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Family Practice Coding Alert

HCFA Changes Eliminate Reimbursement Policy Conflict

As most family practice coders anticipated, Medicare revised its payment policy for several observation and inpatient hospital care services, effective Jan. 1, 2001. However, one component of the revision that had been proposed by HCFA in July 2000 a decrease in work relative value units (RVUs) was not implemented.

The new policy affects how 99217 (observation care discharge), 99218-99220 (initial observation care), 99221-99223 (initial hospital care), 99234-99236 (observation or inpatient hospital care) and 99238- 99239 (inpatient hospital discharge) are assigned (see box at the end of this article for complete code descriptions). The changes, which were announced in November, are designed to clarify conflicts between Medicare payment practice and policies that appear in the Medicare Carriers Manual (MCM).

New National Policy for Observation Care Codes

As published in the Nov. 1, 2000, edition of the Federal Register, the revised national Medicare policy for observation care services is as follows:

Report 99218-99220 when a patient is admitted for observation care for fewer than eight hours and is then discharged on the same calendar date. No discharge code should be reported.

Report 99234-99236 when a patient is admitted for observation care for eight or more hours and discharged on the same calendar date. These codes have both an admission and discharge component and therefore no discharge code would be assigned.

Report 99218-99920 when a patient is admitted for observation care and discharged on a different date. In addition, 99217 would be used to report the subsequent discharge.

New National Policy for Inpatient Hospital Stays

The revised national Medicare policy for inpatient hospital care services is as follows:

Report 99221-99223 when a patient is admitted for inpatient hospital care for fewer than eight hours and is then discharged on the same calendar date. No discharge code should be reported.

Report 99234-99236 when a patient is admitted for inpatient hospital care for eight or more hours and is then discharged on the same day. These codes have both an admission and discharge component and so no discharge code would be assigned.

Report 99221-99223 when a patient is admitted for inpatient hospital care and discharged on a different date. In addition, codes 99238-99239 should be used to report the subsequent discharge.

Changes Correct Policy Discrepancies

In short, the policy changes rectify discrepancies between Medicare reimbursement policy and Medicare payment practice.

In the past, Medicare reimbursement policy disallowed payment for both observation admission and discharge services on the same date of service. However, Medicare reimbursement practice was an entirely different matter. HCFA policy, outlined in sections 15504.b and 15505.l(c) of the MCM, states that physicians could report codes with an admission component only for observation /inpatient hospital stays when the patient was [...]