99220: Initial Observation Care - Final Results of Service Specific Prepayment Review HI, NV, AS, GU, NMI

In order to fulfill our contractual obligation with the CMS, Noridian Healthcare Solutions, LLC, performs prepayment claim review in accordance with CMS Internet Only Manual (IOM), Publication 100-08, Medicare Program Integrity Manual, Chapter 3.

This article is to update providers of the quarterly edit effectiveness results of a Service Specific Targeted Review on claims for the following procedure code(s):

  • CPT ® 99220 – Initial observation care, per day, for the evaluation and management of a patient, which requires these 3 key components: A comprehensive history; A comprehensive examination; and Medical decision making of high complexity. Counseling and/or coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the problem(s) requiring admission to "observation status" are of high severity. Typically, 70 minutes are spent at the bedside and on the patient's hospital floor or unit.

Summary of Findings

Findings of claims reviewed from March 15, 2017 through June 13, 2017 are as follows:

  • 192 Claims Reviewed
  • 7 Claims Paid
  • 185 Claims Corrected or Denied
  • 85.63% Error Rate

The error rate is calculated by dividing the dollar amount of charges billed in error (minus any confirmed under-billed charges) by the total amount of charges for services medically reviewed.

If providers disagree with a claim determination, the normal Appeal process may be followed as directed in your claim Remittance Advice (RA).

Going Forward

Based on the results of this review, Noridian will discontinue with the Prepayment Service Specific Review.

Top Denial Reasons

Noridian is only required to give a high-level determination of the claims reviewed. Individual claim determinations can be found on your Remittance Advice (RA). If you have any questions, contact the Provider Contact Center.

Failure to submit documentation

  • Documentation was not submitted to support the claims submitted to Medicare by the time frame indicated in the Automated Development Letter (ADS). If documentation is not received by Noridian by day 45, the claim will automatically deny. The time frame for submission of documentation is detailed in the ADS letter. Noridian MR cannot give extensions for submitting documentation. Submit documentation to support services billed to Medicare. Failure to submit documentation results in a denial of the claim.

Observation Criteria Not Met

  • The service was denied because the necessary documentation to support observations services was not submitted. Specifically, the order for admission, or documentation stating the stay for observation care or inpatient hospital care involves 8 hours, but less than 24 hours.

Service Not Supported

  • The service was correct coded to another level of service because the documentation did not support the key elements and/or reasonable necessity of the code billed.

Educational Resources and References

The CMS regulations related to this service are available at:

Noridian references are available at:

Additional information, educational opportunities and training tools related to this service are available on our Education and Outreach page.

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