Reimbursement Advisor

For observation codes, it’s when, not where

Author and Disclosure Information


Q When a patient presents to the hospital for preterm labor and is seen within 23 hours, which observation codes are appropriate: 99217–99220 (Initial observation care with discharge on second day) or 99234–99236 (Observation or inpatient care services including admission and discharge on the same day)?

There is no designated area in our hospital for 99217–99220, if I understand the coding book correctly.

A The code choice depends on when the services took place.

No designated place in the hospital is required in order to bill the observation codes, but the physician should state in the record that the patient is being kept for observation.

If the patient is “admitted and discharged” from observation care on the same calendar date, you bill the codes 99234–99236. If she is admitted on day 1 and discharged on day 2, then go with the 99217–99220 codes. Some payers have a time requirement for you to be able to bill for observation care, but many do not. if you cannot bill for observation care, then the default is the outpatient E/M codes, 99201–99215.

Remember these requirements for observation care:

  • The minimum documentation is a detailed history and detailed exam with any level of medical decision-making (straightforward, low, moderate, or high complexity). If you fail to document both at the minimum level, you cannot use an observation code.
  • The physician must physically see the patient on the date of admission and discharge in order to bill for observation care.

Ms. Witt, former program manager in the Department of Coding and Nomenclature at the American College of Obstetricians and Gynecologists, is an independent coding and documentation consultant. Reimbursement Adviser reflects the most commonly accepted interpretations of CPT-4 and ICD-9-CM coding. When in doubt on a coding or billing matter, check with your individual payer.

Next Article: