Physician Billing for Observation: If You Don’t Order it, You Can’t Bill for it

Will CMS address the “absurdity” embedded in the rules of outpatient coding?

Every once in a while, something comes to my attention that I choose not to discuss in public. Over a year ago, I was asked about physician billing for observation services. When a patient is hospitalized, the physician who does the initial history and physical has to choose the proper evaluation and management (E&M) code to use.

The code is based on the type and place of service. If the patient is admitted as an inpatient, the physician uses the initial inpatient visit codes, 99221-99223, with the place of service designated as inpatient hospital. If the patient is placed as an outpatient with observation services, then the physician uses the initial observation visit codes, 99218-99220, with place of service of outpatient hospital.

This person told me that they read that the only physician who could bill for the initial observation visit codes was the physician who actually gave the order for observation. That did not make sense. The doctor who takes the call from the emergency department physician and actually gives the order is often not the same doctor who then comes and sees the patient and provides the face-to-face visit.

But then I read the pertinent regulation and was shocked that the person was correct. Sure enough, Chapter 12, Section 30.6.8.A of the Medicare Claims Processing Manual indicates that the Centers for Medicare & Medicaid Services (CMS) will “pay for initial observation care billed by only the physician who ordered hospital outpatient observation services and was responsible for the patient during his/her observation care.”

And for the past year I have been avoiding reporting about this or writing a RACmonitor article because first, I have never seen a denial for this, and there is no logical reason to have such a policy. If one doctor can give the order for inpatient admission and another one can perform and bill for the initial inpatient visit, why would the same not apply to observation services? But then in October, WPS Medicare, one of the Medicare Administrative Contractors (MACs), released a notice indicating that they had met with CMS about this and confirmed that it is indeed CMS policy.

But now that WPS has published this notice, providers need to decide what to do with this information. If WPS wanted to audit this, they could compare the attending physician entered by the hospital in field 76 on the UB-04 to the physician who bills for the initial observation visit code.

So the first thing to do is ensure that your billing staff is entering the name of the physician who performs the visit and not the physician who gave the order.

But is this legal? Well, the Uniform Billing Rules instruct the hospital to choose as attending provider the individual who has overall responsibility for the patient’s medical care and treatment on the claim, so it seems that choosing the doctor who saw the patient and not the one who ordered the service would be compliant.

If we get those names to match, then WPS would have to actually request the chart to perform a complex review, and that’s a lot of work for a relatively small payment. Plus, there are certainly bigger issues to audit than this.

Of course, the other thing I plan to do is talk to CMS about this. Seema Verma, the administrator of CMS, has started the “Patients over Paperwork Initiative” and has tweeted about the absurdity of Medicare regulations, and this clearly is an example of a regulation that is absurd.

Will I get anywhere? Does CMS read RACmonitor e-News? Who knows? But I’ll keep you up to date if I get any answers.

Print Friendly, PDF & Email
Facebook
Twitter
LinkedIn
Email
Print

Ronald Hirsch, MD, FACP, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Mastering the Two-Midnight Rule: Keys to Navigating Short-Stay Admissions with Confidence

Mastering the Two-Midnight Rule: Keys to Navigating Short-Stay Admissions with Confidence

The CMS Two-Midnight Rule and short-stay audits are here to stay, impacting inpatient and outpatient admissions, ASC procedures, and Medicare Parts C & D. New for 2024, the Two-Midnight Rule applies to Medicare Advantage patients, requiring differentiation between Medicare plans affecting Case Managers, Utilization Review, and operational processes and knowledge of a vital distinction between these patients that influences post-discharge medical reviews and compliance risk. Join Michael G. Calahan for a comprehensive webcast covering federal laws for all admission processes. Gain the knowledge needed to navigate audits effectively and optimize patient access points, personnel, and compliance strategies. Learn Two-Midnight Rule essentials, Medicare Advantage implications, and compliance best practices. Discover operational insights for short-stay admissions, outpatient observation, and the ever-changing Inpatient-Only Listing.

Print Friendly, PDF & Email
September 19, 2023
Secondary Diagnosis Coding: A Deep Dive into Guidelines and Best Practices

Secondary Diagnosis Coding: A Deep Dive into Guidelines and Best Practices

Explore comprehensive guidelines and best practices for secondary diagnosis coding in our illuminating webcast. Delve into the intricacies of accurately assigning secondary diagnosis codes to ensure precise medical documentation. Learn how to navigate complex scenarios and adhere to coding regulations while enhancing coding proficiency. Our expert-led webcast covers essential insights, including documentation requirements, sequencing strategies, and industry updates. Elevate your coding skills and stay current with the latest coding advancements so you can determine the correct DRG assignment to optimize reimbursement, support medical decision-making, and maintain compliance.

Print Friendly, PDF & Email
September 20, 2023
Principal Diagnosis Coding: Mastering Selection and Sequencing

Principal Diagnosis Coding: Mastering Selection and Sequencing

Enhance your inpatient coding precision and revenue with Principal Diagnosis Coding: Mastering Selection and Sequencing. Join our expert-led webcast to conquer the challenges of principal diagnosis selection and sequencing. We’ll decode the intricacies of ICD-10-CM guidelines, equipping you with a clear grasp of the rules and the official UHDDS principal diagnosis definition. Uncover the crucial role of coding conventions, master the sequencing of related conditions, and confidently tackle cases with equally valid principal diagnoses.

Print Friendly, PDF & Email
September 14, 2023
2024 IPPS Summit: Final Rule Update with Expert Insights and Analysis

2024 IPPS Summit: Final Rule Update with Expert Insights and Analysis

Only ICD10monitor delivers what you need: updates on must-know changes associated with the FY24 Inpatient Prospective Payment System (IPPS) Final Rule, including new ICD-10-CM/PCS codes, plus insights, analysis and answers to questions from the country’s most respected subject matter experts.

Print Friendly, PDF & Email
2024 IPPS Summit Day 3: MS-DRG Shifts and NTAPs

2024 IPPS Summit Day 3: MS-DRG Shifts and NTAPs

This third session in our 2024 IPPS Summit will feature a review of FY24 changes to the MS-DRG methodology and new technology add-on payments (NTAPs), presented by senior healthcare consultant Laurie Johnson, with bonus insights and analysis from two acclaimed subject matter experts

Print Friendly, PDF & Email
August 17, 2023

Trending News