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The Medicare Claims Processing Manual, Chapter 12, Section 30.6.8, states that payment for observation service codes are for the ordering, or attending, physician or nonphysician practitioner only. Consequently, any other provider who furnishes “consultation or additional evaluations or services while the patient is receiving hospital outpatient observation services must bill the appropriate outpatient service codes.” Be aware that consulting physicians who perform evaluation and management (E/M) services during an observation stay are required to bill the appropriate new or established E/M office code(s). 

Effective January 1, 2021, CMS and the American Medical Association (AMA) issued code and guideline changes that affect how these observation or outpatient E/M codes will be reported going forward. 

Documentation & Reporting

One major change to how E/M services are reported is that the documented history and examination no longer factor into the determination of the level of service. Providers are now allowed to choose whether their level of service is based on their documentation of Medical Decision Making (MDM) or the total face-to-face time with the patient and any eligible non-face-to-face time. Per the revised AMA code and guideline changes, time includes the following activities, when performed: 

  • Preparing to see the patient, e.g., review of tests
  • Obtaining and/or reviewing separately obtained history
  • Performing a medically appropriate examination and/or evaluation
  • Counseling and educating the patient/family/caregiver
  • Ordering medications, tests, or procedures
  • Referring and communicating with other healthcare professionals (when not separately reported)
  • Documenting clinical information in the electronic or other health record

Please note that counseling and/or coordination of care are no longer factors for time reporting and aren’t separately reported.

Coding Changes

  • New patient CPT code 99201 has been deleted and can no longer be reported.
  • Only new patient CPT codes 99202 to 99205 and established patient CPT codes 99212 to 99215 may be reported. 
  • History and examination must still be documented, but the level of service may be determined by either MDM or total time.

To assist providers, the AMA created a table of CPT E/M Office Revisions effective January 1, 2021, that can be accessed here

Please note that this information is current as of the date of publication. BKD consultants can assist with staff training or assessment of current coding and clinical documentation to facilitate this change in your organization. For more information, reach out to your BKD Trusted Advisor™ or use the Contact Us form below.

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