Denials for Initial Hospital Care and Observation E/M Codes: 2024

Question:

We are experiencing denials when we bill 99221-99223 and the place of service is observation (outpatient hospital).  Are we doing something wrong?

Answer:

You are billing correctly based on CPT 2023 guidelines for E/M that merged inpatient hospital encounters/codes with observation encounters/codes.  Unfortunately, some payor claims processing systems may not yet recognize these changes as they apply to billing.  You will have to appeal these denied claims, with CPT references showing the current guidelines for E/M reporting. 

*This response is based on the best information available as of 2/15/24.