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29.2.18.7 Observation Room Services
Physician outpatient hospital observation room services (procedure codes 99217, 99218, 99219, and 99220) are for professional services for a period of more than 6 hours, but less than 24 hours, regardless of the hour of the initial contact, whether or not the client remains under physician care past midnight. Observation may take place in any client care area of the hospital or outpatient setting. Physician outpatient observation services may be reimbursed if no other services are billed during the same 24-hour period. Outpatient observation is not a service payable to any other provider type.
When a client's status changes from observation to inpatient, the date of inpatient admission is the date the client was first placed on observation status. This rule always applies; regardless of the length of time the client was in observation (fewer than 24 hours) or whether the physician's order to formally admit the client was the following day. Charges are to be billed as specified in Section 22.4, "Outpatient Services".
Observation care discharge day management (procedure code 99217) may be used to report services provided to a client upon discharge from "observation status" if the discharge occurs on a day other than the initial date of admission.
The following limitations apply to these procedure codes:
• Procedure codes 99211, 99212, 99213, 99214, 99215, 99218, 99219, and 99220 are denied if billed on the same day as procedure codes 99217, 99234, 99235, and 99236 by the same provider.
•If a physician observation visit (procedure codes 99217, 99218, 99219, 99220, 99234, 99235, and 99236) is billed on the same day as prolonged services (procedure codes 99354 and 99355) by the same provider, the prolonged services are denied as part of another procedure on the same day.
•Emergency department visits (procedure codes 99281, 99282, 99283, 99284, and 99285) and after-hours and out-of-office services (procedure code 99056) are denied if they are billed the same day as physician outpatient hospital observation room services (procedure codes 99218, 99219, and 99220) by the same provider.
•If procedure codes 99234, 99235, and 99236 are billed on the same day as the initial observation care (procedure codes 99218, 99219, or 99220) by the same provider, they are denied.
•If a hospital admission (procedure codes 99221, 99222, and 99223) is billed on the same day as outpatient hospital observation (procedure codes 99234, 99235, and 99236) by the same provider, the observation is denied.
•If procedure codes 99234, 99235, and 99236 are billed on the same day as prolonged services (procedure codes 99354 and 99355) by the same provider, the prolonged service is denied.
•If procedure codes 99234, 99235, and 99236 are billed on the same day as a subsequent hospital visit (procedure codes 99231, 99232, and 99233) by the same provider, the subsequent visit is denied.
•If procedure codes 99234, 99235, and 99236 are billed on the same day as a consultation by the same provider, the consultation is paid and the physician outpatient hospital observation is denied.
•If a chemotherapy planning program (procedure codes 99213, 99214, or 99215) and physician outpatient hospital observation are billed on the same day by the same provider, the chemotherapy planning is paid and the physician outpatient hospital observation will be denied.
•Procedure codes 99234, 99235, and 99236 are not payable on the same day as procedure codes 99238 and 99239.
•Procedure codes 99234, 99235, and 99236 are subject to the global surgical fee pre-/postcare days assigned to certain surgical procedures.
•If critical care and physician outpatient hospital observation are billed the same day by the same provider, the critical care is paid and the physician outpatient hospital observation is denied.
•E/M services provided at any POS other than an inpatient hospital and billed on the same day as a physician observation visit by the same provider are denied.
•If dialysis treatment and physician observation visits are billed the same day by the same provider, same specialty (other than nephrology and internal medicine specialists), the dialysis treatment may be paid and the physician observation visit is denied.
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