2023 Observation and Consultation EM

By Barbara J. Cobuzzi, MBA, CPC, COC, CPC-P, CPC-I, CPCO, CENTC, CMCS

A client asked me how she should bill consultations for patients that are in Observation status, for payers who still recognize consultation codes and for payers who no longer acknowledge consultation codes. She is confused about the difference between an “other outpatient” status and Observation status.

As 2023 starts, here are my thoughts.

The question is Location, Location, Location.

According to AMA CPT 2023 Office or Other Outpatient Consultations, 99242 – 99245,

“The following codes may be used to report consultations that are provided in the office or other outpatient site, including the home or residence, or emergency department.”

According to AMA CPT 2023 Inpatient or Observation Consultations, 99252 – 99255,

“Codes 99252, 99253, 99254, 99255 are used to report physician or other qualified health care professional consultations provided to hospital inpatients, observation level patients, residents of nursing facilities, or patients in partial hospital setting, and when the patient has not received any face-to-face professional services from the physician or other qualified health care professional or another physician or qualified health care professional of the exact same specialty and subspecialty who belongs to the same group practice during the stay.”

For payers who process consult codes, use the EM codes based on status/location.

For payers who do not process consult codes, here is my advice for patients in hospital observation level status.

2023 Revisions to 2021 E/M Guidelines says that patients that are not admitted and discharged to and from observation on the same day (99234-99236) and a minimum of 8 hours of observation is expended, that admission codes 99221-99223 should be used. For follow up care, subsequent hospital visits 99231-99233 should be used; and when the patient is discharged from Observation, 99238-99239 should be used.

What about the POS?

Now the question is what should the Place of Service (POS) be given that the patient is in Observation status?

We have always been taught that 99221-99233 and 99238-99239 are only billed as inpatient POS. But observation status patients are in outpatient. None of the guidance has stated what POS should be used. However those knowledgeable have indicated that they feel that we have been told to bill observation status patients as OUTPATIENT POS even when using traditionally inpatient codes 99221-99233 and 99238-99239. Billing consultations for payers who do not recognize the consultation CPT codes should be coded and billed as follows:

  1. If the patient is a Medicare Part B patient, and a consultation is performed on a patient in Observation level status, I would code 99221-99223 with POS outpatient, 22. The admitting doctor, who admitted the patient to Observation level status should have used the AI with 99221-99223 to indicate that they are the admitting doctor of record.
  2. If the patient is NOT Medicare Part B you need to determine if the payer has instructed the providers to bill consultations using initial hospital visits when a consultation is performed inpatient. If they have provided this instruction, hopefully in writing, follow the above paragraph’s instructions for Medicare Part B patients in #1 above.
  3. If the patient is not Medicare Part B and the payer has not indicated that they will process consultations for inpatients using initial hospital visits, rather they want providers to just bill subsequent hospital visits, then bill a subsequent hospital visit, 99231-99233 but since the patient is in Observation, the POS will be outpatient, 22.

Because we have not received implicit instructions to bill consultation to patients in hospital observation level status using POS of Outpatient, POS 22, we will have to see how payers are going to process the codes 99252 – 99255 with POS 22 over the first couple weeks.

So, keep an eye on your remittances that come in for all of your 2023 Observation billing that you do in January and get a pulse on how the third-party payers are processing your claims. If they are not accepting POS 22, outpatient, inquire to the third-party payers how they want observation status patients billed and get it in writing.

Barbara J. Cobuzzi, MBA, CPC, COC, CPC-P, CPC-I, CPCO, CENTC, CMCS

Graphic Acknowledgement: Designed by stories / Freepik