf. Accessed May 11, 2010.
Medicare Claims Processing Manual: Chapter 1, Section 50.3. Centers for Medicare and Medicaid Services website. Available at: www.cms.hhs.gov/manuals/downloads/clm104c01.pdf. Accessed May 12, 2010.

FAQ

Question: Sometimes the patient requires inpatient admission after initially being placed in observation. How should a hospitalist report the services if he or she is both the attending of record for the OBS care and the inpatient stay?

Answer: If the patient is converted to an inpatient status on the same day as the OBS admission, only an initial inpatient-care service is reported (e.g., 99222). For billing purposes, it is not necessary to redocument another history and physical exam (H&P), but hospitalists should write the new order for inpatient admission and update the OBS assessment with any relevant, new information to justify the need for conversion.

If the inpatient conversion occurs on the second calendar day of the OBS stay, the physician is allowed to report the initial observation care code (e.g., 99220) on day one, and the initial inpatient care code (e.g., 99223) on day two.⁴ Keep in mind that the physician must then meet the documentation guidelines for initial hospital care and redocument a complete H&P to support the reported code (e.g., 99223=a comprehensive H&P and high-complexity decision-making). The hospitalist is only permitted to reference the previous review of systems and histories, and must redocument the history of present illness, exam, and decision-making.

If the physician decides not to document to this level of detail in support of the initial hospital-care service, reporting a subsequent hospital-care code (99231-99233) is considered reasonable. The physician should not report the OBS discharge (99217).

As a part of a contractual agreement, some private payors might convert the patient’s status for the entire episode of care, beginning when the patient was first admitted to OBS. If this occurs, the physician is responsible for reporting the visit category associated with the patient’s status when that status became effective (e.g., inpatient hospital-care codes are reported on day one of a retroactive inpatient status assignment).—CP

This copy is for your personal, noncommercial use only. No part of this article can be reproduced without the written permission of the publisher. Order presentation-ready copies for distribution to your colleagues, clients, or customers by contacting our reprints department at reprints@wiley.com. Copyright © 2009 Society of Hospital Medicine, administered by John Wiley & Sons Inc.

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