CPT codes 99217 - 99220
Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment, before a decision can be made regarding whether patients will require further treatment as hospital inpatients or whether they can be discharged from observation.
Observation status is commonly assigned to patients who present to the emergency department and require a significant period of treatment or monitoring before an admission or discharge decision can be made.
Observation services are only covered when provided by the order of a physician or another individual authorized by state licensure law and hospital staff bylaws to admit patients to the hospital or to order outpatient tests. In the majority of cases, the decision whether to discharge a patient from observation 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. Only in rare and exceptional cases do reasonable and necessary outpatient observation services span more than 48 hours.
Who May Bill Initial Observation Care
Carriers only pay for initial observation care billed by the physician who admitted the patient to observation and was responsible for the patient during his/her stay. A physician who does not have inpatient admitting privileges but who is authorized to admit a patient to observation status may bill these codes.
For a physician to bill the initial observation care codes, there must be documentation of 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 documentation 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 includes all the care rendered by the admitting physician on the date the patient was admitted to observation. All other physicians who see the patient while he or she is in observation must bill the office and other outpatient service codes or outpatient consultation codes, as appropriate, when they provide evaluation and management services.
For example, if an internist admits a patient to observation and asks an allergist for a consultation on the patient’s condition, only the internist may bill the initial observation care code. The allergist must bill using the outpatient consultation code that best represents the services he or she provided. The allergist cannot bill an inpatient consultation since the patient was not a hospital inpatient.
Physician Billing for Observation Care Following Admission to Observation
If the patient is discharged on the same date as admission to observation, only the initial observation care code may be paid because that code represents a full day of care.
If the patient remains in observation after the calendar date of admission to observation, it is expected that the patient would be discharged on that next (second) calendar date. The physician bills CPT code 99217 for observation care discharge services provided on the second date.
In the rare circumstance when a patient is held in observation status for more than two calendar dates, the physician must bill subsequent services furnished before the date of discharge using the outpatient/office visit codes. The physician may not use the subsequent hospital care codes since the patient is not an inpatient of the hospital.
Admission to Inpatient Status from Observation
If the same physician who admitted a patient to observation status, later admits the patient to inpatient status from observation before the end of the date on which the patient was admitted to observation, only an initial hospital visit for the evaluation and management services provided on that date may be paid. Medicare payment for the initial hospital visit includes all services provided to the patient on the date of admission by that physician, regardless of the site of service. The physician may not bill an initial observation care code on the date that he or she admits the patient to inpatient status. If the patient is admitted to inpatient status from observation on a date subsequent to the date of admission to observation, the physician must bill an initial hospital visit for the services provided on the hospital admission date. The physician may not bill the hospital observation discharge management code (CPT code 99217) or an outpatient/office visit for the care provided in observation on the date of admission to inpatient status.
Hospital Observation During Global Surgical Period
The global surgical fee includes payment for hospital observation (CPT codes 99217, 99218, 99219, and 99220, 99234, 99235, 99236) services unless the criteria for use of CPT modifiers 24, 25, or 57 are met. Carriers must pay for these services in addition to the global surgical fee only if both of the following requirements are met:
- The hospital observation service meets the criteria needed to justify billing it with CPT modifiers 24, 25, or 57 (decision for major surgery) and
- The hospital observation service furnished by the surgeon meets all of the criteria for the hospital observation code billed
Examples of the decision for surgery during a hospital observation period are:
- An emergency department physician admits a patient for observation of a head injury. A neurosurgeon is consulted on the need for surgery while the patient is in the observation unit and decides that the patient requires surgery. The neurosurgeon would bill an outpatient consultation with the CPT modifier 57 to indicate that the decision for surgery was made during the consultation. The surgeon must bill an outpatient consultation because the patient in an observation unit is not an inpatient of the hospital, and only the physician who admitted the patient to hospital observation may bill for initial observation care.
- A patient is admitted by a neurosurgeon to a hospital observation unit for observation of a head injury. During the observation period, the surgeon makes the decision for surgery. The surgeon would bill the appropriate level of hospital observation code with the CPT modifier 57 to indicate that the decision for surgery was made while the surgeon was providing hospital observation care.
Examples of hospital observation services during the postoperative period of a surgery are:
- A patient at the 80th day following a TURP is admitted to observation by the surgeon who performed the procedure with abdominal pain from a kidney stone. The surgeon decides that the patient does not require surgery. The surgeon would bill the observation code with CPT modifier 24 and documentation to support that the observation services are unrelated to the surgery.
- A patient at the 80th day following a TURP is admitted to observation with abdominal pain by the surgeon who performed the procedure. While the patient is in hospital observation, the surgeon decides that the patient requires kidney surgery. The surgeon would bill the observation code with CPT modifier 57 to indicate that the decision for surgery was made while the patient was in hospital observation. The subsequent surgical procedure would be reported with CPT modifier 79.
- A patient at the 20th day following a resection of the colon is admitted to observation for abdominal pain by the surgeon who performed the surgery. The surgeon determines that the patient requires no further colon surgery and discharges the patient. The surgeon may not bill for the observation services furnished during the global period because they were related to the previous surgery.
An example of a billable hospital observation service on the same day as a procedure is:
- A physician who repaired a laceration of the scalp in the emergency department admits a patient for observation of a head injury. The physician would bill the observation code with a CPT modifier 25 and the procedure code.