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Inpatient Hospital Care E/M Services

Inpatient hospital evaluation and management (E/M) services describe the physician or qualified health care professional work involved in evaluating and managing patients during a hospital stay. Medicare reimbursement policies for these services are outlined in the Medicare Claims Processing Manual, while code selection is based on current CPT E/M guidelines. 

Initial inpatient or observation care services are reported with codes 99221-99223. Code selection is based on either medical decision making (MDM) or total physician/nonphysician practitioner time on the date of the encounter. History and examination are performed as clinically indicated but are not used to determine the level of service.

E/M Code Selection

E/M code selection involves two distinct steps.

Step 1: Select the E/M Category

Before selecting a level of service, providers must determine:

  • Patient status
  • Place of service
  • Type of encounter

Examples include:

  • Office or outpatient services
  • Emergency department services
  • Initial hospital inpatient or observation care
  • Subsequent hospital inpatient or observation care
  • Same-day admission and discharge services
  • Hospital discharge day management
  • Critical care services

Step 2: Select the Service Level

Under current CPT guidelines, most hospital E/M services are selected using:

  • Medical Decision Making (MDM), or
  • Time, when permitted by CPT guidelines

Initial Hospital Service

An initial hospital service occurs when the patient has not received professional services during the current stay from the physician or nonphysician practitioner (NPP), or another physician or NPP of the same specialty in the same group practice. 

The concept of a new or established patient does not apply to inpatient hospital care services. A practitioner may report an initial hospital care service even when there is a prior outpatient or office relationship with the patient. 

Initial Hospital Care and Multiple Providers

Medicare allows reimbursement for one initial hospital care service per patient, per admission, per specialty. Physicians and NPPs of the same specialty within the same group practice are considered a single physician for reimbursement purposes. When multiple practitioners of the same specialty participate in the admission process, the submitted service must represent the combined work performed. 

Separate initial hospital care services may be reported when physicians of different specialties are managing distinct aspects of the patient's care. 

Split (or Shared) E/M Visits

A split (or shared) visit is an E/M service performed jointly by a physician and a nonphysician practitioner (NPP) who are members of the same group practice in a facility setting. Medicare reimbursement is made to the practitioner who performed the substantive portion of the visit. 

Determining the Billing Practitioner

The substantive portion is determined by:

  • More than half of the total time spent by the physician and NPP performing the visit; or
  • A substantive part of the medical decision making (MDM) as defined by CPT E/M guidelines. 

When MDM is used to determine the substantive portion, the billing practitioner performs the substantive part of the MDM associated with the reported E/M service. Both practitioners may contribute to the encounter and the medical record identifies the participation of each practitioner. 

Reporting Split (or Shared) Visits

The practitioner who performed the substantive portion reports the E/M service. Split (or shared) E/M visits are reported with modifier FS (Split or Shared E/M Visit). 

Time-Based Services

Code selection for services based on time, the substantive portion is determined by more than half of the total time spent by the physician and NPP furnishing the service. 

Documentation Considerations

Documentation supports:

  • The participation of both the physician and NPP in the encounter.
  • The practitioner who performed the substantive portion of the visit.
  • Total time contributed by each practitioner when time is used for code selection.
  • The medical decision making performed by the billing practitioner when MDM is used to determine the substantive portion. 

Modifier AI (Principal Physician of Record)

Modifier AI identifies the principal physician of record during an inpatient hospital or nursing facility admission. The modifier is used to distinguish the physician who has overall responsibility for the patient's care from other physicians who may also furnish and report medically necessary initial E/M services during the same admission.

When to Report Modifier AI

The admitting or attending physician who oversees the patient's care appends modifier AI to the initial hospital care service reported with 99221-99223. Modifier AI is reported only on the initial hospital care service and is not reported on subsequent hospital care services. 

Examples include:

  • The attending physician reports 99221-99223 with modifier AI to identify themselves as the principal physician of record. 
  • A specialist who performs an initial evaluation during the same admission reports the an initial hospital care code without modifier AI. 

When Modifier AI Is Not Reported

Modifier AI is not reported:

  • By physicians who are not the admitting or attending physician responsible for the patient's overall care. 
  • On subsequent hospital care services (99231-99233). 
  • On procedure codes other than the applicable initial hospital care or initial nursing facility care codes. 

Effect on Claim Processing

Modifier AI is an informational modifier and does not affect reimbursement. Its purpose is to identify the principal physician of record and distinguish that physician's role from physicians furnishing specialty care during the admission. Reimbursement modifiers, when applicable, is reported before modifier AI. 

Documentation Considerations

The medical record must support the physician's role as the attending or admitting physician responsible for overseeing the patient's hospital care. Documentation must clearly reflect the practitioner's involvement in coordinating and managing the patient's overall treatment plan during the admission. 

Modifier AI Billing Example

Physician Specialty Service Reported
Hospitalist serving as attending physician Internal Medicine 99221-99223-AI
Consulting Cardiologist Cardiology 99221-99223
Consulting Nephrologist Nephrology 99221-99223

In this example, the hospitalist reports modifier AI because they serve as the principal physician of record. The consulting specialists report an initial hospital care service without modifier AI. 

Key Billing Consideration

The principal physician of record appends modifier AI to their initial hospital care service. Other physicians furnishing medically necessary specialty services during the same admission report the E/M code without modifier AI. 

Office Visits and Hospital Admissions

Office Visit on One Date, Admission on the Following Date

When a patient is evaluated in the office on one calendar date and admitted to the hospital on the next calendar date, Medicare allows both services to be reported, even when fewer than 24 hours have elapsed between the encounters. 

Office Visit and Admission on the Same Date

When the same physician performs an office visit and subsequently admits the patient to the hospital on the same date of service, the work associated with the admission is included in the initial hospital care service. In this situation, the physician reports an initial hospital care code rather than both the office E/M service and an initial hospital care service. 

Same-Day Admission and Discharge Services

Reporting depends on the length of stay and whether admission and discharge occur on the same calendar date.

Stay Less Than Eight Hours

When a patient is admitted and discharged on the same date and the stay is less than eight hours, report only the initial hospital or observation care code (99221-99223). A discharge day management service is not separately reported. 

Stay at Least Eight Hours but Less Than 24 Hours

When a patient is admitted and discharged on the same calendar date and the stay is at least eight hours but less than 24 hours, report codes 99234-99236, which include both admission and discharge services. 

Admission and Discharge on Different Calendar Dates

When admission and discharge occur on separate calendar dates, report the initial hospital care service (99221-99223) for the admission date and discharge day management code 99238 or 99239 for the discharge date. 

Subsequent Hospital Service

A subsequent hospital service occurs when the patient has already received professional services during the stay from the physician, NPP, or another physician or NPP of the same specialty in the same group practice. 

Reporting Subsequent Hospital Care

Subsequent inpatient or observation care services are reported with codes 99231-99233 and describe E/M services furnished after the initial hospital encounter during the same stay. 

Subsequent hospital care codes are per diem services and are reported once per day by the same physician or by physicians of the same specialty from the same group practice. When multiple physicians of the same specialty within the same group provide services on the same date, report the service based on the combined work furnished that day. 

Concurrent Care

Medicare may allow separate reimbursement when physicians of different specialties manage different conditions or different aspects of a patient's care and documentation supports each practitioner's role. There may also be circumstances in which concurrent care is reported by physicians of the same specialty. Documentation must support the medical necessity and distinct nature of each service. 

Same Specialty, Same Group Practice Considerations

For Medicare reimbursement purposes, physicians and NPPs of the same specialty in the same group practice are treated as a single physician. As a result, Medicare does not make separate reimbursement for multiple E/M services reported by the same specialty group on the same date for the same beneficiary. The submitted service represents the cumulative medically necessary work performed. 

Inpatient Dialysis and E/M Services

Subsequent hospital care codes 99231-99233 are included in reimbursement for inpatient dialysis services 90935-90947 when furnished on the same date of service. Separate reimbursement is not made for the E/M service in these circumstances. 

Documentation Considerations

Medical records serve as the foundation for demonstrating medical necessity, selecting the E/M category and service level, supporting Medicare payment, and supporting claims during medical review.

For Medicare beneficiaries, documentation must clearly communicate the patient's condition, the services provided, the physician's or qualified health care professional's (QHP's) clinical decision making, and the medical necessity of care. Insufficient, inconsistent, or incomplete documentation may affect Medicare payment and medical review outcomes.

Documentation must support:

  • The medical necessity of the service furnished. 
  • The reported level of service based on MDM or total time, when applicable. 
  • The physician's or NPP's involvement in the patient's evaluation and management. 
  • The role of each practitioner when multiple specialties are involved in the patient's care. 
  • The circumstances supporting admission, subsequent care, or discharge services. 

Key Billing Considerations

  • Initial hospital care services are reported with codes 99221-99223. 
  • Medicare pays one initial hospital care service per admission, per specialty. 
  • New and established patient designations do not apply to inpatient hospital E/M services. 
  • An office visit and a hospital admission occurring on different calendar dates may both be reported when supported by documentation. 
  • When an office visit and hospital admission occur on the same date and are performed by the same physician, the admission service includes the related work. 
  • Subsequent hospital care services are reported once per day by the same specialty within the same group practice. 
  • Certain E/M services are included in reimbursement for inpatient dialysis services when furnished on the same date. 

References