2023 Observation Coding and Reimbursement Update - Part Two Focus On Medical Decision Making

Brian Hiestand, MD, MPH, FACEP
Michael Granovsky, MD, CPC, FACEP 

Just as with emergency department (ED) evaluation and management (E/M) codes, the current procedural terminology (CPT) codes covering observation care underwent a substantial revision beginning in 2023. No longer are we counting the number of systems reviewed, or whether the clinician has documented all three of the past, family, and social histories in order to be fairly reimbursed for the work performed in observation. Rather, the complexity of care, as reflected in the documentation of the Medical Decision Making (MDM), is the determining factor that differentiates between the three levels of observation codes for same-day observation or multi-day observation services. An exception is the code reported for discharge services after a multi-day stay which is time based. The discharge codes (99238 and 99239) are the only observation codes that are solely time-based. The documentation requirements for 99238 and 99239 include that the physician or advanced practice provider (APP) should state the total time spent in the care of the patient on that day, indicating if it was 30 minutes or less or greater than 30 minutes.     

The structure and composition of the MDM framework is the same as the ED codes – there are three elements:

• Complexity of Problems Addressed (COPA)
• Data
• Risk

Each of the elements is further stratified into three gradations representing increasing intensity of physician work performed. The highest two scores of the three elements determines the overall complexity of the MDM and ultimate code selection. So, for example, if one has a high complexity of problems addressed (referred to in shorthand as COPA), a high risk of treatment, but only a moderate amount of data reviewed, the overall complexity would be high represented by 99236 for same day observation, 99223 for first day observation, or 99233 for subsequent day observation. In order to document appropriately, an understanding of each element of MDM is required. We will focus on moderate and high complexity in general, as the clinical protocols in most ED affiliated observation units are designed to treat higher acuity patients. 

Number and Complexity of Problems Addressed

The COPA accounts for the contribution of the patient's acuity to the work being performed in observation. While low complexity COPA may certainly be encountered in the ED with presentations requiring no diagnostic work up (eg, dental pain or impetigo), patients in observation will generally be at least of moderate complexity, and likely high complexity. This is where a succinct, but accurate, differential for the patient’s presenting symptoms can provide support.  

It must be noted that this assessment of complexity is based on the patient’s presentation, not on the final diagnosis, which is clearly and explicitly called out in the 2023 guidelines. A patient with chest pain that is worse with exertion, but also with tacos, is still presenting for evaluation of a condition that is a threat to bodily function (potential acute coronary syndrome), even if their eventual diagnosis is GERD. Most patients that are managed in observation will have a condition that is potentially a threat to bodily function: TIA as a potential for stroke, chest pain for potential acute coronary syndrome, etc. Cellulitis, pyelonephritis, and pneumonia exist along a clinical spectrum and are placed in observation for active treatment and due to the threat of deterioration into sepsis.  

The other area to parse out is the distinction between “exacerbation of chronic illness” and “severe exacerbation of chronic illness.” CPT codes are based on a concept of care throughout the entire spectrum of the house of medicine, not just the ED. Therefore, the CPT manual defines chronic disease management in a framework that is inclusive of ambulatory care as well as emergent care. Exacerbation of chronic illness includes those presentations where a chronic disease is progressing or poorly controlled, eg, this would be the code used for a patient presenting to primary care with asymptomatic hypertension who needs their lisinopril up titrated or an asthmatic patient discussing the addition of inhaled corticosteroids to their inhaler regimen. An exacerbation of chronic heart failure that warrants emergent diagnostic and therapeutic intervention in the ED, let alone the observation unit, is consistent with a severe exacerbation. For those who are performing psychiatric observation services, most of these patient presentations will represent a severe exacerbation of their underlying psychiatric conditions.

Complexity of Problem Addressed Definitions:  

Medical coders will take existing documentation and, using appropriate policies, determine the COPA. The treating clinical team can support the coding process by directly documenting the severity of the patient’s presentation. Adding a succinct differential that highlights the nature of the concern can provide support to assign the correct complexity level.

Potential documentation example: “Patient’s presentation is due to chest pain that is concerning for ACS requiring serial troponins, ECG, and provocative cardiac imaging.”  

Additionally, though not at all required, the physician could also potentially add a statement directly related to the COPA such as: “Patient’s presentation is due to chest pain that is concerning for ACS requiring serial troponins, ECG, and provocative cardiac imaging. This represents an acute illness posing a potential threat to bodily function.”

Data

The data section of MDM is simultaneously the most detailed section and the one that lends itself most to “counting boxes.” Until set to memory, we recommend referring to ACEP’s MDM grid. This grid applies equally to ED E/M as well as observation E/M codes. There are three broad subcategories within “data”:

• Category 1 - Tests and Documents
• Category 2 - Independent Interpretation
• Category 3 - Discussion of Results or Patient Management

Informally, we conceptualize these as 1) Acquisition; 2) DIY; and 3) Phone a Friend...

Category 1 (Data Acquisition): 

This includes test ordering, reviewing previous test results or external records, or the use of an independent historian, such as a spouse, a parent/guardian, or EMS. Each separate test or test panel counts as a point, so ordering a CBC, a chemistry panel, and an ECG will completely fulfill the data acquisition requirement, as will ordering a COVID panel, reviewing the last discharge summary, and talking to the patient’s spouse for additional details. Any three elements of any type will complete Category I at a level sufficient to support a moderate or high complexity. 

Specific to observation care, incorporating the ED portion of the encounter into the observation documentation is consistent with most sites’ clinical workflow.  

A positive development in the CPT guidelines is the provision of credit for the deliberate decision not to engage in testing, either through the use of decision rules (ie, PECARN for head CT, Wells/PERC for pulmonary embolism testing, HEART Pathway for low risk chest pain). The decision to forgo testing should be documented, both to make it easy for the coder to discern, as well as for recording your decision making within the medical record.

Category 2:  Independent Interpretation of a Billable Test (DIY):

As emergency physicians, we often have to interpret and act on ECGs and imaging studies that will ultimately be interpreted and billed out by another professional. Typical ED studies that satisfy this category include ECGs, X-ray, CT, point of care ultrasound (POCUS), and cardiac monitor readings. A crucial point: one cannot both bill for interpreting the test AND get credit in Category 2 for the MDM. If you count the test towards your MDM (eg, an EKG), you may not also bill for the professional interpretation. Additionally, the documentation does not need to rise to the level of a separately billable interpretation but should be clinically meaningful.

Potential documentation example: “EKG interpreted by me shows NSR and no acute ischemic changes.” 

Category 3 (Phone a Friend): Discussion of Patient Management or Test Interpretation:  

Often, the care of the patient requires involving another medical professional, and this supports an increased complexity of information management. Involving a consultant physician, an admitting physician, pharmacist, social worker, case manager, or physical therapist in the care of the patient is sufficient to meet this category. Discussion of the imaging results with a radiologist or stress test results with a cardiologist would also suffice, as would directly discussing the patient’s course of care and follow up needs with their primary care physician (PCP). Functions like secure online chatting are generally felt to meet the definition of “discussion,” however, simply sending a discharge summary to an outpatient office would not meet this criteria.

A review of the MDM grid should make it clear that all the test ordering in the world alone will not score the data element at the highest level - independent interpretation or discussion of patient care with another medical professional is required to meet high complexity.

Complexity of Data Definitions:

Risk of Treatment 

The formal title of this category in the AMA CPT publication is “Risk of Complications and/or Morbidity or Mortality of Patient Management.” While comprehensive, this tongue twister of a section header does not adequately instruct that this has little to do with the risk of the patient presentation and rather is referring to the risk of management options. Fortunately, for observation management, this domain is nearly always pre-destined for a high complexity result. Per the CPT definitions, consideration of hospitalization meets criteria for high complexity. As the very nature of observation is an outpatient evaluation to determine the potential need for escalation of care to inpatient hospitalization, meeting this mark is not difficult for observation patients. 

DOCUMENT THIS: “Patient requires observation care at this time, with ongoing consideration of the need for further hospitalization for their condition of ***.” 

Risk of Treatment Definitions:

Links

1. ACEP // 2023 Emergency Department Evaluation and Management Guidelines
2. https://www.acep.org/globalassets/sites/acep/media/reimbursement/acep---2023-ed-mdm-grid.pdf
3. CPT® Evaluation and Management (E/M) Code and Guideline Changes

Brian Hiestand, MD, MPH, FACEP, is the service line director for Atrium Health Wake Forest Emergency Medicine headquartered in Winston Salem, North Carolina, and the director of ED observation services for Atrium Health Wake Forest. He is currently a member of the ACEP Reimbursement Leadership Development Program.  

Michael Granovsky, MD, CPC, FACEP, is president of LogixHealth, a national ED coding and billing company processing over 13 million annual encounters. He has served as chair of both the ACEP Coding and Nomenclature Committee and ACEP Reimbursement Committee and is the current course director of the ACEP National Coding and Reimbursement Conference. Questions? Contact Dr. Granovsky.