Observation

• Based on the physician order
• Considered outpatient codes
• Only the doctor who admitted and was responsible for the patient during his/her stay in observation may bill these codes.
• Must have a medical observation record for the patient which contains dated and timed physicians admitting orders on the patients care in observation, nursing notes and progress notes prepared by the doctor while the patient was in observation status
• Code is assigned based on whether the patient is treated and released within the same calendar day

Observation Admit and Discharge on same calendar date

Observation or Inpatient Care Services (Including Admission and Discharge) on the same date of service:
99234 - 99236  

• Documentation requirements the same as Initial Visit (H&P), as well as discharge work.
• Pt must be in observation for minimum of 8 hours on the same calendar date (When patient is admitted to observation for less than 8 hours on the same date use 99218-99220.  No discharge code would be reported) 

Observation status for multiple days

Initial Observation Care
99218 – 99220

• Documentation requirements the same as Initial Visit (H&P)
• Admitted to observation for less than 8 hours on the same date

Observation Care Discharge
99217

• Includes final examination of the patient, discussion of the hospital stay, instructions for continuing care and preparation of discharge records.
• Use when discharge from observation occurs on a different date
• Bill an initial hospital visit code 99221-99223 instead of observation care discharge code 99217 if the patient is admitted as an inpatient on a date after the patient was admitted to observation       

Each day between admission and discharge in observation status
Per CMS: Use the appropriate outpatient/office visit codes (usually 99211-99215)
Per AMA: Use 99499 (unlisted code)

• Unusual event that a patient remains in observation for more than 2 calendar days
• Physicians need to be credentialed to report outpatient services 

QUICK TIPS 

Patient admitted and discharged from observation unit on the same dates
99234-99236

Patient admitted to the observation unit and discharged on the next date—e.g., held overnight in the observation unit:
99218-99220 for the first day
99217 for the second day

Patient admitted to the observation unit, then admitted to the hospital on the sameday:
99221-99223

Patient admitted to the observation unit, then admitted to the hospital inpatient unit the next date, then discharged on a subsequent date:
99218-99220 for the first day
99221-99223 for the second day
If the patient is discharged on the third day, you can use either subsequent hospital care codes 99231-99233 or hospital discharge services 99238 for 30 minutes or less or 99239 for over 30 minutes

If there are several days between inpatient admission and discharge, use 99231-99232