Hospitalists play a crucial role in patient care, especially in inpatient settings. Hospital medicine practice requires using specific medical codes for billing medical services. Hospitalists often deal with complex medical conditions that require detailed documentation, which can make coding complex. Keeping up with changes in coding and billing regulations can also be challenging. Documenting and coding completely and accurately are key for hospitalists to ensure appropriate reimbursement for their services. Medical billing outsourcing can make it easier to navigate these complexities and ensure accurate claim submission to ensure optimal payment for services rendered. Let’s take a look at the key points, including the main challenges and solutions, related to billing hospitalists’ services.
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Medical Coding and Billing Challenges for Hospitalists
Accurate documentation and coding are critical for hospitalists, as both undercoding and overcoding can lead to audits and affect reimbursement. Hospital billing is inherently more complex than physician billing for several reasons:
- Multiple Billing Codes: Hospitalist billing requires the use of a wide range of codes, including ICD-10, CPT, and HCPCS codes for diagnoses and procedures, as well as revenue codes. Revenue codes, used on forms like the UB-04 or CMS-1450, specify where and when treatments occurred or what equipment was used. Claims must include both valid procedure and revenue codes to be processed accurately.
- Inpatient vs. Outpatient Services: Billing and coding differ for inpatient and outpatient services, with each setting following distinct guidelines and code sets. Inpatient services are usually coded based on Medicare Severity-Diagnosis Related Groups (MS-DRGs), with principal and secondary diagnoses and procedures affecting the MS-DRG and reimbursement. Additionally, hospitals often have internal protocols to follow for accurate coding.
- Reimbursement Challenges: Hospitalists face several unique reimbursement challenges. Hospitals deal with a large number of insurers, each with their own rules, which adds complexity to the billing process. This is especially true for private insurers who may have different requirements from Medicare and Medicaid. Moreover, while Medicare payments are standardized, the benefits and reimbursements can vary by the patient’s state of residence. Hospitals also provide uncompensated care. The American Hospital Association (AHA) has reported that uncompensated care accounts for around 6% of the average hospital’s costs. This includes both charity care (free services) and bad debt (services for which payment is not received).
Due to these reasons, hospital billing requires careful attention to coding, payer requirements, and regulations to ensure accurate reimbursement.
Strategies to Support Accurate Billing of Hospital Services
- Understand Evaluation and Management (E/M) codes: Hospitalist billing primarily utilizes Evaluation and Management (E/M) codes specific to hospital settings. In 2021, the American Medical Association (AMA) and the Centers for Medicare & Medicaid Services (CMS) implemented new rules for coding E/M office visits. In 2023, similar revisions were made to coding E/M office visits in hospitals and nursing homes.
E/M Coding for Hospital Visits
Effective January 1, 2023, the requirements for history and physical examination were removed for coding hospital and nursing home visits. Similar to office visits, coding for these services depends exclusively on medical decision making (MDM) or total time. However, there are two exceptions: emergency department (ED) visits are still coded based on MDM and hospital discharge visits should be coded based on time.
Hospital and nursing home E/M visits fall into three categories: initial services (admissions), subsequent services, and discharge services. The E/M codes specific to hospital settings include:
99221-99223 – Initial hospital care: These codes are used to report the first hospital inpatient encounter with a patient by the admitting physician. They are used for initial hospital care and can only be reported once per day.
According to the American Medical Association (AMA), initial visits are when a patient has not previously received professional services from the physician or another healthcare provider of the same specialty and group during the inpatient, observation, or nursing facility stay. After that first visit, all other visits are classified as subsequent until the discharge. When the patient moves from inpatient to observation, or vice versa, that does not begin a new stay eligible for an initial services visit.
99231-99233 – Subsequent hospital visits: These codes are used to report subsequent hospital inpatient or observation care. They indicate the level of MDM for each day of care:
99231: Straightforward or low medical decision making
99232: Moderate medical decision making
99233: High-level medical decision making
99238-99239 – Discharge services. These codes are utilized to document the time a physician or other qualified health professional (QHP) spends on the day of a patient’s discharge from a hospital or observation facility. These codes specifically apply to face-to-face E/M services that include:
- Final examination of the patient
- Discussion of the hospital stay
- Instructions for continuing care
- Preparation of discharge records, prescriptions, and referral forms
Codes 99238-99239 are reported on the date of the physician’s visit, even if the patient is discharged on a different day. Proper assignment of these codes is essential to report the complexity of the patient’s condition, the time spent, and the decision-making involved.
Points to Note
- For patients admitted and discharged on the same day, use CPT codes 99234-99236. For multi-day stays, initial services are coded with 99221-99223, subsequent visits with 99231-99233, and discharge services with 99238-99239. For nursing home visits, initial services use codes 99304-99306.
- Annual nursing home exams are included under subsequent visit codes 99307-99310.
- While the MDM and Time requirements are the same for Initial Hospital Inpatient vs. Observation when using the 99221-99233 code set, code selection depends on the patient’s “status”. Hospitals can append modifier 27 to the second and subsequent E/M code to indicate that the E/M service is a “separate and distinct E/M encounter” from the service previously provided that same day in the same or different hospital setting. If the initial inpatient service in the hospital is a consultative service, the admitting physician should report it using a Subsequent Hospital Visit Code, 99231-99233.
This standardized coding system enables physicians to easily code most visits based on total time spent. However, there are key differences to note, such as total time spent after midnight being countable for hospital E/M visits, but not for office E/M visits.
- Ensure precise documentation of diagnosis: Hospitalists should focus on clear, concise, and accurate documentation that reflects the patient’s condition and care plan. The documentation should provide clinically valid information for other caregivers. Fraudulent practices, such as documenting invalid diagnoses to increase the severity of illness and improve DRG (Diagnosis-Related Group) classification, must be avoided. If a diagnosis is uncertain at discharge (e.g., “probable,” “suspected,” “likely”), it should still be coded as if confirmed, provided it is supported by clinical suspicion and evidence.
- Report specific diagnosis codes: Physicians should document the most specific diagnosis possible, and coders should assign diagnosis codes to the highest level of specificity. Specificity in diagnosis coding is critical for proper reimbursement, as payers base payments on detailed, accurate codes. Coders should also review clinical documentation and supporting data, like imaging reports, to derive more specific codes if needed.
- Document medical necessity for diagnostic tests: Hospitalists must ensure that all diagnostic tests are supported by documentation of medical necessity. This includes maintaining records of test orders, lab results, imaging reports, and case discussions with other providers. Diagnostic test orders should be properly signed, dated, and include specific diagnoses. Accurate documentation helps avoid overpayments and minimizes denials from Medicare and other payers.
- Stay current with payer rules: Payer rules frequently change, so it’s important for hospitalists and billing teams to stay updated. CMS regularly updates its guidelines, and other payers often provide notifications through their websites. Keeping track of policy changes is especially important for high-cost or high-volume services to avoid claim denials.
Partner with a Skilled Medical Billing Company
Expert support can greatly improve hospital revenue cycle management. Outsourcing to a specialized medical billing and coding company ensures hospitalists have dedicated professionals who accurately bill all services with the correct codes. These teams stay current with industry and payer regulations, ensuring compliance. When documentation is unclear, incomplete, or inconsistent, skilled coders work closely with physicians to clarify and assign the most accurate codes. This collaboration is key to achieving proper reimbursement and enhancing financial performance.
Don’t miss out on accurate and timely reimbursements for hospital medical services!
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