Warning: Black Holes Likely to Ensnare Many

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There are giant loopholes in the 2023 CPT®  and CMS Hospital Visit Coding Guidelines.

The hospital community let out a giant sigh of relief when, on Nov. 2, the Centers for Medicare & Medicaid Services (CMS) released the 2023 Physician Fee Schedule (PFS) Final Rule and agreed to adopt most of the changes to Evaluation and Management (E&M) visit coding released by the American Medical Association (AMA) in July (and now scheduled to take effect on Jan. 1, 2023).

These changes will more closely align the guidelines used for the selection of an E&M code for a patient visit in the hospital with those adopted in 2021 for office visits.

Most notably, the new guidelines remove the need for specified elements of the history and physical examination to be included in order to bill higher-level codes. The only ones likely to be upset to see these changes are the keys “CTRL,” “C,” and “V” on the keyboard, as they should be visited much less frequently as the need for copying and pasting diminishes greatly.

But while the celebrations continue, it is important to note that in the hospital setting, there are several nuances to these guidelines that are not present in the office setting. First, the Current Procedural Terminology (CPT®) panel eliminated the codes for observation services 99217-99220, along with renaming the inpatient codes as “Inpatient and Observation Care Services.” That means that the physician will use the same E&M code set for inpatients and patients receiving observation services.

Unfortunately, there must be a place-of-service code accompanying every E&M code when submitted for payment. An inpatient has a place of service of 21, whereas a patient receiving observation services has a place of service of 22 at an “on-campus outpatient hospital.” While the claim submitted by the hospital does not include a place-of-service code, their claims include a type of bill code indicating whether the patient is an inpatient or outpatient. It would be a simple task for a payer to compare the type of bill code submitted by the hospital to the physician’s place-of-service code, allowing them to deny payment if a mismatch is found.

Another ambiguity created by the code set change relates to the ever-increasing number of patients who are hospitalized, but not admitted as inpatient (nor are they receiving observation services). For instance, consider a patient undergoing an elective outpatient surgery, such as a joint replacement, with a planned overnight in-hospital recovery; such a patient is neither inpatient, nor is an order for observation services appropriate. Yet it is likely that the surgeon will ask a hospitalist or specialist to see the patient to manage their comorbid conditions.

Since this outpatient does not have observation services ordered, the use of the “Inpatient and Observation Care Services” codes would not be appropriate. Rather, the physician must bill the visit using the “office and other outpatient” visit codes, 99202-99215. And while these codes no longer require specific elements of the history and physical, the medical decision-making guidelines are different, since instead of three code levels, there are now five. In addition, the rules about new or established patients require the physician to determine if the patient had been seen by any member of their medical group with the same specialty in the last three years.

In addition, when a patient is hospitalized as an outpatient and receiving observation services ordered by the attending, a consultant who sees that patient would not bill with the “Inpatient and Observation Care Services” codes, but would use the “office and other outpatient” visit codes, 99202-99215, with the same complexities as outlined above. To justify this, CMS refers to Chapter 12 of the Medicare Claims Processing Manual, section 30.6.8.A, which specifies that only the practitioner billing for observation services can use the observation services visit codes (the same concept now being applied to the “Inpatient and Observation Care Services” codes).

In addition to these nuances, CMS has also chosen not to adopt the CPT changes to prolonged visit coding and critical care time counting.

It is clear that the intent of CMS and CPT to put “patients over paperwork” is a noble one, but the current iteration leaves several traps that warrant careful attention.

Programming note: Listen to Dr. Ronald Hirsch make his Monday rounds on Monitor Monday, 10 a.m. EST and sponsored by R1-RCM.


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).

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