The landscape of medical coding and reimbursement for Observation services underwent significant shifts in 2023. As healthcare providers and coders adapt to these changes, understanding the nuances between initial and subsequent observational care coding is paramount. This article breaks down the crucial updates, focusing on documentation guidelines, code changes, and time requirements, to ensure accurate and optimized coding practices.
Key Documentation Changes for 2023
The good news for healthcare professionals is that 2023 brought a simplification in documentation requirements for observation services. The previous, more rigid guidelines have been replaced with a more flexible approach. Notably, specific history and physical examination elements are no longer mandated. For instance, documenting family history is not compulsory even for high-level observation cases. Instead, the current guideline emphasizes a “medically appropriate history and/or exam.”
A pivotal change for 2023 is that the level of observation visit is determined by either Medical Decision Making (MDM) OR time. This dual approach offers more flexibility in coding based on the complexity of patient care and time spent.
Crucially, same-day observation services in 2023 necessitate two distinct “encounters” with the patient. These typically occur upon admission to observation status and again closer to the time of discharge. This requirement underscores the need for comprehensive care and documentation even within a single day.
Decoding the 2023 Observation CPT Code Updates
Significant revisions have been made to the numeric codes and their definitions for observation services in 2023. Let’s dissect how to report different lengths of observation stays:
- Same-Day Observation Stays:
For patients admitted and discharged on the same day, the following CPT codes are now in effect:
-
99234 – Low-complexity MDM
-
99235 – Moderate-complexity MDM
-
99236 – High-complexity MDM
-
Two-Day Observation Stays:
For observation stays spanning two days, the coding structure is as follows:
Day 1 CPT Codes (Initial Observation Care): These codes are used to report the initial observational care on the first day of a multi-day stay. Notice that observation services coding has merged with initial inpatient care codes.
- 99221 Initial hospital inpatient or observation care, per day, straight forward or low-level medical decision making
- 99222 Initial hospital inpatient or observation care, per day, moderate medical decision making
- 99223 Initial hospital inpatient or observation care, per day, high-level medical decision making
Discharge Day CPT Codes: For the discharge day of any observation stay, time-based codes are utilized:
- 99238 Hospital inpatient or observation discharge day management; 30 minutes or less on the date of the encounter
- 99239 Hospital inpatient or observation discharge day management; more than 30 minutes on the date of the encounter
It is critical to document the total time spent on patient care and discharge arrangements on the discharge day, as these codes are differentiated by a 30-minute time threshold.
- Observation Stays Exceeding Two Days:
For longer observation periods, the “middle days” of the service are reported using subsequent observational care codes, which are now aligned with subsequent inpatient care codes:
- 99231 Subsequent hospital inpatient or observation care, per day, straightforward or low medical decision making
- 99232 Subsequent hospital inpatient or observation care, per day, moderate medical decision making
- 99233 Subsequent hospital inpatient or observation care, per day, high-level medical decision making
These subsequent observational care codes (99231-99233) are crucial for accurately reporting care provided after the initial day and before discharge, reflecting the ongoing management and medical decision making required during extended observation stays.
Understanding 2023 Time Requirements for Observation Services
Time plays a significant role in determining the appropriate CPT code, particularly in 2023. Here’s a breakdown of the time thresholds for different observation service scenarios:
| Same Day Obs | Initial Day Obs | ||
|---|---|---|---|
| Same Day CPT Code | Time | Initial Day CPT Code | |
| 99234 | 45 minutes | 99221 | |
| 99235 | 70 minutes | 99222 | |
| 99236 | 85 minutes | 99223 | |
| Subsequent Day Obs | Discharge Day Obs | ||
| Subsequent Day CPT Code | Time | Discharge Day CPT Code | |
| 99231 | 25 minutes | 99238 | |
| 99232 | 35 minutes | 99239 | |
| 99233 | 50 minutes |
Medical Decision Making (MDM) in 2023 Observation Coding
While time is a crucial factor, Medical Decision Making (MDM) complexity remains a cornerstone in selecting the correct observation CPT code. The levels of MDM complexity are defined as follows for each category of observation service:
| CPT Code | Medical Decision Making Complexity |
|---|---|
| INITIAL DAY | |
| 99221 | Straight Forward/Low |
| 99222 | Moderate |
| 99223 | High |
| SUBSEQUENT DAYS (MIDDLE DAYS) | |
| 99231 | Straight Forward/Low |
| 99232 | Moderate |
| 99233 | High |
| SAME DAY ADMIT AND DC | |
| 99234 | Straight Forward/Low |
| 99235 | Moderate |
| 99236 | High |
Code Evolution: 2022 vs. 2023 Observation Codes
To provide a clearer picture of the code changes, here’s a comparative “cheat sheet” illustrating the evolution from 2022 to 2023 observation codes:
| Observation 2022 | Observation 2023 |
|---|---|
| 99218 | 99221 |
| 99219 | 99222 |
| 99220 | 99223 |
| 99217 | 99238/99239 |
| 99234-99236 | 99234-99236 |
RVU Stability in 2023
The Relative Value Units (RVUs) for observation codes have remained largely stable in 2023, reflecting the cognitive effort involved in managing these cases, particularly those with extended stays.
Same Day Observation RVU Comparison (2022 vs. 2023)
| Same Day Obs | 2022 Total RVU | 2023 Total RVU |
|---|---|---|
| 99234 | 3.77 | 2.92 |
| 99235 | 4.78 | 4.71 |
| 99236 | 6.12 | 6.18 |
| 99285 | 5.17 | 5.21 |
Multi-Day Observation RVU Comparison (2022 vs. 2023)
| 2022 Multi Day Obs | 2022 Total RVUs | 2023 Multi Day Obs | 2023 Total RVUs |
|---|---|---|---|
| 99218+99217 | 4.90 | 99221+99238/39 | 4.85/5.85 |
| 99219+99217 | 5.90 | 99222+99238/39 | 6.24/7.24 |
| 99220+99217 | 7.24 | 99223+99238/39 | 7.52/8.52 |
Medicare’s 8-to-24 Hour Rule: A 2023 Summary
Medicare has specific guidelines for observation services lasting between 8 and 24 hours. CMS provided a helpful table in the 2023 Medicare Physician Fee Schedule Final Rule, clarified here with CPT codes:
| Hospital Length of Stay | Discharged On | Code(s) to Bill |
|---|---|---|
| 8 hours | Same calendar date as admission or start of observation | Initial hospital services only 99221-99223 |
| 8 or more hours | Same calendar date as admission or start of observation | Same-day admission / discharge 99234-99236 |
| 8 hours | Different calendar date than admission or start of observation | Initial hospital services only 99221-99223 |
| 8 or more hours | Different calendar date than admission or start of observation | Initial hospital services + discharge day management 99221-99223 + 99238/99239 |
Key Reminders for Observation Services in 2023
Certain fundamental principles of observation services remain unchanged:
- Medicare’s 8-hour rule for utilizing same-day observation codes (99234-99236) is still in effect.
- Observation status is about the level of care, not the location. Patients can be in various settings (hallway, ED bed, CDU, inpatient ward) under observation status.
- Observation is generally not intended for routine post-procedure recovery.
- Despite professional coding changes, facility reporting of observation services remains largely consistent.
For further clarification and in-depth guidance, healthcare providers are encouraged to consult the ACEP FAQs, maintained by the Coding and Nomenclature Committee. Staying informed about these 2023 updates is crucial for accurate coding, compliant billing, and optimal reimbursement for observation services.
