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Focus On Observation Introduction CPT and CMS Requirements CPT Codes Documentation Requirements Observation Coding: Facility Considerations

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Introduction Observation services involve care that is more than a typical ED Evaluation and Management (E/M) service, but less than a formal inpatient admission. Observation services are provided to patients that will benefit from additional hours (generally up to 24 hours) of ongoing assessments, diagnostic services and/or treatments. These services are commonly ordered for Emergency Department (ED) patients who require additional treatment or monitoring over a period of time in order to determine if the patient can be discharged or if they instead will require hospital admission for further treatment and/or evaluation. Observation services must be medically necessary to be covered by Medicare. Most clinicians and payers agree that observation services should be used to forestall a potential inpatient admission, and that there are two predominant circumstances when observation is appropriate: 1. Lack of diagnostic certainty, where a more precise diagnosis is needed. 2. Therapeutic intensity, where additional medical treatment has a reasonable possibility of improving the acute condition and avoiding the need for an admission. Observation should not be ordered for the purpose of simply holding a patient for convenience. For example, a patient staying in the ED overnight waiting for a ride home would not be an appropriate observation candidate. Examples of Conditions That May Benefit From Observation Asthma CHF Chest Pain Abdominal Pain Renal Calculi Croup Dehydration Syncope Allergic Reactions Drug Ingestion/Overdose Alcohol Intoxication Vaginal Bleeding CPT and CMS Requirements The CMS Claims Processing Manual indicates that for a physician to bill the initial observation care codes there should typically be an observation record which contains a dated and timed physician admission order. The observation record should reflect the care the patient receives while in observation, including nursing notes and physician progress notes. The observation record must be in addition to any record prepared as a result of an emergency department or outpatient clinic encounter. For Medicare, same-day observation services CPT codes 99234-99236 may be reported if a minimum of eight hours of observation was provided. However, if the patient is admitted and discharged on different days, then Medicare does not require that the patient stay a minimum number of hours in order to bill for observation services. CPT does not have specified time requirements for same day observation. In the majority of cases, the decision whether to discharge a patient from observation care or to admit the patient as an inpatient can be made in less than 48 hours, most often in less than 24 hours. 3

CPT Codes Observation: 1 Day Codes (Admitted and Discharged on the Same Day) There are three codes for reporting when the patient is admitted and discharged from observation on the same day: 99234 Low complexity 99235 Moderate complexity 99236 High complexity Observation: Multiple Day Codes (Admitted and Discharged on Different Calendar Days) Day 1-The First Day There are three codes for reporting the first day of observation when the discharge is on a subsequent day: 99218 Low complexity 99219 Moderate complexity 99220 High complexity The Middle Days There are three codes for reporting the middle days of observation for observation stays greater than two days: 99224 Low complexity 99225 Moderate complexity 99226 High complexity The Discharge Day There is one code for reporting the last day of observation when the discharge is on a subsequent day: 99217 Observation care discharge day This code is used for the management of care on the final day, and is used in conjunction with the first day series CPT codes 99218-99220 and if applicable the middle day codes 99224-99226. 4

Documentation Requirements 99218/99234 Low complexity MDM and requires Detailed Hx and Exam HPI: 4 elements PFSHx: 1 area ROS: 2 systems PE: 5-7 organ systems/areas These codes are rarely used in the ED 99219/99220/99235/99236 Moderate and High complexity MDM and requires Comprehensive Hx and Exam HPI: 4 elements PFSHx: 3 areas (different from ED which requires 2 of 3) ROS: 10 systems PE: 8 organ systems Documentation Requirements Summary Level HPI ROS PFSHx PE MDM 99218/99234 4 2 1 5 Low 99219/99235 4 10 3 8 Moderate 99220/99236 4 10 3 8 High RVU and Reimbursement Considerations Approximate Multi Day Obs Approximate Same Day Obs Approximate ED E/M Service Payment Payment Payment 99284 $120.00 99217* $75.00 99234 $135.00 99285 $135.00 99218 $100.00 99235 $170.00 99219 $140.00 99236 $220.00 99220 $190.00 *Combine 99217 discharge day RVUs with 99218-99220 for the total RVUs of the observation stay. LogixHealth is an industry leader in revenue and compliance, providing services to many of the nation s largest hospitals. 5

Facility Observation Codes: Documentation Requirements Observation Coding: Facility Considerations The criteria for observation services are similar for both the professional and facility component. The services must be medically necessary and furnished by a physician or non-physician provider, and the care must be documented in the observation medical record including: An order for observation An admission note A progress note Discharge instructions The observation note must be signed by the provider. For the facility component, observation services are reported per hour. For Medicare the observation stay must span a minimum of 8 hours. Facility Observation: Timing Considerations Observation time starts at the time the services are initiated with the provider s order for observation, and ends when all medically necessary services related to observation care are completed. This includes additional nursing care after the physician s discharge order is written but would not include time simply waiting for a ride. Additionally, observation time does not include time the patient spends off of the unit, for example a patient in observation for chest pain that leaves the observation unit for 2 hours to have a stress test performed; those two hours would not be included in the hours of observation. Facility Observation: Required to Be Provided in Conjunction with Another Service For Medicare payment, a 99284, 99285, G0463 visit code or critical care code 99291 is required to be reported for the day before or on the same day that the patient was placed in observation. The observation code for Medicare is G0378 and is reported in units that equal the number of hours the patient was in observation care. Medicare requires 8 units (hours) of G0378 to meet the requirements for facility reimbursement for observation services. CMS then combines the ED stay and the 8 hours of observation into APC 8009 and makes one bundled payment, which is higher than the payment for just an ED visit (see box). All related services provided, such as labs, procedures and ancillary studies, should be reported in addition to the observation codes. ED Facility 99285 Approximate Reimbursement $460.00 ED 99285 + 8 Units of G0378 = APC Reimbursement $1,200.00 6

Fruitful opportunities are all around you The facility observation APC payment has been increasing annually and is now greater than $1,200 7