Is this a Medicare Patient? Medicare requires the patient be inpatient for a minimum of eight hours before they will consider an observation stay under medical necessity. 99217 really doesn't have too many rules attached to it like no time limits to meet.
Also you should be using POS 22 if they were admitted under Observation. 99217 really doesn't have too many rules attached to it like no time limits to meet.
The visit, like all E&M visits, must be a face-to-face encounter, but there are no time limits you have to meet and no specific crazy rules like most other E/M codes. You just discharge the patient and bill the CPT 99217 observation discharge code.