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8.2.57.1.5 Observation Services
Hospital observation (procedure codes 99217, 99218, 99219, and 99220) are professional services provided for a period of more than 6 hours but fewer than 24 hours regardless of the hour of the initial contact, even if the client remains under physician care past midnight. Subsequent observation care, per day (procedure codes 99224, 99225, and 99226) is also a benefit of Texas Medicaid.
Inpatient hospital observation services must be submitted using the procedure code 99234, 99235, or 99236.
Observation care discharge day management procedure code 99217 must be billed to report services provided to a client upon discharge from observation status if the discharge is on a date other than the initial date of admission. The following procedure codes are denied if submitted with the same date of service as procedure codes 99217, 99234, 99235, and 99236:
If an E/M service is billed by the same provider with the same date of service as a physician observation visit, the E/M service is denied if provided in any place of service other than inpatient hospital.
If a physician observation visit (procedure code 99217, 99218, 99219, 99220, 99234, 99235, or 99236) is billed by the same provider with the same date of service as prolonged services (procedure code 99354, 99355, 99356, or 99357), the prolonged services will be denied as part of another procedure on the same day.
If dialysis treatment and a physician observation visit are billed by the same provider (and same specialty other than an internist or nephrologist) with the same date of service, the dialysis treatment may be reimbursed and the physician observation visit will be denied.
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