Clarifying CPT codes for observation, admission, discharge

Q: How should I code services rendered to a patient admitted to observation status on one date, then admitted as an inpatient for two additional days?

A: The coding for the scenario you describe should be billed using:

• An initial observation care Current Procedural Terminology (CPT) code, 99218-99220, on the first date, when the patient is in observation status. Any evaluation and management services in another setting, such as the office or an emergency department, that are related to the admission to observation status cannot be billed separately, as they are considered part of the initial observation care service.
• An initial inpatient hospital care code, 99221-99223, on the second date, on which you admit the patient to the hospital inpatient setting. You cannot report the observation care discharge service code, 99217, in conjunction with a hospital admission. All related evaluation and management services are part of the initial hospital care service, regardless of the setting.
• A hospital discharge service code, 99238-99239, for the third date.

Q: What if I admit a patient to observation status and then send him or her home the next day?

A: If the patient is admitted to observation status on one calendar date and discharged on the next date, bill an initial observation care code, 99218-99220, for the first date of service and the observation care discharge service code, 99217, for the second.

Q: What about admission and discharge from observation to home on the same date?

A: Bill a CPT “Observation or Inpatient Care Services (Including Admission and Discharge Services)” code, 99234-99236. These codes are to be used for a same-date admission and discharge in the observation status or inpatient setting.

Q: Does Medicare require a minimum number of hours on observation status before a physician can bill 99234-99236?

A: Yes. A patient must be in observation status at least eight hours for a physician to bill a same-date admission and discharge code. Medicare rules differ from the instructions in the CPT code book for this scenario and, thus, are more likely to differ from private-payer billing rules. For Medicare:

• If the patient is admitted to observation status and is then discharged home on the same date of the observation stay that lasted at least eight hours (but fewer than 24 hours, since it must be on the same date), bill a code from the 99234-99236 range.
• If the patient is discharged home after fewer than eight hours in observation status, bill only an initial observation care code, 99218-99220.

The Medicare eight-hour minimum rule for observation status pertains to same-date admission and discharge only. If, as happens rarely, a Medicare beneficiary is admitted to observation status and is discharged in fewer than eight hours on a different date, bill an initial observation care code, 99218-99220, for the first date of service and the observation care discharge service code, 99217, on the second date.

Q: Can you provide some background on each of these different code families?

A: CPT code 99217, observation care discharge day management, is used for billing when a patient is discharged from observation care on a date other than the date he or she was placed in observation status.

CPT codes 99218-99220, initial observation care, describe physician visits during a patient's stay in observation status.

CPT codes 99234-99236, observation or inpatient care, are used when the patient is placed in observation status or admitted to inpatient status and then discharged on the same date.

All services provided on the day of discharge from inpatient status are coded 99238 or 99239. This applies for a discharge from inpatient status on a day other than the day a patient was admitted. The full Medicare observation care services' billing rules are listed in the Medicare Claims Processing Manual, Chapter 12. The pertinent information is in Section 30.6.8.