NGS statement on billing condition code 44
We have received many questions on the articles we have published on the counting of hours of observation in cases where condition code 44 is used to convert an inpatient to an outpatient after UR review. A couple weeks ago I wrote about this issue following contact by a National Government Services representative, encouraging providers to contact their local MAC for more information.
I recently received some further clarification from National Government Services and wanted to update you. As you know, I’ve advised that hospitals should not be counting the time between the inpatient order and the change to outpatient status as observation – rather, I said, the observation time should begin with the change in status to outpatient when the observation order is written (assuming the appropriate level of care). NGS’ recent clarification, confirmed to me in an email exchange, is as follows:
As you are aware, the recent regulation changes resulted in many questions. We received confirmation from our CMS representative that indeed, a written order for observation status is required and that the inpatient stay can not be converted to observation time when CC 44 is applicable. If the physician (or UR committee in conjunction with the physician) deems the patient meets observation criteria after conversion to outpatient status, then observation time may be billed if the level of care is met. But observation time would begin when the order is written; and the previous (although incorrect) inpatient time could not be billed as observation. The services rendered while the patient was placed in inpatient status would be billed as outpatient services, but no observation time could be billed.
NGS is relying on their CMS central office contact for this clarification and not just their individual interpretation. Therefore, if any of you have received conflicting advice from your MAC, I would encourage you to provide them with this information and continue to use caution in billing any hours of observation without a proper order for observation services.
Editor’s note: This article was written by Kimberly Anderwood Hoy, the director of Medicare and regulatory compliance for HCPro. It was originally published on the MedicareMentor blog. Read the original post here.
About the Author: Julie works in the case management market at HCPro, Inc. She works on all of HCPro’s product lines for case managers including books, audio conferences, journals, videos and an eNewsletter. To contact her with questions, comments, or to be a blog writer, email jmcginley@hcpro.com.
Stefani | Jul 23, 2009 | Reply
I am concerned about the implication that case managers should be ‘counting’ the hours of obs time for billing purposes. I believe that finance is responsible for billing activities and the case managers – or better yet, the UR specialists – are responsible for progression-of-care management. If the UR specialist and the CM recognize that the patient does not require acute level of care, then they certainly should negotiate with the physician and alert finance of the impending change. Taking on this billing activity will inevitably lead to other ‘monkey management’ activities to reduce the business office load. I don’t think the CM team really wants to go there…..they have enough to do as it is.
Julie McGinley | Jul 23, 2009 | Reply
Stefani, thanks for your comment. I would gladly post a blog from you about case management models. Anytime you want, just let me know.
Rita McCarty | Jul 24, 2009 | Reply
The Medicare Manual states the entire episode of care should be billed as an outpatient under condition code 44. That is why many hospitals are making the effective date the time of the admission with the condition code attached to the claim. The medical necessity supports observation level of care instead of inpatient. Did NGS state who specifically at CMS provided this information? Perhaps the definition of observation is being confused with the condition code 44. Observation is an outpatient service. Just something to consider. Thank you.
Lisa Farrar | Aug 12, 2009 | Reply
I also have the same question. The Medicare Regs specifically state the whole episode should be billed OP.
“When the hospital has determined that it may submit an outpatient claim according to the conditions described above, the entire episode of care should be billed as an outpatient episode of care.” from the Medicare manual.