The Observation Deck

Length of Stay⁴

In general, the duration of observation care services typically does not exceed 24 hours, although in some circumstances patients may require a second day. Observation care for greater than 48 hours without inpatient admission is not considered medically necessary but may be payable after medical review. When the stay spans two calendar days, physician billing is straightforward: Select an initial observation care code (99218-99220) for calendar day one and the observation discharge code (99217) for day two. Only the admitting physician/group may report the discharge service, when applicable. Documentation must demonstrate a face-to-face encounter by the physician for each date of service.

Should the stay only constitute one calendar day, the duration of care becomes a crucial factor in determining the code category. Standard OBS codes (99218-99220) are applicable if the patient stay is less than eight hours on any given date. The OBS discharge code (99217) is not reported in this instance, although the documentation should reflect the attending physician’s written order and appropriate discharge plan. Alternately, same day admit/discharge codes (99234-99236) apply to single-day stays lasting more than eight hours. The OBS discharge code (99217) also is not reported in this instance. Documentation must identify, at a minimum:

• Duration of the stay;
• Presence by the billing physician; and
• Physician performance of each service (i.e., both an admission and discharge note).

Inpatient Admission^1,4-5

Sometimes the patient requires inpatient admission after initially being placed in observation. If the inpatient admission occurs on the same day as the OBS admission, only one service is reported (e.g., 99222). The physician need not redocument a complete history and physical (H&P) but merely write the new order for admission and update the OBS assessment with any relevant, new information.

Should the inpatient admission occur on the second calendar day of the OBS stay, the physician is able to report the initial observation care code (e.g., 99219) on day one, and the initial inpatient care code (e.g., 99223) on day two. However, the physician must meet the documentation guidelines for initial hospital care and redocument the H&P associated with the reported visit level. In the case of 99223, the physician must document a comprehensive history (only referring to the previous review of systems and histories, while rewriting the history of present illness) and high complexity decision making. If the physician chooses not to document to this extent, a subsequent hospital care code (99231-99233) is reasonable because the episode of care is a continuation from the observation phase.

Beware that some insurers may change the patient’s status for the entire episode of care. In other words, the conversion to inpatient status occurs on day two of the patient stay, but the insurer may convert the entire stay, including day one, to an inpatient status. Should this happen, the physician is responsible for reporting the visit category that corresponds with the patient’s status. Inpatient services codes are required for claim submission when the patient stay qualifies as an inpatient admission. Because these conversions occur with some frequency, it is advisable to hold claims intended for observation patients until the correct patient status can be confirmed by the utilization review team, and communicated to the physician. TH

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