Correctly Apply Subsequent Codes in 2023

In September 2022, the American Medical Association released the revised E/M guidelines for 2023, bringing the 2021 Guidelines in alignment with other code sets for Evaluation and Management Services. This is part of their ongoing effort to reduce physician documentation burdens.

On November 1st CMS released their Final Rule in the CMS-1770-F for revisions to Payment Policies under the Medicare Physician Fee Schedule Quality Payment Program for 2023. This lays out their response to the 2023 Evaluation and Management guidelines. While they generally agree and will adopt the majority of the code changes and guideline revisions, they have chosen to retain several of their current policies that they feel conflict with the 2023 Revisions from the AMA.

For subsequent care service codes 99231-99233, prior to these revisions were largely used to report services during an inpatient stay that were performed on calendar days subsequent to the day of admission. They were also permitted by CMS and other third-party payers to reflect work done, where documentation was insufficient to report an admission code or consultation service with 99221-99223.

The AMA revisions in 2023 have been revised to delete Observation subsequent codes and bundle Inpatient and Observation subsequent care codes to 99231-99233.


CPT® Evaluation and Management (E/M) Code and Guideline Changes Effective January 1, 2023- CPT® is a registered trademark of the Amerian Medical Association

As we can see in the revised descriptors it states per day and can be chosen based on Medical Decision Making or Time. CMS has agreed to adopt these changes while retaining some of its policies regarding the site of care and additional services provided on the same date.

The revised guidelines from AMA stated that:

“When the patient is admitted to the hospital as an inpatient or to observation status in the course of an encounter in another site of service (eg, hospital emergency department, office, nursing facility), the services in the initial site may be separately reported. Modifier 25 may be added to the other evaluation and management service to indicate a significant, separately identifiable service by the same physician or other qualified health care professional was performed on the same date

Tip: Modifier 25 should be appended to the initial service, and not the Inpatient/Observation service.This of course will conflict with the policy CMS stated in the Final rule to retain.

According to the Medicare Claims Processing Manual, IOM 100-04, Chapter 12, section, “when a patient is admitted to outpatient observation or as a hospital inpatient via another site of service (such as, hospital ED, office, nursing facility), all services provided by the practitioner in conjunction with that admission are considered part of the initial hospital inpatient or observation care when performed on the same date as the admission

The proper use of codes 99231- 99233 has been further clarified in both the AMA revisions and CMS final rule where the 2023 revisions state that:

“In the case when the services in a separate site are reported and the initial inpatient or observation care service is a consultation service, do not report 99221, 99222, 99223, 99252, 99253, 99254, 99255. The consultant reports the subsequent hospital inpatient or observation care codes 99231, 99232, and 99233 for the second service on the same date

There has been confusion surrounding this revision, and many were concerned that all hospital consults would now have to be billed with 99231-99233 based on the wording in the revised guidelines, but after reviewing the CMS final rule interpretation it becomes clear that the use of 99231-99233 is used when a physician on the same day sees a patient and places them in another site. They may at times have to go from Observation to admission during the stay, and once they admit them, instead of billing an admit code 99221-99223, they will be instructed to report a subsequent code 99231-99233.

You will want to keep in mind that this is what was intended in the AMA revisions regarding consulting physicians seeing the patient on the same date. They are not the ones admitting the patient so if they saw them on the same date and then see them again at the next site, on the same day, the correct reporting will be 99231-99233, which would make sense.

There are, however, situations where a provider will see a patient in one site and will bill an office visit perhaps as a consultant. Then on a separate calendar date, the admission is required, and CMS has instructed in the Final rule that this will mean they are to bill subsequent care codes 99231-99233 for the second visit on the separate calendar date. The following example refers to situations where the first visit is related to an admission. 

If a patient is seen on April 1 at 5 pm and then the admission takes place at 7 am on April 2, then CMS will allow both services to be billed.”- Final Rule 2023 Page 591

Since CMS does retain its policy for one admit per stay, this will at times conflict with AMA instructions as we have seen in the revisions, including prolonged services.

Always consult your third-party payer claim processing manual to ensure proper payment and decrease any delays in payment. There are many other scenarios discussed in the Final Rule on pages 590-598.