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How to bill for initial inpatient services


Understand the changes for 2010 in billing for inpatient services and how to bill for pulse oximetry.

Q: What are the changes for 2010 in how we bill initial inpatient services?

A: Effective January 1, several changes were implemented for initial inpatient care codes (99221–99223) and initial nursing facility care codes (99304–99306).

The required elements for initial inpatient codes, however, are dramatically different than those for subsequent inpatient codes, so be sure to double-check that you are meeting the code requirements.

Also, the admitting/attending physician is required to append the "AI" modifier to the initial hospital care or initial nursing facility care code to identify himself or herself as the admitting physician who is overseeing the patient's care.


Q: Why are we having a hard time getting paid for the pulse oximetry code (94760) when we bill it with an office visit?

A: Medicare and many commercial carriers won't pay for the pulse oximetry codes 94760 (noninvasive ear or pulse oximetry for oxygen saturation; single determination) or 94761 (multiple determinations [for example, during exercise]) when billed in conjunction with evaluation/management (E/M) or other services.

Although the CPT guidelines allow separate coding of diagnostic tests ordered/interpreted during a patient E/M encounter (subsection "Levels of E/M Services" in the E/M Services Guidelines), Medicare ruled in 1999 that pulse oximetry is no more difficult than taking a patient's temperature and should be reflected as such. As a result, it is included in any E/M code submitted.

Medicare gives codes 94760–94761 a payment status of "T," which means they're bundled into any procedure or visit performed on the same day. This fact means that you cannot bill the pulse oximetry codes when any other code is billed for that date of service.

When no other service is provided on that day, you can bill pulse oximetry alone, but you'll still need to make sure your documentation supports medical necessity. Medicare will allow payment for oximetry when accompanied by an appropriate ICD-9-CM code for a pulmonary disease, which is commonly associated with oxygen desaturation.

Medically necessary reasons for pulse oximetry:

1. A patient exhibits signs or symptoms of acute respiratory dysfunction.

2. A patient has chronic lung disease, severe cardiopulmonary disease, or neuromuscular disease involving the muscles of respiration, and oximetry is needed for at least one of the following reasons:

3. A patient has sustained severe multiple trauma or complains of acute severe chest pain.

4. A patient is under treatment with a medication with known pulmonary toxicity, and oximetry is medically necessary to monitor for potential adverse effects.

The author is a compliance manager for Baptist Medical Associates in Louisville, Kentucky. Have a coding or managed care question for our experts? Send it to

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Jennifer N. Lee, MD, FAAFP
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