Observation Codes: Usage Depends on Discharge and Admission

When billing for observation of a patient in a hospital (99218-99220), oncology practices must consider whether the patient was discharged or had a subsequent admission.

And observation can occur in a hospital outpatient unit as well as in a hospital room normally used for inpatients, says Margie Hickey, MS, MSN, RN, OCN, CORLN, an independent coding consultant based in New Orleans. Oncology practices can still use observation codes if the patient is not in an "observation unit," and should not feel compelled to use other codes such as office visit codes (99212-99215.)

Observation often occurs following an office visit when the oncologist finds it necessary to send the patient to the hospital for observation. Diagnoses such as dehydration (276.5) and severe pain are commonly associated with observation. The oncology practice has the option of billing for the office visit or the initial observation visit in the hospital, says Lillie McAlister, CPC, president of Double Diamond Enterprises, a coding and billing consulting firm in Conroe, Texas. Choosing between the two depends on which provides the greatest reimbursement, but both cannot be billed.

For example, if a cancer patient presents for a scheduled visit and the patient is diagnosed as being severely dehydrated, the oncologist should code only for observation and not for the office visit. To show medical necessity of the observation stay, 276.5 should be listed as the primary condition, and cancer codes 143.0-199.0 should be listed as the secondary condition. Any other illness that is present should also be reported.

Initial Observation

If the observation codes are used, the visit must meet the following requirements:

Initial observation care, 99218-99220, may be billed only by the physician who admitted the patient to hospital observation and was responsible for the patient during his or her stay.

Practices are encouraged to keep a medical observation record. It should include the date and time of admission. The admitting order must contain a description of the care the patient will receive while in observation, such as hydration therapy, 90780 (IV infusion for therapy/diagnosis, administered by physician or under direct supervision of physician; up to one hour), as well as nursing and progress notes prepared by the physician while the patient is in observation status.

Other physicians who see the patient while in observation must bill the office and other outpatient service codes or outpatient consultation codes, 99241-99245. Those physicians must adhere to the key components of [...]

- Published on 2001-12-01

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