ED Coding and Compliance: Get Observation Coding Right With These Expert Pointers


With regard to facility, we have this whole extended assessment category, which used to be called observation. And on the professional side, we still call it observation. And the medical coding rules for observation aren't dramatically different between physician and facility.

On the physician side, we have our observation codes. We don't bill our E/M level for the ED in addition to our observation services either same day or day other than the day observation was started. You have your two sets of codes, your observation discharge codes, a whole different set of criteria going on on the physician's side. And you can't bill an E/M service for the ED in addition to observation or can't get paid for both of them.

On the facility side, you have to bill either an ED E/M level or critical care or in some cases, hospital level for the direct admit to observation. So, it's a very different set of medical coding rules and it's very important again that for observation or as they're calling it on a hospital side extended assessment, your doctors provide all of the required documentation.

And it's pretty much the same on both sides and that we want to make sure that you have an order to place the patient an observation status. And on the ED professional side, its observation status, not necessarily a unit so the patient can be in a regular bed and just be under observation.

On the facility side, you place the patient in observation status. You want a time note. You need to have progress notes while the patient is being observed because it's the person that provides the observation really that's supposed to bill for it.

And you need a note that indicate any changes in the patient's condition, et cetera through this observation. And then you need a discharge note from observation that's timed because observation from Medicare on the facility side has to meet that eight-hour rule. So, these are timed codes.

And again, on the hospital side, you do bill an ED E/M level or critical care in addition to this observation now entitled extended assessment for Medicare. So, it's important that you make that distinction for error free medical coding and billing.

Two levels of observation are payable in 2009.They're called extended facility assessment. One of them is the APC8002 and one is APC8003. 8002 is referred to as Level I facility assessment. And that really isn't going to pertain so much to us because this is a direct admit to observation from a physician office or a clinic. So that's not typically going to be what we in the emergency department environment are going to code.

However, that APC8003 which is the Level II extended facility assessment is what we're going to be aware of in the emergency department. And that is defined as a direct admit from the ED. And these get combined. And it's really a very magical thing that happens with these codes. We're asked to code these different levels and then Medicare on its facility side, their OCE billing software, basically combines these, looks at to make sure that everything is there and then provides and then assigns payment.

So, the final payment is determined by the combination of codes that are billed on your facility side. So you have to be aware of that. But for me, the big difference for those of you that are billing for both the physician and the facility is that you must have an ED visit or critical care for the facility in order to bill observation. But you can't have it for the physician side to bill observation.

So, it's really confusing. And the important message is that we still want our physicians to provide all of these required documentation regardless of which side you're coding on. And who knows, those of you that are doing professional medical coding right now for your EDs may at some point be asked to take over the facility coding.

On the visit code requirements for payment, it's interesting on the hospital side, the Level IV and Level V ED visit bills with this observation or extended facility assessment is what kind of kicks it into payment gear. So you're going to have to have a Level IV or Level V ED E/M in order to get paid for this observation.

Now here's a thing, when we look at the way ED medical coding criteria - and that's the definitions of the E/M levels on the facility side. And those can be different than they are on the professional side. But when we look at how some of these levels are defined, we find that so many services that really kick in to like, we mean similar to a Level IV or Level V level on the facility side get coded a Level III either because the coders don't understand the criteria or because the criteria is skewed down a little bit.

And with observation requiring either a Level IV or a Level V to be billed in addition to it to get paid, you're going to be losing a lot of money on your observation if your facility criteria doesn't really provide good acuity identifications at these levels.

So, if you go back and take a look at your Level III and Level IV ED acuity criteria and see if some of the things that you've got in your Level III really are higher acuity and should be in your IV, you can make sure that you're getting paid for observation.

Now, there will be times when your observation doesn't meet Level IV criteria and you're going to have to bill that as Level III. But a lot of it depends on how your facility criteria is written. And I would encourage you to take another look at it.

For the most part, criteria at this point in the evolution of APC has been, you know, modified and changed and altered and fixed and tested, et cetera for most of you. But if you haven't looked at it in the last year or two, you may want to look at it again. Just make sure that what should be a Level IV is a Level IV and it gets coded that way particularly with these observation medical coding and billing payments because downcoding a IV to a III is going result to deny in payment for your observation.

Typically we're looking at, you know, high resources, high agility for these patients. They come in and get a lot of tests, a lot of work up and they're usually presenting problem that's fairly significant. So you can pretty much make the case for this being a higher acuity area.

Also, just don't forget that you have to meet the time requirements for this extended facility assessment level IV observation. And it must exceed eight hours. So, you don't want to forget about that. It's very important.

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