REIMBURSEMENT GUIDELINES

Initial Observation Care 

The physician supervising the care of the patient designated as "observation status" is the only physician who can report an initial Observation Care CPT code (99218-99220). It is not necessary that the patient be located in an observation area designated by the hospital, although in order to report the Observation Care codes the physician must: 

 Indicate in the patient's medical record that the patient is designated or admitted as observation status; 

 Clearly document the reason for the patient to be admitted to observation status; and 

 Initiate the observations status, assess, establish and supervise the care plan for observation and perform periodic reassessments

The CPT codebook states that "When "observation status" is initiated in the course of an encounter in another site of service (e.g., hospital emergency department, office, nursing facility) all evaluation and management services provided by the supervising physician or other qualified health care professional in conjunction with initiating "observation status" are considered part of the initial observation care when performed on the same date. The observation care level of service reported by the supervising physician should include the services related to initiating "observation status" provided in the other sites of services as well as in the observation setting."

Determine the Extent of Examination Performed

The extent of the examination performed is dependent on clinical judgment and on the nature of the presenting problem(s). The levels of E/M services recognize four types of examination that are defined as follows: 

Problem Focused - A limited examination of the affected body area or organ system. 

Expanded Problem Focused - A limited examination of the affected body area or organ system and other symptomatic or related organ system(s). 

Detailed - An extended examination of the affected body area(s) and other symptomatic or related organ system(s). 

Comprehensive - A general multisystem examination or a complete examination of a single organ system. Note: The comprehensive examination performed as part of the preventive medicine E/M service is multisystem, but its extent is based on age and risk factors identified.

For the purposes of these CPT® definitions, the following body areas are recognized: 

• Head, including the face; 

• Neck; 

• Chest, including breasts and axilla; 

• Abdomen; 

• Genitalia, groin, buttocks;

• Back; 

• Each extremity;

For the purposes of these CPT® definitions, the following organ systems are recognized:

• Eyes; 

• Ears, nose, mouth, and throat; 

• Cardiovascular; 

• Respiratory; 

• Gastrointestinal; 

• Genitourinary;

• Musculoskeletal; 

• Skin; 

• Neurologic; 

• Psychiatric;

• Hematologic/Lymphatic/Immunologic. 

 Determine the Complexity of Medical Decision Making: Medical decision making refers to the complexity of establishing a diagnosis and/or selecting a management option as measured by:

• The number of possible diagnoses and/or the number of management options that must be considered; 

• The amount and/or complexity of medical records, diagnostic tests, and/or other information that must be obtained, reviewed and analyzed; and 

• The risk of significant complications, morbidity, and/or mortality, as well as comorbidities, associated with the patient’s presenting problem(s), the diagnostic procedure(s) and/or the possible management options. 

Time

The inclusion of time in the definitions of levels of E/M services has been implicit in prior editions of CPT®. The inclusion of time as an explicit factor beginning in CPT® 1992 is done to assist in selecting the most appropriate level of E/M services. It should be recognized that the specific times expressed in the visit code descriptors are averages and, therefore, represent a range of times which may be higher or lower depending on actual clinical circumstances.

Time is not a descriptive component for the emergency department levels of E/M services because emergency department services are typically provided on a variable intensity basis, often involving multiple encounters with several patients over an extended period of time. Therefore, it is often difficult to provide accurate estimates of the time spent face-to-face with the patient. 

Studies to establish levels of E/M services employed surveys of practicing physicians to obtain data on the amount of time and work associated with typical E/M services. Since “work” is not easily quantifiable, the codes must rely on other objective, verifiable measures that correlate with physicians’ estimates of their “work.” It has been demonstrated that estimations of intraservice time (as explained below), both within and across specialties, is a variable that is predictive of the “work” of E/M services. This same research has shown there is a strong relationship between intraservice time and total time for E/M services. Intraservice time, rather than total time, was chosen for inclusion with the codes because of its relative ease of measurement and because of its direct correlation with measurements of the total amount of time and work associated with typical E/M services. 

Guidelines

Any specifically identifiable procedure (ie, identified with a specific CPT code) performed on or subsequent to the date of initial or subsequent E/M services should be reported separately.

The actual performance and/or interpretation of diagnostic test/studies ordered during a patient encounter are not included in the levels of E/M services. Physician performance of diagnostic tests/studies for which specific CPT® codes are available may be reported separately, in addition to the appropriate E/M code. The physician’s interpretation of the results of diagnostic tests/studies (ie, professional component) with preparation of a separate distinctly identifiable signed written report may also be reported separately, using the appropriate CPT code with modifier 26 appended.

The physician or other health care professional may need to indicate that on the day a procedure or service identified by a CPT code was performed, the patient’s condition required a significant separately identifiable E/M service above and beyond other services provided or beyond the usual preservice and postservice care associated with the procedure that was performed. The E/M service may be caused or prompted by the symptoms or condition for which the procedure and/or service was provided. This circumstance may be reported by adding modifier 25 to the appropriate level of E/M service. As such, different diagnoses are not required for reporting of the procedure and the E/M services on the same date. 

 Nature of Presenting Problem: A presenting problem is a disease, condition, illness, injury, symptom, sign, finding, complaint, or other reason for encounter, with or without a diagnosis being established at the time of the encounter. The E/M codes recognize five types of presenting problems that are defined as follows: 

Minimal - A problem that may not require the presence of the physician or other qualified health care professional, but service is provided under the physician’s or other qualified health care professional’s supervision.

Self-limited or Minor - A problem that runs a definite and prescribed course, is transient in nature, and is not likely to permanently alter health status OR has a good prognosis with management/compliance. 

Low severity - A problem where the risk of morbidity without treatment is low; there is little to no risk of mortality without treatment; full recovery without functional impairment is expected. 

Moderate severity - A problem where the risk of morbidity without treatment is moderate; there is moderate risk of mortality without treatment; uncertain prognosis OR increased probability of prolonged functional impairment.

High severity - A problem where the risk of morbidity without treatment is high to extreme; there is a moderate to high risk of mortality without treatment OR high probability of severe, prolonged functional impairment.

DEFINITIONS OF COMMONLY USED TERMS

 Chief Complaint: A chief complaint is a concise statement describing the symptom, problem, condition, diagnosis, or other factor that is the reason for the encounter, usually stated in the patient’s words

 Concurrent Care and Transfer of Care: Concurrent care is the provision of similar services (eg, hospital visits) to the same patient by more than one physician or other qualified health care professional on the same day. When concurrent care is provided, no special reporting is required. Transfer of care is the process whereby a physician or other qualified health care professional who is providing management for some or all of a patient’s problems relinquishes this responsibility to another physician or other qualified health care professional who explicitly agrees to accept this responsibility and who, from the initial encounter, is not providing consultative services. The physician or other qualified health care professional transferring care is then no longer providing care for these problems though he or she may continue providing care for other conditions when appropriate. Consultation codes should not be reported by the physician or other qualified health care professional who has agreed to accept transfer of care before an initial evaluation but are appropriate to report if the decision to accept transfer of care cannot be made until after the initial consultation evaluation, regardless of site of service

 Counseling: Counseling is a discussion with a patient and/or family concerning one or more of the following areas:

• Diagnostic results, impressions, and/or recommended diagnostic studies;

• Prognosis; 

• Risks and benefits of management (treatment) options; 

• Instructions for management (treatment) and/or follow-up; 

• Importance of compliance with chosen management (treatment) options; 

• Risk factor reduction; and 

• Patient and family education. (For psychotherapy, see 90832-90834, 90836-90840) 

 Family History: A review of medical events in the patient’s family that includes significant information about:

• The health status or cause of death of parents, siblings and children; 

• Specific diseases related to problems identified in the Chief Complaint or History of the Present Illness, and/or System Review; 

• Diseases of family members which may be hereditary or place the patient at risk.

 History of Present Illness: A chronological description of the development of the patient’s present illness from the first sign and/or symptom to the present. This includes a description of location, quality, severity, timing, context, modifying factors, and associated signs and symptoms significantly related to the presenting problem(s).

 Levels of E/M Services: Within each category or subcategory of E/M service, there are three to five levels of E/M services available for reporting purposes. Levels of E/M services are NOT interchangeable among the different categories or subcategories of service. For example, the first level of E/M services in the subcategory of office visit, new patient, does not have the same definition as the first level of E/M services in the subcategory of office visit, established patient.

EVALUATION AND MANAGEMENT GUIDELINES

In this Fee Schedule CPT® codes that contain explanatory language specific to Arizona are preceded by Δ. Codes, however, that are unique to Arizona and not otherwise found in CPT®-4 are preceded by an AZ identifier and numbered in the following format: AZ0xx-xxx.

The evaluation and management guidelines adopted by reference may be found in the Current Procedural Terminology®, Fourth Edition (“CPT® book”) published by the AMA and is reprinted, in part, below with permission. To the extent that a conflict may exist between an adopted portion of the CPT®-4 and a code, guideline, identifier or modifier unique to Arizona, then the Arizona code, guideline, identifier or modifier shall control.

 A. CLASSIFICATION OF EVALUATION AND MANAGEMENT (E/M) SERVICES: The E/M section is divided into broad categories such as office visits, hospital visits, and consultations. Most of the categories are further divided into two or more subcategories of E/M services. For example, there are two subcategories of office visits (new patient and established patient) and there are two subcategories of hospital visits (initial and subsequent). The subcategories of E/M services are further classified into levels of E/M services that are identified by specific codes. This classification is important because the nature of work varies by type of service, place of service, and the patient’s status.

 The basic format of the levels of E/M services is the same for most categories. First, a unique code number is listed. Second, the place and/or type of service is specified, eg, office consultation. Third, the content of the service is defined, eg comprehensive history and comprehensive examination. (See “Levels of E/M Services” for details on the content of E/M services). Fourth, the nature of the presenting problem(s) usually associated with a given level is described. Fifth, the time typically required to provide the service is specified. (A detailed discussion of time is provided below).

B. DEFINITIONS OF COMMONLY USED TERMS: Certain key words and phrases are used throughout the E/M section. The following definitions are intended to reduce the potential for differing interpretations and to increase the consistency of reporting by physicians in differing specialties. E/M services may also be reported by other qualified health care professionals who are authorized to perform such services within the scope of their practice.