Editor’s note: AAOS partners with KarenZupko & Associates, Inc. (KZA) on the organization’s coding education, and KZA often provides content for AAOS Now. For more information, visit aaos.org/membership/coding-and-reimbursement.

This year ushered in much-anticipated changes to the Evaluation and Management (E/M) Current Procedural Terminology (CPT) coding guidelines. After 2 years to become familiar with guidelines implemented in 2021 for Office or Other Outpatient Services (codes 99202 to 99215), the American Medical Association (AMA) decided to level guidelines for facility services as well. This required a slight revision in the medical decision making (MDM) table to support the addition of the facility categories. Unfortunately, not all insurance carriers follow all aspects of the revised guidelines for the inpatient/observation care and consultation codes.

Consultations in observation and hospital inpatient care
The Centers for Medicare & Medicaid Services (CMS) and CPT are not in agreement on how to bill consultations in observation care. CMS instructs physicians and qualified healthcare professionals (QHPs) to use new and established Office or Other Outpatient Codes for consultations when the patient is in observation status. CPT states to use the Inpatient and Observation Care consultation codes (99252 to 99255) for consultations during an observation stay.

Two separate visits on the same day
According to CPT guidelines, when a physician or QHP sees a patient at two separate sites on the same day (e.g., hospital emergency department [ED], office, nursing facility), they may bill for both encounters. In this case:

• Modifier 25 is appended to the second E/M service to indicate that a separately identifiable service by the physician or other QHP was performed on the same date.
• When the service at a separate site is reported and the initial inpatient or observation care service is a consultation, CPT instructs not to report codes 99221 to 99223 or 99252 to 99255. Instead, the consultant should report the subsequent hospital inpatient or observation care codes (99231 to 99233) for the second service on the same date.

However, according to CMS, when a patient is seen at two separate sites in 1 day, only one visit is billable on any given day (which is in line with previous CMS guidance).

• All visits performed on a given day should continue to “roll up” into the highest level of service. Consider the following example: A patient is seen in the office in the morning, then presents to the emergency department (ED) in the evening with worsening symptoms, and a physician or QHP is called in and admits the patient for observation and pain control. For a Medicare patient, the physician/QHP is allowed to bill only for the higher service level performed that day, which is admission (99221 to 99223), and they are not allowed to bill for both the office visit and admission.
• For Medicare, the first hospital or observation encounter with the patient by the admitting physician/QHP should continue to be reported with codes 99221 to 99223, with an AI modifier to identify the admitting physician of record.

Inpatient or observation consultations (9925x)*
According to CPT guidelines, physicians/QHPs should report codes 99252 to 99255 when consultations are provided to hospital inpatients, observation-level patients, residents of nursing facilities, or patients in a partial hospital setting when the patient has not received any face-to-face professional services from the physician or other QHP of the exact same specialty and subspecialty during the stay.

In these instances, the admitting physician/QHP typically requests the consultant’s opinion or advice. The request for the consultation must be documented in the medical record, and the consultation note is maintained in the shared medical record as required for consultation codes. Only one consultation may be reported by the consultant per individual patient admission.

However, Medicare does not recognize consultation service codes. For Medicare patients, continue to report the Initial Inpatient or Observation Care codes (99221 to 99223). In addition to Medicare, United HealthCare, Cigna, and Aetna (as of March 2022) do not cover or reimburse for consultations. So, for these payers in the inpatient setting, physician/QHPs must report Initial Hospital/Observation codes (99221 to 99223), or in the outpatient setting, they must report the Office or Other Outpatient Services codes (99202 to 99215), as one would do for Medicare.

Outpatient consultations in the ED
A consultation is billed when one physician or QHP requests the opinion or advice of another physician/QHP. The request for consultation must be documented in the medical record. When a shared document exists (e.g., in the hospital, health system, ED), the consultation may be documented on the shared record.

When a consultation takes place in the ED and the patient is discharged home, CPT and CMS offer differing guidance. For these patients:

• CPT says to report the appropriate Outpatient Consultation code (99242 to 99245).
• CMS says to report the appropriate ED code (99282 to 99285).

When a consultation takes place in the ED and the patient is admitted following the consultation:

• CPT says to report the Outpatient Consultation code (99242 to 99245) and report the Subsequent Inpatient or Observation Care code (99231 to 99233).
• CMS says that if the patient is admitted to observation status by the physician performing the evaluation, the physician/QHP should bill an Initial Inpatient or Observation Care code (99221 to 99223) and not an ED visit code (99282 to 99285). Append an AI modifier to note who is the admitting physician/QHP.

Payer errors
Earlier this year, these changes caused a lot of confusion as well as some issues with payers not updating their mapping of place-of-service (POS) and type of E/M service codes in their systems. If a practice or physician experienced denials for observation care services in the beginning of 2023, it was more than likely due to a payer error.

For example, using the outpatient POS code (22) for observation with the revised Hospital/Observation Care codes (initial, 99221 to 99223, or subsequent, 99231 to 99233) was causing denials. CMS stated they were aware of some Medicare Administrative Contractors (MACs) denying the Initial or Subsequent Inpatient/Observation codes with an outpatient POS code, as well as denials of codes for Inpatient or Observation Discharge Day Management services (99238 to 99239) when reported with a POS code for outpatient (22), emergency room (23), and comprehensive outpatient rehabilitation facility (62). The good news is that, as of May 15, these issues have been resolved with those MACs.

These changes are challenging but can be managed. Be proactive and stay on top of the issues as they arise. Make sure to check Explanation of Benefits statements (or Electronic Remittance Advice forms) for all payers, both commercial and Medicare, for payment errors and denials.

Most importantly, if issues are identified, close follow-up is needed if reimbursement is still outstanding. Query payers and obtain their rules in writing if possible. If they refuse and say they follow CPT guidelines, hold them accountable when they deviate and improperly deny any claims. It remains to be seen what 2024 will bring, so stay tuned and stay vigilant.

*Coverage criteria for consultation services may be restricted by payers.

Marissa Clemmer, CPC, CCS, CPMA, CPB, CANPC, CPEDC, is a consultant with KZA and is a speaker at the AAOS reimbursement and coding workshops.