All Entries Tagged With: "condition code 44"
Relief from Modifier GA denials and new Condition Code 44 Billing Guidance
There were two items of note this week that update issues we’ve previously reported on .
In a December 22, 2009, post, we discussed the significant problems CMS’ planned automatic denial of line items with modifier GA could create. CMS is now suspending this edit due to feedback it has received from providers.
As a reminder, modifier GA indicates an ABN has been provided to the patient for the item. CMS had issued transmittal instructions, effective April 1, 2010, for the institutional claims systems to automatically deny lines with modifier GA. However, this was problematic because a patient may have been given an ABN in error or before a covered diagnosis was discovered by the diagnostic test that was the subject of the ABN, causing an inappropriate denial.
The new denial for lines with GA did not allow the claims processing contractor to verify whether a diagnosis justifying the test was billed, but rather automatically denied the line, requiring an appeal by the patient. This was extremely problematic because the claim may be billed with a covered diagnosis code, but still have to be appealed by the patient.
CMS suspended the automatic denials, effective back to April 1, 2010. The implementation date is October 17, 2010, which means that the denial edits do not have to be corrected until that date. However, after that date, any claim regardless of date of service would not be subject to automatic denial because CMS backdated the effective date of the suspension of the denial to match the effective date the edit was put in place.
If providers established any workaround to ensure unnecessary GA modifiers were not billed to Medicare, often requiring multiple medical necessity checks for a single test, they may wish to review those policies in light of CMS’ suspension of these automatic denials.
The second item of note is long awaited guidance on billing for hours of monitoring and nursing care prior to an observation order being written, particular in a situation where condition code 44 applies. We have previously reported on this issue several times (see posts here, here, and here).
As you might recall, condition code 44 is used when a physician orders inpatient care and the hospital evaluates the case and determines it should have been outpatient and/or observation care and follows specific procedures to change the patient’s status to outpatient.
Earlier this year, in FAQ 9973, CMS made clear that providers could not report observation hours for the time before the patient’s status was changed to outpatient and an order for observation written. That same FAQ specified that providers could still include charges on the claim for these hours of hospital utilization of resources, they simply could not charge them as observation hours with HCPCS code G0378. However, the FAQ did not specify how providers should include these charges on their claims.
In the October OPPS quarterly update, CMS has now specified that the hours could be billed under revenue code 0762 (“Observation Hours”) without a HCPCS code. They also provided an example, with specific billing instructions.
New CMS FAQ addresses observation/condition code 44
CMS has posted a new FAQ related to our ongoing discussion of how to count hours of observation after going through the condition code 44 process:
How should the hospital report observation services when the patient’s status is changed from inpatient to outpatient using Condition Code 44? May the hospital report observation services from the beginning of the hospital outpatient encounter?
Update: Observation hours and condition code 44
Reader/commenter Sandra McCune (thank you Sandra!) has forwarded to us some new information regarding the counting of observation hours when using condition code 44.
As my colleagues Kimberly Hoy and Debbie Mackaman have noted previously on this blog, when an inpatient is converted to outpatient using the condition code 44 process, hospitals should count observation time beginning with the change in status rather than from the beginning of the entire stay, in accordance with the timing of the physician’s order. (See previous posts here, here, and here on the topic.)
Ms. McCune was able to contact CMS and present such a scenario for analysis. The CMS representative directed hospitals to Claims Processing Manual, Chapter 4, Section 290, explaining that:
Observation services are reported beginning at the clock time documented in the patient’s medical record, which coincides with the time observation services are initiated in accordance with a physician’s order for observation services. Medicare never allows for retroactive orders.
CMS met with contractors’ medical directors several months ago to clarify this policy. The CMS representative requested that hospitals contact CMS if their FIs or MACs are providing information contrary to this interpretation.
Physician Supervision for Recovery Room and Condition Code 44 Services
Providers should pay attention to two issues that were quietly discussed in the physician supervision section of the 2010 OPPS final rule released this week in the Federal Register. The applicability of physician supervision requirements to recovery room services and services billed on condition code 44 claims were both discussed in the comment and response section to the rule and have important implications for providers.
It seems that condition code 44 won’t go away. I would agree with some of the commenters on our blog that this just shouldn’t be that hard, but it seems like just when we have a handle on it, CMS throws something new in the mix. In the OPPS final rule, they indicated that each HCPCS code reported on an outpatient claim, including one billed with condition code 44, must comply with applicable requirements, including those for physician supervision.
At first glimpse, this wouldn’t seem hard. However, it presents a special problem for services on a claim with condition code 44 because some of these services were provided at a time when the patient was an inpatient, but are now being treated as outpatient services for billing purposes. And although inpatient is a higher level of care, there are no specific requirements for physician supervision for inpatients. On the other hand, outpatient services provided “in the hospital” must meet direct supervision requirements. Under the new regulations effective 2010, this means a physician must be on the same campus and close enough to be immediately available to intervene.
Therefore, when the services on a condition code 44 claim were initially provided, no particular level of supervision was required because they were inpatient services, but to bill them as outpatient services they must have been provided under direct supervision. This appears to put hospitals in an awkward position of having direct supervision on their inpatient floors in order to meet the supervision requirements should they have a service there that is or ends up being an outpatient service.
For some smaller hospitals, this may be problematic, particularly at night or on weekends. Even large institutions may find it difficult to meet this depending on the physical configuration of their campus and the location of their ED or other areas staffed by physicians, especially at night. Commenters brought up these difficulties in comments to the rule and CMS indicated it was their belief that hospitals have physicians available at all times while inpatient services are being provided–and if they found this was not the case they would consider future rule making on the level of supervision for inpatient services. This one seems to go in the “be careful what you wish for” file, because commenters were asking for looser supervision requirements for outpatients in hospitals based on the current lack of requirements for inpatients, and instead we may end up with supervision requirements for inpatient services too.
There may be a similar problem related to CMS’ comments about a part of the regulation that requires physician supervision “throughout the performance of the procedure.” CMS specified that this would include all covered components of the service or procedure, including recovery room services, even if the hospital receives no separate payment for them because they are packaged for payment purposes.
Again, at first glance, this shouldn’t be a problem for most procedures. However, some hospitals provide extended recovery on their inpatient floors. This happens when a patient with a planned outpatient procedure, requiring less than a 24-hour stay, remains overnight in the inpatient area. They are not inpatients, but rather remain outpatients and can not be considered to be receiving observation services. Some providers consider this time extended recovery, but whatever you call it, it is an outpatient service and CMS has now made clear it requires direct physician supervision by a physician on the campus. The problem is, again, there has been no specified level of supervision for the inpatient area they are housed in, putting hospitals in the position of having direct supervision for their inpatient areas because some of the services provided there may be billed as outpatient services.
These two clarifications from the discussion in the rule should not be overlooked when hospitals are reviewing their policies for physician supervision to comply with the 2010 changes. While the changes to the regulations were primarily provider friendly over the 2009 requirements, clarifications such as these make it clear providers have to be much more conscientious about considering which of their services and departments or areas may require direct physician supervision. Policies should at least consider services like observation and extended recovery, that require direct supervision but are provided primarily in inpatient areas where there has been no prior requirement for supervision. And don’t forget almost any service in an inpatient area can require direct physician supervision if you end up converting that patient to outpatient using the condition code 44.
One last note about condition code 44. We’ve discussed extensively on the blog the issue of observation hours in relationship to the use of condition code 44. In the rule, CMS declined to comment on counting hours of observation when condition code 44 is used, stating it was beyond to scope of the rule. They did say they would use “other available mechanisms, as appropriate.” In the meantime, Noridian, who is the J3 and J6 Medicare administrative contractor (MAC), has posted on its Web site an article titled “Observation and Condition Code 44” which specifies providers may not begin counting hours of observation until the observation order is written. You may recall that we reported on this blog that National Government Service (NGS), the J8 and J13 MAC had confirmed this to us in earlier correspondence. However, Palmetto, the J1 and J11 MAC, does still have transcripts of a call from September posted which specify that you count from the beginning of the admission. Due to the ongoing conflict in this area, we urge readers to be cautious and contact their MAC if they have questions.
Condition Code 44 – The Next Chapter
After CMS issued Transmittal 1803, we have continued to receive questions on the correct way to bill for outpatient services when Condition Code 44 criteria have been met. The next chapter of the story involves determining if and when observation begins.
After the provider has documented that Condition Code 44 requirements have been met and is able to “roll back” the patient’s status from inpatient to outpatient, the outpatient regulations begin to apply. According to Chapter 1 of the Medicare Claims Processing Manual, when the hospital has determined that it may submit an outpatient claim, the entire episode of care should be billed on a 13x or 85X type of bill for the services that were ordered and furnished during that period of time. However, in order to bill for medically reasonable observation services, the provider must obtain a timed and documented physician’s order. Because there wasn’t an actual order for observation at the time the patient was admitted as an inpatient, the provider cannot begin counting observation hours until one is obtained. The order for observation is not “retroactive” back to the time of the original inpatient admission order.
In a July 13 MedicareMentor post, we included an email clarification from National Government Services (NGS) confirming the need for and the timing of the observation order. After receiving inquiries from its providers, Noridian Administrative Services also sent out a notification on September 24 confirming this.
This is the example that was given: Patient A was admitted at noon on Sunday. On Monday afternoon it was determined that the patient didn’t meet inpatient criteria, the physician concurred, and the status was changed to outpatient. The outpatient status is considered to have begun at noon on Sunday. However, observation hours cannot be billed until the physician has written an order for observation. If the order was written at 2 p.m. on Monday, the hospital would begin the observation hours at that time. No observation can be charged between noon on Sunday and 2 p.m. on Monday.
In light of the previous RAC focus on observation billing, we encourage all providers to review the regulations and their current processes. Providers should contact their FI/MAC with any questions that they may have to ensure that observation hours are being billed correctly when condition code 44 is being submitted.
Condition code 44 – The continuing saga
On Friday, 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 Friday, 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.
More on condition code 44 and observation
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.
More on condition code 44 and observation
UPDATE: Please read our more recent article on this topic for updated information.
This is an especially light week of publications from CMS, so I thought I would update you a bit on an issue we have included in recent postings, which has resulted in a number of questions from readers. In two recent articles related to use of condition code 44, we indicated that, based on the written manuals, it appeared inappropriate to report the hours from the beginning of the stay as observation when converting the stay to outpatient.
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.
CMS replaces the term ’observation status’ with ’observation services’
In the July 2009 quarterly updates, CMS revised portions of both the Claims Processing Manual and Benefit Policy Manual related to observation. These changes were characterized as “editorial” in nature, removing certain terms CMS felt were confusing and revising some sections in accordance with that. Additionally, a new section entitled “Policy and Billing Instructions for Condition Code 44” was added to Chapter 1 of the Claims Processing Manual, along with other revisions to information on condition code 44.
