Observation CPT code 99224, 99226 , 99234 , 99236 - Q & A

Are observation codes considered outpatient or inpatient?

Q. Are observation care codes 99224-99226 and 99234-99236 considered outpatient or inpatient codes?
A. The Centers for Medicare and Medicaid Services (CMS) Internet-only manual directly addresses this point by explaining that while a patient is in observation care they are not considered an inpatient of the hospital. These codes (99224-99226 and 99234-99236) are designated as hospital outpatient observation services.

Q. Does the billing physician need to document the time the patient spent in observation care, or the time the physician spent tending to the patient?
A. The time that must be documented relates to the time that the patient is in observation care. Note that the codes selected regarding services furnished during this time are directly related to how long the patient remains in this status.codes (99224-99226 and 99234-99236) are designated as hospital outpatient observation services.


Q. Does the documentation of the time and date that a patient is in observation care pertain to the time during which the patient was admitted to observation care, or does it start at the time that the physician provides services (i.e., completes a history and physical)?

A. Per the Centers for Medicare & Medicaid Services (CMS) Internet-only manual (IOM):
Observation time begins at the clock time documented in the patient’s medical record, which coincides with the time that observation care is initiated in accordance with a physician’s order.
Observation time ends when all medically necessary services related to observation care are completed.

Specific coding guidelines are given in the IOM, based on the total time during which the patient is admitted for observation care, without regard to when specific services are provided.


Where to find detailed scenarios pertaining to observation care codes
Q. Where can I find information explaining and distinguishing between codes and guidelines pertaining to observation care and/or inpatient admission/discharge?

A. The CMS Internet-only manual provides detailed scenarios pertaining to observation care coding, and guidelines regarding billing/coding for inpatient hospital services.



Physician must document date and time of medical record

Q. In regard to observation care, must a physician document date and time in the medical record, or is the nursing documentation sufficient to verify date and time?

A. Regarding documentation requirements on behalf of a physician who is billing for observation care, the Internet-only manual states:
For a physician to bill the initial observation care codes, there must be a medical observation record for the patient which contains dated and timed physician’s orders regarding the observation services the patient is to receive, nursing notes, and progress notes prepared by the physician while the patient received observation services. This record must be in addition to any record prepared as a result of an emergency department or outpatient clinic encounter


Observation care vs. time spent tending to the patient

Q. Does the billing physician need to document the time the patient spent in observation care, or the time the physician spent tending to the patient?
A. The time that must be documented relates to the time that the patient is in observation care. Note that the codes selected regarding services furnished during this time are directly related to how long the patient remains in this status.