Proper Coding Guide for Observation Followed by Discharge


Proper coding depends on whether the observation status lasted fewer than, or more than, eight hours if a patient is placed under observation status and is discharged on the same date of service.

For observation status lasting fewer than eight hours, report initial observation care (99218-99220 Initial observation care, per day, for the evaluation and management of a patient) at the documented level of care.

For observation status lasting more than eight hours, report to choose the appropriate level of service from codes 99234-99236 Observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these 3 key components… for observation care, including discharge.

For example, a pregnant patient presents at 37.5 weeks gestation assuming that she is in labor. It had been an extremely hot day, and she hadn’t been drinking much water. An external fetal monitor was applied, that showed she was having contractions every 10-15 minutes. Provider found no cervical changes while evaluating her at admission. Her contractions ceased after some fluids and rest. She was sent to the home after nine hours of observation care. An appropriate code from range 99218-99220 should be chosen here. Because the physician did not have a face-to-face with the patient to discharge her, only Initial Observation Care should be billed here. You would use the appropriate code from range 99234-99236, instead if the physician had returned to the hospital to perform and document a discharge service. 

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