Found a solution:
Turn off BT, then go into BT scanning settings and disable BT scanning. Then turn BT back on, and you can select Phone Audio.
See here
https://forums.lenovo.com/t5/Moto-G4-Moto-G4-Plus-Moto-G4/Bluetooth-will-NOT-let-me-select-quot-Phone-Audio-quot-when/m-p/3577838#M17926