CMS Pub. 100-04, ch. 12, § 30.6.9.1

Services and Hospital Inpatient or Observation Care Services (Including

Admission and Discharge Services)

(Rev. 11842; Issued; 02-09-23 Effective:01-01-23; Implementation: 05-09-23)

A. Initial Hospital Inpatient or Observation Care From Emergency Department

A/B MACs (B) pay for an initial hospital inpatient or observation care service if a practitioner

sees a patient in the emergency department and decides to admit the person to the hospital or

place the patient in observation care. They do not pay for both E/M services. Also, they do not

pay for an emergency department visit by the same practitioner on the same date of service.

When the patient is admitted to the hospital via another site of service (e.g., hospital emergency

department, physician’s office, nursing facility), all services provided by the practitioner in

conjunction with that admission are considered part of the initial hospital inpatient or

observation care when performed on the same date as the admission.

B. Initial Hospital Inpatient or Observation Care on Day Following Visit

A/B MACs (B) pay both visits if a patient is seen in the office on one date and admitted to the

hospital as an inpatient or receives observation care on the next date, even if fewer than 24

hours has elapsed between the visit and the admission for hospital inpatient or placement in

observation care.

C. Initial Hospital Inpatient or Observation Care and Discharge on Same Day

Both hospital inpatient and observation care coding should be billed as follows:

When the patient is admitted to inpatient hospital care or is in observation care for less than 8

hours on the same date, then Initial Hospital Inpatient or Observation Care, from CPT code

range 99221 - 99223, shall be reported by the physician. The Hospital Inpatient or Observation

Discharge Day Management service, CPT codes 99238 or 99239, shall not be reported for this

scenario.

When a patient is admitted to inpatient hospital care or is in observation care and then

discharged on a different calendar date, the physician shall report an Initial Hospital Inpatient

or Observation Care from CPT code range 99221 - 99223 and a Hospital Inpatient or

Observation Discharge Day Management service, CPT code 99238 or 99239.

When a patient has been admitted to inpatient hospital care or is in observation care for a

minimum of 8 hours but less than 24 hours and discharged on the same calendar date, Hospital

Inpatient or Observation Care Services (Including Admission and Discharge Services), from

CPT code range 99234 - 99236, shall be reported.

The following table summarizes the above, based on hospital length of stay and discharge date:

Hospital Length of

Stay

Discharged On Code(s) to Bill

< 8 hours Same calendar date as

admission or start of

observation

Initial hospital services

only*

8 or more hours Same calendar date as

admission or start of

observation

Same-day

admission/discharge*

< 8 hours Different calendar date than

admission or start of

observation

Initial hospital services

only*

8 or more hours Different calendar date than

admission or start of

observation

Initial hospital services* +

discharge day management

*Plus prolonged inpatient/observation services, if applicable.

D. Documentation Requirements for Billing Hospital Inpatient or Observation Care

Services (Including Admission and Discharge Services)

The physician shall satisfy the E/M documentation guidelines for admission to and discharge

from inpatient observation or hospital care. In addition to meeting the documentation

requirements for medically appropriate history and/or examination, and medical decision

making documentation in the medical record shall include:

• Documentation stating the stay for hospital treatment or observation care status

involves 8 hours but less than 24 hours;

• Documentation identifying the billing physician was present and personally

performed the services; and

• Documentation identifying the admission and discharge notes were written by the

billing physician.

E. Physician Services Involving Transfer From One Hospital to Another; Transfer

Within Facility to Prospective Payment System (PPS) Exempt Unit of Hospital; Transfer

From One Facility to Another Separate Entity Under Same Ownership and/or Part of

Same Complex; or Transfer From One Department to Another Within Single Facility

Physicians may bill both the hospital discharge management code and an initial hospital care

code when the discharge and admission do not occur on the same day if the transfer is between:

• Different hospitals;

• Different facilities under common ownership which do not have merged records; or

• Between the acute care hospital and a PPS exempt unit within the same hospital

when there are no merged records.

In all other transfer circumstances, the physician should bill only the appropriate level of

subsequent hospital care for the date of transfer.

F. Initial Hospital Care Service Requirements

Per the CPT code descriptors for Initial Hospital Inpatient or Observation Care Services, a

medically appropriate history and/or examination will be required, but will no longer be used

to select visit level. Practitioners working in hospitals should continue to be aware of the

documentation needed to meet requirements for other payment systems or Conditions of

Participation, in addition to the documentation required to bill Hospital Inpatient or

Observation Care codes under the PFS.

Physicians who provide an initial visit to a patient during inpatient hospital care that meets the

code descriptor requirements shall report an initial hospital care code (99221-99223). The

principal physician of record shall append modifier “-AI” (Principal Physician of Record) to

the claim for the initial hospital care code. This modifier will identify the physician who

oversees the patient’s care from all other physicians who may be furnishing specialty care.

Physicians may bill initial hospital care service codes (99221-99223), for services that were

reported with CPT consultation codes (99241 - 99255) prior to January 1, 2010, when the

furnished service and documentation meet the Initial Hospital Inpatient or Observation Care

code descriptor requirements. Physicians must meet all the requirements of the initial hospital

care codes, to report CPT code 99221, which are greater than the requirements for consultation

codes 99251 and 99252.

Reporting CPT code 99499 (Unlisted evaluation and management service) should be limited to

cases where there is no other specific E/M code payable by Medicare that describes that

service. Reporting CPT code 99499 requires submission of medical records and A/B MAC (B)

manual medical review of the service prior to payment. A/B MACs (B) shall expect reporting

under these circumstances to be unusual.

G. Initial Hospital Care Visits by Two Different M.D.s or D.O.s When They Are Involved

in Same Admission

In the inpatient hospital setting all physicians (and qualified nonphysician practitioners where

permitted) who perform an initial evaluation may bill the initial hospital care codes (99221 -

99223) or nursing facility care codes (99304 - 99306). A/B MACs (B) consider only one M.D.

or D.O. to be the principal physician of record (sometimes referred to as the admitting

physician.) The principal physician of record is identified in Medicare as the physician who

oversees the patient’s care from other physicians who may be furnishing specialty care. Only

the principal physician of record shall append modifier “-AI” (Principal Physician of Record)

in addition to the E/M code. Follow-up visits in the facility setting shall be billed as

subsequent hospital care visits and subsequent nursing facility care visits.