Academic Institutions

READER Q&A

CMS Suggests Extended Observation Should Be Infrequent Occurrence

Question: I read the March 2011 “Billing and Coding” article regarding the new CPT codes and have the following inquiry: Often, as a hospitalist, I will get a lot of pushback from our UM reviewers and case managers when observation patients stay longer than 48 hours. This is due to the Centers for Medicare & Medicaid Services’ 48-hour observation policy. It sounds like the CPT is trying to address this issue by creating these new codes and have patients stay longer as observation. This seems in conflict with the goal of CMS to have patients stay only for 48 hours as observation and then be converted to inpatient if they fail 48 hours of observation.

Answer: While the goal of CMS is to maintain a limit of hospital observation services, there seems to be a growing trend of extended observation care (>48 hours) over the past several years. CMS recognizes that there might be extenuating circumstances, which might require an observation stay of more than 48 hours, but suggests that this should be an infrequent occurrence. Typically, the physician is able to determine if the patient should be admitted to the hospital or discharged to home within 48 hours.

Other factors affect observation care services. Only the attending of record can bill for initial hospital care (99218–99220).¹ Prior to Jan. 1, 2010, consultants could provide their services, as appropriate, and report consultation services. With the elimination of payment for consultation services in 2010, the consultant was only allowed to report outpatient/office codes (99201–99215) for the hospital observation care.

Additionally, with private payors able to “downgrade” inpatient care to observation both during and after discharge (unlike Medicare), inpatient stays greater than 48 hours were being reversed and reported with office codes (99212–99215) on the days between the initial admission service (99218–99220) and the discharge service (99217).¹ The office codes would then be met with denials for “missing referrals,” and subsequent attempts to appeal would often provide no reimbursement.

These combined factors led to the creation of a more viable solution for interim observation days: subsequent observation care (99224–99226).² The attending of record reports these codes on stays that spanned three calendar days but still less than 48 hours; the consultant reports these for their rendered services; and the private payors can make these codes exempt from requiring referrals when downgrading inpatient stays.

References

1. Abraham M, Ahlman J, Boudreau A, Connelly J, Evans D. Current Procedural Terminology Professional Edition. Chicago: American Medical Association Press; 2011:12-13.
2. Medicare Benefit Policy Manual: Chapter 6, Section 20.6A. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/manuals/Downloads/bp102c06.pdf. Accessed April 20, 2011.