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Scenario 2: The care spans 2 calendar days.
For example, the patient is placed in Observation
status at 10 a.m. and discharged home the
following day at 9 a.m. Observation provided on
calendar date #1 is reported with the code set
99218–99220 based on the documented History,
Physician Exam, and Medical Decision Making.
These CPT codes apply to all evaluation and
management services that are provided on the
same date of in itiating "observation status."
99218 – Initial observation care, per day, for
presenting problems of low severity. Documentation requires a detailed or comprehensive history,
a detailed or comprehensive exam, and straightforward or low-complexity MDM. Physicians typically spend 30 minutes at the bedside and on the
patient’s hospital floor or unit.
RUC Vignette: 99218 – An intoxicated 52-year-old
male presents after a fall. He has a blood alcohol
concentration of 0.325% and has vomited several
times. The patient is admitted for observation.
99219 – Initial observation care, per day, for presenting problems of moderate severity. Documentation requires a comprehensive history, a
comprehensive exam, and moderate-complexity
MDM. Physicians typically spend 50 minutes at
the bedside and on the patient’s hospital floor or
unit.
RUC Vignette: 99219 – A 57-year-old woman
presents with an allergic reaction after a bee sting
complaining that "her throat is constricting" and she
is having "difficulty breathing." The patient is
admitted for observation.
99220 – Initial observation care, per day, for presenting problems of high severity. Documentation
requires a comprehensi ve history, a comprehensive exam, and high-complexity MDM. Physicians
typically spend 70 minutes at the bedside and on
the patient’s hospital floor or unit.
RUC Vignette: 99220 – A 78-year-old male with a
history of CHF presents complaining of shortness of
breath and lower extremity edema. He admits to not
taking his "heart pills" and admits to drinking beer
and eating hotdogs recently at a baseball game. He is
dyspneic, able to complete sentences of three to five
words, has rales to mid lung field, and +3 pitting
edema in the bilateral lower extremities. His ECG is
unchanged from prior. The patient is admitted for
observation.
The final day of a 2-day stay is reported with the
discharge code 99217.
99217 – Observation care discharge manage-
ment includes services on the date of observation
discharge (can only be used on a calendar day
other than the initial day of observation). The
documentation for 99217 should include the
following: a final exam, discussion of the observation stay, follow-up instructions, and documentation. Do not report in conjunction with a hospital
admission.
Scenario 3: The care spans more than 2 calendar days. For example, the patient is placed in
Observation status at 10 a.m. on Monday and
discharged home on Wednesday at 9 a.m. This
scenario incorporates the logic of the 2-day stay
but a new set of codes is utilized to report the
middle day(s), which are identified as subsequent
observation services. The CPT code set
99224–99226 is used to report subsequent observation care based on the History, Physical Exam,
and Medical Decision Making.
Subsequent Observation Care As per CPT,
utilize these codes for observation care services
provided on dates other than the initial or discharge date. Thes e codes include reviewing the
medical record and reviewing the results of diagnostic studies and changes in the patient’s status
since the last assessment by the physician. Of
note, because they are subsequent visit codes, only
two of the three key components of the History,
Physical Exam or Medical Decision Making are
required to be satisfied.
99224 – Subsequent observation care, per day,
for stable, recovering, or improving patients.
Documentation requires a problem-focused interval history, problem-focused examination, and
low-complexity MDM. Physicians typically spend
15 minutes at the bedside and on the patient’s
hospital floor or unit.
RUC Vignette: 99224 – Subsequent observation care
of a 42-year-old male following an uncomplicated
mandible fracture who is responding to pain
medication; however, he is not controlled on oral
medications and requires continued observation.
99225 – Subsequent observation care, per day, for
the patient responding inadequately to therapy
or has developed a minor complication. Documentation requires expanded problem-focused
interval history, expanded problem-focused
examination, and moderate-complexity MDM.
Physicians typically spend 25 minutes at the bedside and on the patient’ s hospital floor or unit.
Physician Coding and Reimbursement
067
21:24:06
RUC Vignette: 99225 – Subsequent observation care
of a 23-year-old female with nausea, vomiting, and
crampy abdominal pain, who is responding to
therapy. Although the patient’s condition has
improved, there are concerns regarding the
abdominal condition requiring continued
observation.
99226 – Subsequent observation care, per day, in
which the patient is unstable or has developed a
significant complication or a significant new
problem. Documen tation requires detailed interval history, detailed examination, and highcomplexity MDM. Physicians typically spend
35 minutes at the bedside and on the patient’s
hospital floor or unit.
RUC Vignette: 99226 – Subsequent observation care
for a 78-year-old male who fell and suffered
contusions to the head and shoulder, but no fractures.
He has a history of stroke and is currently on warfarin
requiring continued assessment for stability and
possible intervention for internal bleeding.
Documentation Requirements
With the implementation of the 1995 CMS documentation guidelines as amended in 1997, physicians providing observation services must be
aware of the documentation requirements related
to reporting these services. Observation cases are
scored primarily based on the key elements of the
History, Physical Exam, and Medical Decision
Making. With the exception of the lowest level of
service, Observation services require a Complex
History and Physical Exam.
Summary of Documentation
Requirements: 1-Day and 2-Day
Observation
Detailed History and Physical Exam for 99218
and 99234
History of Present Illness: 4 elements
Past, Family, or Social History: 1 area
Review of Systems: 2 systems
Physical Exam: 5–7 organ systems/areas
Comprehensive History and Physical Exam for 99219/
99220 and 99235/99236
History of Present Illness: 4 elements
Past, Family, or Social History: All 3 areas (Of
note, the ED Evaluation and Management (E/
M) codes only require 2 of 3 PFSH elements to
qualify as comprehensive)
Review of Systems: 10 systems
Physical Exam: 8 organ systems
The subsequent observation codes used to report
the “middle days” also have specified documentation requirements.
Table 62.3 summarizes the History, Physical
Exam, and Medical Decision Making requirements
for each of the individual Observation codes.
Table 62.3 Summary of Observation E/M Code Documentation Requirements
Service CPT Code Required Documentation
History Physical MDM
Same-day observation 99234 D or C D or C Straightforward or low
Same-day observation 99235 C C Moderate
Same-day observation 99236 C C High
Initial observation 99218 D or C D or C Straightforward or low
Initial observation 99219 C C Moderate
Initial observation 99220 C C High
Subsequent observation 99224* PF PF Straightforward or low
Subsequent observation 99225* EPF EPF Moderate
Subsequent observation 99226* D D High
D = Detailed, C = Comprehensive, PF = Problem focused, EPF = Expanded problem focused
*Requires only two of the three key components to meet or exceed stated requirements rather than meeting all three
requirements.
Michael A. Granovsky and David A. McKenzie
067
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Prolonged Services with Observation
Starting in 2012, CPT listed typical times associated
with observation code ranges 99218–99220 and
99224–99226 (Table 62.4). With typical times now
assigned, those codes sets are eligible for consideration of additionally reporting prolonged services
when the time the physician spends performing the
service exceeds the typical published time.
CPT offers specific guidance regarding the Prolonged Service codes. Prolonged service refers to
direct patient contact, is face-to-face and includes
additional non-face-to-face services on the patient’s
floor or unit in the hospital or nursing facility
during the same session, even if the time spent is
not continuous. It is reported in addition to the
designated evaluation and management services at
any level and any other services providedat the same
session as evaluation and management services.
The inpatient or observation prolonged code
descriptors read as follows:
+99356 – Prolonged service in the inpatient or
observation setting requiring unit/floor time
beyond the usual service; first hour
(Use 99356 in conjunction with 90837,
99218–99220,
99221–99223, 99224–99226, 99231–99233,
99234–99236,
99251–99255, 99304–99310)
+ 99357 – Each additional 30 minutes (List
separately in addition to 99356.)
Prolonged services codes are time-based addon codes. CPT includes a chart for threshold time
requirements (Table 62.5).
The Resource Based Relative Value Scale
When a new code is approved through the CPT
process, it is sent to the American Medical Association (AMA) Relative Value Scale Update Committee (RUC) for valuation. Data is provided to
the RUC to help members assign an appropriate
relative value to the service. The RUC then forwards their recommendations to CMS, which
historically has adopted those recommendations
over 90% of the time.
An RVU is an abbreviation for Relative Value
Unit. Physician services are reported using the Current Procedural Terminology (CPT) coding system.
For each CPT code, RVU valuations are calculated
for Physician Work, Practice Expense, and Professional Liability Expense. Each of these three components is assigned an RVU value and the sum
represents the total RVUs for that CPT code.
RBRVS Formula:
Work RVU
Practice expense RVU
+ Liability insurance RVU
= Total RVUs
Example for Code 99236
Work RVU + Practice Expense RVU + Liability
Insurance RVU = Total RVU
4.20 + 1.64 + 0.29 = 6.13
Table 62.4 Summary of CPT Typical Times
Associated with Observation Services
CPT Code Typical CPT Times
99218 30 minutes
99219 50 minutes
99220 70 minutes
99224 15 minutes
99225 25 minutes
99226 35 minutes
Table 62.5 CPT Time Thresholds for Observation Prolonged Care Services
Total Duration of Prolonged Services Code(s)
Less than 30 minutes not reported separately
30–74 minutes
(30 minutes – 1 hour 14 minutes)
99356 × 1
75–104
(1 hour 15 minutes – 1 hour 44 minutes)
99356 × 1 and 99357 × 1
105 or more
(1 hour 45 minutes or more)
99356 × 1 and 99357 × 2 or more for each additional 30 minutes
Adopted for use with Observation Services
Physician Coding and Reimbursement
067
21:24:06
Like other typical Evaluation and Management
Services, the Observation Codes have been evaluated by the RUC and CMS has published the
Total RVU Values for these services. Typical
Observation Code RVUs appear in Table 62.6
with the inclusion of the ED codes of similar
complexity to serve as a reference point.
In the scenario where a patient was admitted
to observation on one day and discharged on the
following day, the 99218–99220 codes would usually be assigned with the discharge code, 99217.
The combined RVUs for these code pairs would
be as follows: 4.86 for 99218 and 99217; 5.86 for
99219 and 99217; and 7.27 for 99220 and 99217
(see Table 62.7).
As discussed earlier, in the event patient
care spans more than 2 calendar days the middle
day(s) are reported with the subsequent observation care codes (99224–99226). These codes have
also been assigned RVUs (see Table 62.8), which
would be additive.
5
Medicare Payments
To determine the Medicare reimbursement the
Total RVUs for a given code are multiplied by a
conversion factor (typically published on an
annual basis by Medicare) to obtain the resulting
Medicare reimbursement for that CPT code (see
Table 62.9 and Table 62.10).
Total RVUs × Medicare Conversion Factor =
Medicare Payment
Example for 99236 using the updated
2016 Medicare conversion factor:
6.13 Total RVUs × $35.8043 = $219.48
It is important to remember that CPT
instructs that when observation status is initiated
in the course of an encounter in another site of
service such as the emergency department, all E/
M services provided by the same physician (usually also defined as a physician of the same specialty from the same group) in conjunction with
initiating observation status are considered to be
part of the initial observation care when performed on the same date and are not separately
reportable. Some groups have considered complex corporate structures to allow reporting both
an ED E/M and observation services on the same
date. Groups contemplating such complex corporate structures should seek advice from legal
counsel before considering such plans.
Modifiers
Many of the same modifiers apply to Observation
that would apply to ED E/M service. The most
common application would be the 25 modifier
(Significant, Separately Identifiable Evaluation
and Management Service by the Same Physician
Table 62.6 RVU Comparison of E/M Codes of Similar Complexity
Emergency Department Codes Same-Day Observation 2-Day Observation
CPT code RVUs CPT code RVUs CPT code RVUs
99283 1.75 99234 3.76 99218 2.81
99284 3.32 99235 4.76 99219 3.81
99285 4.90 99236 6.13 99220 5.22
99217 2.05
Table 62.7 Combined RVUs for Patients Admitted on One
Day and Discharged on the Next Day
Code Pair:
Initial Observation
Code + Discharge
Code (for
following day)
RVUs Combined
RVUs
99218 + 99217 2.81 + 2.05 4.86
99219 + 99217 3.81 + 2.05 5.86
99220 + 99217 5.22 + 2.05 7.27
Table 62.8 RVUs for Subsequent Observation
Subsequent Observation Codes
CPT code RVUs
99224 1.12
99225 2.05
99226 2.95
Michael A. Granovsky and David A. McKenzie
067
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on the Same Day of the Procedure or Other
Service), to distinguish the observation service
from any procedures that were performed during
the same encounter.
Consider this scenario: “Presenting patient is a
78-year-old male who fell and suffered contusions
to the head and shoulder, but no fractures. He has
a history of stroke and is currently on warfarin
requiring continued assessment for stability and
possible intervention for internal bleeding.”
The patient then goes on to develop significant
epistaxis requiring complex anterior nasal
packing described by CPT code 30903 (Control
nasal hemorrhage, anterior, complex [extensive
cautery and/or packing] any method). His admission and discharge from observation all occurs on
the same calen dar day. You would apply the
25 modifier to the 99236 and also report the
epistaxis treatment code. Final coding would be:
99236 25 and 30903
Keep in mind that the Observation codes may not
be used for simple recovery (such as following
moderate sedation) particularly if the procedure
is part of a global surgical package.
Critical Care Reported with Observation
In the event a patient in observation status suddenly crashed and becomes critically ill, it may be
possible to also report the time spent providing
critical care, 99291 (Critical care, evaluation and
management of the critically ill or injured patient;
first 30–74 minutes) if the minimum time thresholds are met. CPT explicitly states that critical care
and other E/M services may be provided to the
same patient on the same day by the same physician. Additionally, Medicare has stated “When a
hospital inpatient or office/outpatient evaluation
and management service (E/M) are furnished on a
calendar date at which time the patient does not
require critical care and the patient subsequently
requires critical care both the critical Care Services (CPT codes 99291 and 99292) and the previous E/M service may be paid on the same date
of service.”
6
References
1. CMS Manual System Pub 100-
04 Medicare Claims Processing
Manual, Chapter 12, Section
30.6.8.
2. CMS Manual System Pub 100-
04 Medicare Claims Processing
Manual, Chapter 4, Section
290.1.
3. CMS Manual System Pub 10004 Medicare Claims Processing
Manual, Chapter 4, Section
290.
4. Current Procedural
Terminology CPT®, 2016.
Chicago, IL: American
Medical Association,
2015.
5. Medicare RBRVS: The
Physicians’ Guide 2012.
Chicago, IL: American Medical
Association, 2012.
6. CMS Claims Processing
Manual Pub 100-04,
Chapter 12, Section
30.6.9.
Table 62.9 Sample Medicare Reimbursement for Observation Services
Code RVUs ×
Medicare
Conversion
Factor
Payment Code RVUs ×
Medicare
Conversion
Factor
Payment Code RVUs ×
Medicare
Conversion
Factor
Payment
99234 3.76 × 35.8043 $134.62 99218 2.81 × 35.8043 $ 100.61 99224 1.12 × 35.8043 $ 40.10
99235 4.76 × 35.8043 $170.43 99219 3.81 × 35.8043 $136.41 99225 2.05 × 35.8043 $ 73.40
99236 6.13 × 35.8043 $219.48 99220 5.22 × 35.8043 $186.90 99226 2.95 × 35.8043 $105.62
99217 2.05 × 35.8043 $ 73.40
Table 62.10 Sample Medicare
Reimbursement for ED Services
ED Code Payment
99281 $21.48
99282 $41.89
99283 $62.66
99284 $118.87
99285 $175.44
Physician Coding and Reimbursement
067
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Subpart VA
Chapter
63
Financial – Coding and Reimbursement
Hospital Coding and Reimbursement
Candace E. Shaeffer, RN, MBA, RHIA
Michael A. Granovsky, MD, CPC, FACEP
OBSERVATION UNIT
REIMBURSEMENT: HOSPITAL
Introduction
In addition to understanding the clinical aspects
of providing hospital observation services it is
important for emergency department (ED) clinical and financial leaders to understand
charging, coding, and other aspects of the revenue cycle as they relate to observation
reimbursement.
The Healthcare Financia l Management Asso-
ciation and others define revenue cycle management as the coordination of “ all administrativ e
and clinical functions that contribute to the capture, management, and collection of patient service revenue.”
1
While coders manage the coding,
and the back-end billing functions remain a
patient financial services responsibility, knowledge of these processes – including patient registration, documentation, charging, coding, and
some billing related tasks – will be essential to
the observation manager as he or she strives to
optimize revenue and steer clear of compliance
issues.
When examining revenue cycle issues
related to observation, managers will discover
that the Cent ers for Medicare and Medicaid
Services (CMS) has published an abundance of
information, rules and regulations to guide the
effort. Commercial payers are often not as
transparent so many hospitals have adopted
Medicare rules as the standard and apply variations as needed to satisfy specific payer
requirements.
The CMS rules for reporting hospital or
facility observation are very different from the
professional/physician rules discussed in
Chapter 62. Being mindful of the fact that
different rules come into play on the facility side
is a good first step to understanding hospital
observation reimbursement.
General Medicare
Observation Rules
CMS requires adherence to published guidelines
as a condition for payment. As a hospital outpatient service, observation requirements can be
found in the Medicare Hospital Manual, various
transmittals, and in the Outpatient Prospective
Payment (OPPS) rules that are updated annually. As with all billable services, an observation
service must be medically necessary and supported with thorough and specific documentation. Because only services that meet CMS
requirements are reportable/payable, it is
important for providers to be aware of the rules
and guidelines to help ensure appropriate
reimbursement.
CMS has designated hospital observation, for
the purpose of reimbursement, as a “Comprehensive APC” (Ambulatory Payment Classification).
This means that generally, all other services provided during the observation stay will be packaged and not paid separately. Under the
comprehensive APC payment structure CMS
packages payment for items and services that it
considers integral, ancillary, supportive, dependent, or adjunctive to the primary service.
2
Observation services require a defined level of
supervision based on the stability of the patient.
Upon initiation of Observation the services must
be provided under direct supervision (meaning
that the physician or appropriate nonphysician
practitioner is immediately available to furnish
assistance and direction throughout the performance of the service though he or she does not have
to be present in the room where the service or
068
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procedure is being perform ed. General supervision (meaning that the service is furnished under
the overall direction and control of the physician
or appropriate nonphysician practitioner, but his
or her physical presence is not required during
the performance of the service nor is he/she
required to be immediately available) is allowed
once the patient is deemed stable. Importantly,
the point of transition to general supervision
should be documented in the medical record.
For example, a 48-year-old asthmatic with
labored breathing and moderate wheezing is
placed in observation. During this initial stage
the patient requires direct supervision. However,
with ongoing treatment the patient begins to
improve, no longer requires supplemental oxygen
and has transitioned to a more stable state requiring only general supervision. Of note, the observation provider can be a physician or
nonphysician practitioner as long as the service
is within the clinician’s scope of licensure, credentialing, and the hospital bylaws.
3
CMS does not require a specific location for
the provision of observation thus allowing a high
degree of flexibility to hospitals. Observation
areas or beds may be located in the ED, a formal
observation unit, an outpatient short-stay area, or
even on an inpatient floor.
An observation stay usually follows an ED or
clinic visit, but the patient may be directly
referred to observation by a physician in the community. Observation services typically last less
than 24 hours, and rarely more than 48 hours.
4
Observation Reimbursement from a
Revenue Cycle Perspective
Because the CMS requirements related to registration, documentation, charging, coding, and
billing are often found to be confusing, a systematic walk through each of these revenue cycle
components as they relate to observation will help
provide clarity.
Registr ation
The physician order determines if a patient is
registered as an inpatient or outpatient. Each
status has different reporting r equi rements
and implications for reimbursement: registration sets up the downstream charging, coding,
andbillingprocessesaseitherinpatientor
outpatient. If caught immediately, a registrationerrorcanbechanged,butifthe
patient’s care is initiated the back-end process
to convert from inpatient to outpatient can be
onerous.
An incorrect registration can result from a
registration mistake or an incorrect admission
order. Registration mistakes are easy to make
if the order does not clearly state “place in
observation.” It is easy to see how a physician’s
order, “Admit to Observation,” could result in
an in patient admission in the registration
system.
An incorrect admission order occurs when
the patient’s intensity of service needs and
severity of illness are c onsistent with outpatient
care but the patient is admitted as a formal
inpatient. The process for converting an inpatienttoanoutpatientwillbediscussedinthe
Billing section later in this chapter.
Documentation Requirements and
Best Practices
Fortunately, the same documentation requirements discussed in the physician section also
apply to hospital observation. Interestingly, CMS
has published very few observation nursing documentation requirements.
The physician should document a separate
observation record that includes:
– A dated and timed order to “place
in observation” or “provide observation
care”
– Notation of medical necessity, the
benefits of observation and/or the risk
of discharging the patient home; if
observation is for a complication
following an outpatient surgery the
complication and need for observation
should be clearly documented
– A treatment plan
– Progress notes for ongoing care
– A discharge note
Hospital Coding and Reimbursement
068
21:24:12
In the OPPS rules and Medicare manuals, CMS
has further stated that the patient’s medical record
should include:
– Written orders for observation care and
discharge, documentation of a risk assessment
by the MD; all notes should be written and
signed
– Start and stop times for observation should be
documented in the nursing notes
Best practice nursing documentation includes
dated and timed initial, progress, and discharge
notes that are consistent with the physician’s
orders; results of “periodic monitoring” by
the nurse; responses to any interventions and
treatment; notation of communications with
the physician or other provider; and nursing
signatures.
Charging
Observation charges may be determined by a
coder, or a nurse or clerk in the unit where the
service was provided. Typical observation “visit”
charges include a Current Procedural Technology
(CPT) or Healthcare Common Procedure Coding
System (HCPCS) code as noted in Table 63.1,
units of service in hours, a dollar charge set by
the hospital, and observation revenue code 762.
Of note, this is a different revenue code than 450,
which is typically used for the ED. In addition to
the observation visit charge, CPT codes for separately billable procedures and any diagnostic
testing would also be reported (Table 63.2). Once
determined, each charge will be entered into the
billing system and reported on the UB04 hospital
claim (an electronic data file) once “coding” has
been completed.
Medicare and commercial payers are
inconsistent in their observation reporting
requirements; Medicare requires the observation
HCPCS code, G0378. Some commercial payers
will also accept this HCPCS code, but others
require an observation CPT code or no code at
all and instead expect only the observation revenue code, the duration of the observation stay in
Table 63.2 CPT Private Payer Observation Codes
Observation
CPT Code
CPT Descriptor, as Applicable
to Hospital Observation
99218 Initial observation care, per day;
low-severity presenting problem
99219 Initial observation care, per day;
moderate-severity presenting
problem
99220 Initial observation care, per day;
high-severity presenting problem
99217 Observation care discharge, day
management
99224 Subsequent observation care,
per day; patient is usually
stable, recovering or
improving
99225 Subsequent observation care,
per day; patient is usually
responding inadequately to
therapy or has developed a minor
complication
99226 Subsequent observation care, per
day; patient is usually unstable or
has developed a significant
complication or a significant new
problem
99234 Observation or inpatient hospital
care; same day admit and
discharge; low-severity
presenting problem
99235 Observation or inpatient hospital
care; same day admit and
discharge; moderate-severity
presenting problem
99236 Observation or inpatient
hospital care; same day
admit and discharge;
high-severity presenting
problem
Source: 2016 AMA CPT [American Medical Association, CPT
Professional Edition, AMA 2016]
Table 63.1 Medicare Observation HCPCS Codes
Medicare Observation
HCPCS Codes
Descriptor
G0378 Hospital observation
service, per hour
G0379 Direct referral to
observation care
Source: 2016 OPPS Final Rule, Appendix B
Candace E. Shaeffer and Michael A. Granovsky
068
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55 EST. AMOUNT DUE
56 NPI
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75
76 ATTENDING
80 REMARKS
OTHER PROCEDURE
a
77 OPERATING
78 OTHER
79 OTHER
81CC
AERC TION D ETA
3aPAT.
CNTL#
24
b.MED.
REC. #
44 HCPCS / RATE / HIPPS CODE
GAP E OF
APPROVED OMB NO.
e
a
8 PATIENT NAME
50 PAYER NAME
63 TREATMENT AUTHORIZATION CODES
6
STATEMENT COVERS PERIOD
9 PATIENT ADDRESS
17 STAT
71 PPS
CODE
QUAL
LAST
LAST
National Uni form
NUBC
™
OCCURRENCE
QUAL
QUAL
QUAL
LIC9213257
CODE DATE
A
B
C
A
B
C
A
B
C
A
B
C
A
B
C
a
b
a
b
Any Hospital
123 Any Street
Bellevue
WA 98007
1234
0131
221234567 03 10 12
04 11 12
1234 Main Street
Bellevue W
A 98007
Patient ID if different from Sub
Doe, John
03 20 1931
03 10 12
M
08
3
3
12
01
Condition Codes Required Identifying Events
98765
RESERVED
Country code if
other than USA
FUTURE
USE
WA
RESERVED
Occurrence and Occurrence Span Codes may be used to define a significant event that may affect payer processing
John Doe
1234 Main Street
Bellevue, WA 98007
A1
952 00
Value Codes and amounts required when necessary to process claim
0310 Laboratory N400093723106
0402 Ultrasoud
0
0762
0260
0260
450 ED
Observation
Infusion
Infusion
Services
1 100 00
450 00
850 00
180 00
300 00
1980 00
Future
Use
0 00
0 00
0 00
0 00
0 00
0 00
0 00
2222222222
1234567890
Secondary
Tertiary
Amount
estimated
to be due
Required when
indicated payer has
paid amount to
Provider
Report HIPAA National
Health Plan Identifier
when mandatory
Y Y
1
1
Washington State
Secondary Payer
Tertiary Payer
Any Hospital
456 Any Street
Bellevue
WA 98007
Doe, John
Secondary
Tertiary
18
ABC1234567800
Employee, Inc.
1234
Watch Repair, Inc.
491234
02468
Secondary
Tertiary
3910
4280
9
Use A through Q to report “Other Diagnosis” if applicable
Reserved
Reserved
Secondary
Tertiary
May-be used to report reason for visit
May be used to report external cause of injury
2222222222
1G
Reserved
Doctor
May be used to report additional
information.
B3 282N00000X
DRG
1
03 10 1288173
76942
99284
G0378
96365
96366
03 10 12
0
03 10 12
03 10 12
03 10 12
3 10 12 1
14
1
1
100 00
Red = Required
Black = Situational/Required, if applicable/Reserved
TYPE
OFBILL
11 SEX
THROUGH
MD
1234569822
43 DESCRIPTION 49
DATE
FROM
13 HR 14 TYPE
Hospital Coding and Reimbursement
068
21:24:12
hours, and a dollar charge. Some hospitals code
the observation CPT codes for internal tracking
even when they are no t required by a payer.
Medicare also requires that CPT/HCPCS
codes for the service that led to the observation
stay be reported. This would include a CPT code
for a qualifying clinic (G0463) or ED visit (99281-
992855) or critical care (99291), or the HCPCS
code, G0379, if the patient was a direct referral to
observation. For example, our asthma patient
would have a facility ED code of 99285 and then
an additional charge for observation based on the
length of the observation services, which will be
discussed next.
Correctly calculating the number of reportable
observation hours can be challenging. CMS states
that facility observation time starts at the clock
time documented in the patient’s medical record,
which “coincides with the time that observation
services are initiated in accordance with a physician’s order for observation.” Observation time
ends at the time when all medically necessary
services related to observation care are completed –
including follow-up after the physician’s discharge
order is written. For counting partial hours, observation hours are rounded to the nearest hour. For
example, our asthmatic patient receives a
99285 ED facility service and is then placed in
observation at 7 a.m. The patient receives ongoing
treatment for 12 hours with all services completed
with discharge at 7 p.m. The facility coding would
be 99285 and 12 units of G0378.
5
The observation start and stop times determine the total duration of observation, but to
calculate reportable observation hours, any time
that the patient is out of the observation area
without an RN and any time spent in a separately
billed diagnostic or therapeutic service that
requires active monitoring must be subtracted
from the total duration of observation. For
example, if the same asthmatic patient above
received observation services from 7 a.m. to 7 p.m.
but departed the observation unit for a bronchoscopy and was gone for 2 hours, only 10 units of
G0378 would be coded.
6
Active monitoring is not defined by CMS; it is
left to the hospital to determine, usually by the
presence of a physician order requiring such
monitoring. CMS does give providers two
examples of procedures requiring active monitoring: a colonoscopy and chemotherapy. Other
examples might include: certain injections and
infusions, moderate conscious sedation, cardiac
catheterization procedures, blood transfusions,
and insertion of a central venous access device.
Because the duration of these procedures is
not usually documen ted in the patient’s medical
record, CMS states that hospitals may subtract an
“average” procedure time from the total observation time.
7
Hospitals will need to determine aver-
age times for providing these services.
Coding
As with other medical services, the correct coding
of ICD-10 diagnostic codes helps to support the
medical necessity for an observation service and
ensure appropriate reimbursement. Coding is
usually performed by professional coders in the
Health Information Manag ement (HIM) department and will often include validation of the CPT
and HCPCS codes in addition to the coding of
ICD-10 codes, modifiers, provider information,
and quality reporting if required.
The coding group will also support the billing
process by helping to correct claims that did not
meet billing requirements or were edited out of
the billing system. Coding will research issues
causing billing delays and work with the observation manager or other departments to obtain the
necessary information or corrections so the claim
may be submitted for payment. Coding may also
be asked to assist with the app eal process if an
observation code on the claim is denied. These
codes were detailed earlier in Tables 63.1 and 63.2.
Billing
Most hospital billing is highly automated and
includes the consolidation of all observation
charges and coding, performing editing or “scrubbing” to create a clean claim, generating the UB04
claim file and other billing forms, and submitting
the claim to the payer.
One special observation billing issue deserves
mention: condition code 44. Condition code 44 is
a CMS utilization review and billing process used
to convert an inpatient to outpatient observation if
the patient is admitted but is later determined to
not meet inpatient criteria. CMS expects this conversion to occur infrequently and only if strict
criteria are met:
The decision to convert from inpatient to
outpatient is supported by the Utilization
Review committee.
Candace E. Shaeffer and Michael A. Granovsky
068
21:24:12
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