All Entries Tagged With: "condition code 44"
CMS says providers cannot use condition code 44 to backdate observation services
CMS issued a transmittal that explicitly states providers may not use condition code 44 to retroactively bill for observation services that the hospital provided prior to the physician’s order to change the patient from inpatient to observation.
The transmittal does not change the requirements providers must meet when applying condition code 44. It reiterates Medicare billing rules, which state that providers may not bill for observation services that occur prior to the physician’s order.
The new language is as follows:
When Condition Code 44 is appropriately used, the hospital reports on the outpatient bill the services that were ordered and provided to the patient for the entire patient encounter. However, in accordance with the general Medicare requirements for services furnished to beneficiaries and billed to Medicare, even in Condition Code 44 situations, hospitals may not report observation services using HCPCS code G0378 (Hospital observation service, per hour) for observation services furnished during a hospital encounter prior to a physician’s order for observation services. Medicare does not permit retroactive orders or the inference of physician orders. Like all hospital outpatient services, observation services must be ordered by a physician. The clock time begins at the time that observation services are initiated in accordance with a physician’s order.
While hospitals may not report observation services under HCPCS code G0378 for the time period during the hospital encounter prior to a physician’s order for observation services, in Condition Code 44 situations, as for all other hospital outpatient encounters, hospitals may include charges on the outpatient claim for the costs of all hospital resources utilized in the care of the patient during the entire encounter. For example, a beneficiary is admitted as an inpatient and receives 12 hours of monitoring and nursing care, at which point the hospital changes the status of the beneficiary from inpatient to outpatient and the physician orders observation services, with all criteria for billing under Condition Code 44 being met. On the outpatient claim on an uncoded line with revenue code 0762, the hospital could bill for the 12 hours of monitoring and nursing care that were provided prior to the change in status and the physician order for observation services, in addition to billing HCPCS code G0378 for the observation services that followed the change in status and physician order for observation services. For other rules related to billing and payment of observation services, see Chapter 4, §290 of this manual, and Chapter 6, §20.6 of the Medicare Benefit Policy Manual, Pub. 100-02.
Whether condition code 44 allows facilities to backdate observation services has been a contentious debate on case management blogs, listservs, and message boards. This transmittal may finally end the backdating debate amongst providers, says Sandra McCune BSN, RN, utilization management specialist at Lakeland Regional Health System in St. Joseph, MI. “Finally, a clarification in language we can all understand!”
The transmittal also confirms that hospitals may report outpatient nursing charges and other services that occurred while the patient was incorrectly an inpatient, even though Medicare won’t pay for them, McCune says. “It is important that claims reflect all of our costs,” she adds.
Using condition code 44 when physicians don’t agree
Soon after I read Transmittal 299, CR 3444, I spoke with the hospital’s medical director about creating a process to use Condition Code 44. He was intrigued, but as a physician he knew it would cause challenges for our medical staff.
We educated the medical staff about Condition Code 44’s meaning and carefully implemented a successful protocol. I won’t say that admitting physicians were happy when we approached them about changing patient status, but at least they understood why.
When I mention Condition Code 44 to compliance colleagues, they generally cringe and try to avoid discussing it. The culture in their institutions can evoke empathy. However, with increased scrutiny by Recovery Audit Contractors (RAC), Medicare Administrative Contractors (MAC), and Medicaid Integrity Contractors (MIC), we should revisit Condition Code 44 requirements.
Revision to Condition Code 44 instructions
During August 2009, CMS updated information (Medicare Claims Processing Manual, Chapter 1-General Billing Requirements, 50.3.1, Rev. 1803, Issued: 08-28-09, Effective: 10-01-09, Implementation 10-05-09) to help providers understand appropriate application of Condition Code 44:
“The conditions for the use of Condition Code 44, as stated in section 50.3.2 below, require physician concurrence with the UR committee decision. For Condition Code 44 decisions, in accordance with 42 CFR §482.30(d)(1), one physician member of the UR committee may make the determination for the committee that the inpatient admission is not medically necessary. This physician member of the UR committee must be a different person from the concurring physician, who is the physician responsible for the care of the patient”
Accurate use of Condition Code 44 assumes that a hospital has a utilization review (UR) plan. CMS reminds providers that:
“The hospital must ensure that all the UR activities, including the review of medical necessity of hospital admissions and continued stays are fulfilled as described in 42 CFR §482.30. The CoP standards in 42 C.F.R. §482.30 of the regulations are comprehensive and broadly applicable with regard to the medical necessity of admissions to the hospital and continued inpatient stays.”
Condition code 44 is a gift from CMS. Providers use it weekends, late at night, and other times when case management can’t review an admission in a timely fashion. CMS assumes that all Medicare admissions are reviewed before discharge and that Condition Code 44 is invoked when an admission doesn’t meet inpatient criteria.
Documenting disagreements
In order to use condition code 44, a UR physician must determine that an inpatient admission does not meet hospital criteria. The attending physician must agree that the patient status can be changed to outpatient while the patient is still in-house and before a claim is submitted.
If the attending physician does not agree with the change, the hospital may submit a 12x bill for covered ‘Part B Only’ services. Medicare may still pay for certain Part B services when an inpatient admission is not medically necessary.
When creating your Condition Code 44 protocol, consider how to proceed when the attending and UR physician do not agree on patient status. In my experience, a Part B claim for medically unnecessary admission that does not include the condition code 44 assignment may trigger an audit. In these instances, it is important that the UR physician and the attending physician clearly document their findings during the review process. CMS warns:
“Entries in the medical record cannot be expunged or deleted and must be retained in their original form. Therefore, all orders and all entries related to the inpatient admission must be retained in the record in their original form. If a patient’s status changes in accordance with the requirements for use of Condition Code 44, the change must be fully documented in the medical record, complete with orders and notes that indicate why the change was made, the care that was furnished to the beneficiary, and the participants in making the decision to change the patient’s status.”
It may be advantageous for your UR physician to document the specific criteria used to inform his or her decision. The UR physician should also be available to answer any questions the attending physician may have. The attending physician should note in the chart that UR physician offered the criteria and that the attending physician reviewed it. The attending physician should then document the outcome of that act.
It may also be useful to review your observation services policies with the attending physician who may not be as familiar with patient status assignment.
Listen to expert interpretation of Condition Code 44 regulations
Condition code 44 is one of those topics that never goes away.
- Can we use condition code 44 if the physician has already written the discharge order?
- Can we use condition code 44 if the attending physician doesn’t concur with the utilization review committee?
- Can we use condition code 44 to change inpatient time to observation services?
For whatever reason questions like these continue to come up. Perhaps it’s the vaguely-worded regulation or the conflicting advice found on the internet. Whatever it is, people are confused.
We at HCPro were thinking that because condition code 44 is such a contentious and confusing topic perhaps a written article is not the best way to explain it. That’s why we decided to call in the experts (Kimberly Anderwood Hoy, JD, CPC, the director of Medicare and compliance for HCPro, Inc and Sandra McCune BSN, RN utilization management specialist) for a 90-minute audioconference that will hopefully put all your condition code 44 concerns to bed.
How and McCune will share their interpretation of the rule using the official guidance provided by CMS. The program includes a 30-minute question and answer portion that will give you the chance to get your burning condition code 44 question addressed by our experts.
Take a listen to the following audio clip I recorded with Kimberly Hoy. In it, she explains why it is important for folks to listen to the program and highlights some of the important information the audience will take away.
If you like what you hear head over to the HCMarketplace and sign up for the program, Condition Code 44 and the Utilization Review Committee: Ensure Process and Documentation Compliance.
Lessons learned at the Case Management Administrator Intensive Workshop
This week I took the opportunity to learn more about the case management profession and get a sense of what issues case management administrators are struggling with. I spent Monday and Tuesday of this week attending The Center for Case Management’s Case Management Administrator Intensive Workshop in Boston. It was two info-packed days and at the end I emerged from the convention center with enough story ideas to get me through to next spring.
Here are a few quick nuggets of wisdom I took from the workshop:
- The group at the workshop represented a great cross section of the national case management scene, which made for a well-rounded discussion. There were representatives from small non-profit facilities and large hospital systems. Some flew in from the west coast, others drove up the east coast, and one case manager even made the trek from Taiwan.
- The attendees had a laundry list of issues they struggle with everyday including:
- Creating data dashboards
- Recruiting and retaining staff in a tough economy
- Structuring transfer agreements
- Creating a utilization review committee
- Using condition code 44
- Defining case management and social worker roles
- Karen Zander RN, MS, CMAC, FAAN, principal and co-owner of the Center for Case Management had a great simile for case managers. She called them the immune system of the hospital. Much like the immune system, case managers typically keep all the hospital’s functions working properly while going relatively unnoticed. However, when the hospital gets sick (e.g. denials increase, patient satisfaction goes down, readmissions go up, etc.) they quickly come to the forefront.
- Tina Davis, RN, MS, CNS, CMAC, said “The RAC solution is in case management.” What she meant is that a strong case management program can prevent many of the issues RACs commonly search for including medical necessity, level of care, condition code 44, proper MS-DRGs, and readmissions.
- Kathleen Bower, DNSc, RN, FAAN co-owner of the Center for Case Management urged the attendees to make case management a data driven department. Data supports what the case management department does for the hospital’s bottom line. With data, case management administrators can negotiate more resources for the department, assess new policies and practices, and demonstrate the value of the department.
- Bonnie Geld, MSW, advised that case managers should not limit their knowledge of a case to what is on the record. Geld said case managers should “go see, touch, smell, and speak to the patient.” Taking the time to interact with a patient early and often can help develop a discharge plan that takes into account the patient’s family, economic, and mental status.
Condition code 44 – The continuing saga
On August 28, CMS issued Medicare Claims Processing Manual (MCPM) transmittal 1803, which is the October 2009 update to the Outpatient Prospective Payment System (OPPS). CMS included minor revisions to those sections of Chapter 1 of the MCPM that relate to condition code 44.
As you will recall, condition code 44 is used when a patient’s initial inpatient status is successfully changed to outpatient for purposes of billing and payment. This generally occurs when case management and other utilization review personnel were not available (weekends and holidays) at the time that the admission decision was made, and it is later determined that the patient does not meet Medicare’s inpatient guidelines. Condition code 44 is reported on the subsequent outpatient (013X) type of bill that is submitted to recover for the services provided in the inpatient setting.
Those inpatient services are covered and reimbursed on the same terms and conditions as if they actually had been provided in the outpatient setting, so long as all of the following criteria are met:
- The decision to change status must be made by the hospital’s “utilization review committee” (UR committee). One “member” of the UR committee can make the decision, with the attending physician’s agreement; in all other cases, the decision must be made by at least two “members.” The change in status must be made prior to discharge or release of the patient and before the hospital has submitted a claim for the inpatient admission;
- A physician must concur with the decision;
- The physician’s concurrence must be documented in the patient’s medical record; and
- The UR committee must provide written notice to the hospital, the patient and the patient’s physician within two days (but not later than the patient’s discharge or release from the hospital) of the change and its impact on the patient, including financial liability for applicable deductible and coinsurance amounts.
In the transmittal issued on August 28, CMS stated that although one physician member of the UR committee is empowered to make the decision to change status, the physician member who makes the decision must be different from the concurring physician, who is the physician responsible for the care of the patient. Based upon this most recent statement, it is not clear what the effect would be if the physician responsible for the care of the patient did not concur with the change in status.
The regulations that set out the hospital’s conditions of participation (CoP), which call for the establishment of a UR committee, along with the scope of its responsibility and authority (including change of status), indicate that, in all other circumstances, the change in status decision must be made by two members of the UR committee. Presumably, this is the procedure that a hospital should follow if it were unable to obtain the agreement of the patient’s physician to change the status of care from inpatient to outpatient.
Hospitals are encouraged to have at least two signatures on the documentation for the change in status: (1) when the attending physician concurs, signatures of both the attending physician and the physician member of the UR committee who made the change in status decision; or (2) when the attending physician does not concur, signatures of the two physician members of the UR committee who made the decision to change status.
Hospitals are also encouraged to confirm with their FI/MAC that the process as outlined above, particularly when the patient’s physician does not concur, meets the requirements of a condition code 44 change in status.
Editor’s note: This article was written by Judith Kares, an, instructor for HCPro’s Medicare Boot Camp – Hospital Version. It was originally published on the MedicareMentor blog. Read the original post here.
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.
Manual changes related to condition code 44
I’d like to turn my attention to the manual changes related to condition code 44, as promised. Overall, the changes were designed to incorporate discussion and FAQs that were previously published in MLN Matters Article SE0622. In this respect, the changes to the manual have very few surprises. Almost everything added came directly from SE0622 and nothing added was really anything new. With that said, however, I do think that hospital case managers and anyone involved in condition code 44 cases or billing for cases with changed status should review the changes carefully to be sure they are following all the guidance provided.
One of the disappointing things about the changes is that they did not address the issue of whether the period of time from the inpatient order up to the time the patient is changed to outpatient and the observation order is written can be billed as observation time. The language stating that the entire episode of care should be billed as outpatient remains unchanged and nothing was added to clarify it. However, if we carefully consider the other changes made to the observation sections, I think we can discern that CMS does not mean for these hours of care to be billed as observation.
The statement that the entire episode be billed as outpatient would seem to be saying that any service that was rendered during the episode of care should be billed under the outpatient billing, coding and coverage rules. For instance, if the patient had an x-ray during the time prior to being changed to an outpatient, this x-ray would be billed on a revenue code line with a HCPCS code, in accordance with any outpatient edits and policies that might exist. An order for the x-ray would be required and it would be subject to the outpatient medical necessity coverage rules like any other outpatient x-ray.
Applying this same analysis to the observation services, they would be billed as outpatient services on a revenue code line for observation with the appropriate observation HCPCS code. To be billed to Medicare they would have to meet all the coverage and billing requirements, just like the x-ray. This is where the new changes to the observation section of the manual perhaps add a bit of clarity, though the issue is still not crystal clear. The revisions to Claims Processing Manual, Chapter 4 § 290.4.1, indicate that G0378 is used when observation services are “ordered and provided”, with the word “ordered” added. Additionally, revisions to Claims Processing Manual, Chapter 4 § 290.2.2 indicates that time is calculated from when the services are initiated in accordance with the physician’s order. Both of these changes emphasize that an order is required for the observation services to be billed, and seem to indicate that order must be received before time for the services can be counted. [more]
Condition Code 44 question
The following question comes from Debbie Love, RN, a Case Management Weekly reader.
Question regarding Condition Code 44:
Are you aware of anyone who already has a “Condition Code 44 form” prepared/template which outlines the requirements and signatures, and, once signed, would be provided to the patient?
We are considering either a patient instruction handout on what observation means that would be provided to the patient along with a signed document by UR MD, patient’s PMD, and another member of our UR Committee (such as our director of case management) or a combined “Condition Code 44 form” which includes a brief explanation of observation and its financial implications for the patient (along with all the signatures.)
We do not have a UR Case Manager in our ED, and are finding this difficult to explain once a patient has already been admitted to a bed on a clinical unit. Is there anyone else having this same issue, and if so, how are you handling this?
Thank you,
Debbie Love, RN
Compliance and Training, Project Specialist
Sibley Hospital
dlove@sibley.org
