Health Information Management

Q&A: Accounting for observation services after same-day surgery

JustCoding News: Outpatient, March 24, 2010

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QUESTION: A Medicare patient is admitted to same-day surgery. Following surgery, the physician orders observation services for the patient and discharges the patient home the following day. Would this case remain a same-day surgery, with the overnight observation charges absorbed into the account, or should I treat it as an observation account?

ANSWER: Guidelines in the 2010 CPT® Manual state:

When ‘observation status’ is initiated in the course of an encounter in another site of service, all evaluation and management services provided by the supervising physician 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 service as well as in the observation setting.

Because the physician ordered observation services for the patient and then discharged the patient the next day, select the appropriate code (i.e., 99218, 99219, or 99220) for the initial observation care and also code 99217 for the discharge service.

Editor’s note: Shelley C. Safian, MAOM/HSM, CCS-P, CPC-H, CHA, of Safian Communications Services in Orlando, FL, answered this question. She is a senior assistant professor who teaches medical billing and insurance coding at Herzing University Online in Milwaukee, WI. E-mail her at

This answer was provided based on limited information submitted to Be sure to review all documentation specific to your own individual scenario before determining appropriate code assignment.

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