Patient Status: Hospital Inpatient vs. Observation

by  Jeanette Anderson, CPC, CPMA
February 12th, 2016

As an auditor, we must ensure that the documentation supports the selected use of codes for reimbursement. When auditing hospital encounters, the patient status serves as the basis for the code selection and therefore must be clearly documented. This ensures that the hospital is able to collect appropriate reimbursement.

During an audit review, particularly with the use of EMR (electronic medical record) templates, it's necessary to ensure there was a physician order for an inpatient admission, or likewise the appropriate observation status documents to select the appropriate category of codes. Sometimes as auditors, we will run across a default header on the note for a date of service, so it's very important to verify the actual patient status through other documentation found in the medical record.

The patient status needs to be looked at on a case by case basis and, depending on the hospital, there can be variation. Some hospitals have a designated area or unit for patients in 'observation' status while others do not. As a coder or auditor, the documentation for each case should be clear on each individual patient as to what their status is.

If the medical record documentation supports that the patient is in inpatient status and has an inpatient admission order, the appropriate category of codes would be as follows:

If the medical record documentation supports that the patient is in observation status for the given date of service, the appropriate category of codes would be as follows:

Additionally, there is an alternate group of CPT codes that covers both inpatient and observation statuses for an admission and discharge that occurred on the same day of service. This code range is 99234-99236. In conclusion, it's imperative to ensure that in a hospital encounter, the patient status is clearly defined and supported through documentation. Unclear representations of patient status can result in the use of the incorrect category of codes and in turn erroneous reimbursements to the hospital.

Patient Status: Hospital Inpatient vs. Observation. (2016, February 12). Find-A-Code Articles. Retrieved from

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