The landscape of medical coding for observation services underwent significant changes starting January 1, 2023. For healthcare providers and medical coders, understanding these updates is crucial for accurate billing and compliance. This guide breaks down the key changes in Observation Care Coding, ensuring you’re up-to-date with the latest CPT® guidelines.
Key Changes to CPT Codes for Observation Services
The most significant update is the elimination of distinct CPT codes specifically for observation services. Instead, observation care is now integrated into the existing framework for inpatient services. This means you will now utilize the same code sets for both initial and subsequent observation or inpatient care.
For initial observation care, use codes 99221–99223. These codes are now applicable to both inpatient and observation level of care. Similarly, for subsequent observation care visits, employ codes 99231–99233, again, these are unified for both inpatient and observation settings. When it comes to discharge services, codes 99238 and 99239 remain in use for both inpatient and observation discharges.
A crucial code set to remember is 99234—99236. These codes are specifically for situations involving admission and discharge on the same calendar date, whether for inpatient or observation services.
Place of Service Matters
While the CPT codes have been streamlined, accurately reporting the place of service is still essential. For inpatient hospital settings, continue to use place of service code 21. For on-campus outpatient hospital settings, including observation services, use place of service code 22. It’s important to reiterate that observation services are categorized as outpatient services.
Observation Care Coding for Consulting Physicians
The coding guidelines for consulting physicians in observation settings depend on the payer.
Commercial Payers: For commercial insurance plans that still recognize consultation codes, consulting physicians should report inpatient consultation codes 99252—99255 for the initial service in an observation setting. Follow-up visits are coded using 99231—99233.
Medicare Patients: Medicare ceased recognizing consultation codes in 2010. Therefore, for Medicare patients in observation care, the admitting physician uses 99221-99223 (with modifier AI for Medicare). However, consulting physicians must bill using office and/or other outpatient codes 99202—99215. Remember the “new patient” definition: a patient not seen by the physician or a partner of the same specialty within the past three years. These outpatient codes are used for both initial and subsequent visits by the consulting physician for Medicare patients in observation care.
Staying informed about these CPT code updates for observation care coding is vital for accurate claim submissions and optimal reimbursement. Always refer to the latest CPT guidelines and payer-specific instructions to ensure compliance.
