All Entries Tagged With: "observation"
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.
More on observation services: The Medicare Compliance Forum
Frequent MedicareMentor readers will be aware of the series of posts my colleague Kimberly Hoy has written on observation services — read the ongoing discussions here, here, and here. You can hear Kimberly say a bit more about the cluster of issues surrounding observation at the upcoming Medicare Compliance Forum.
The “Medicare Compliance Forum: A Strategic Approach to RACs, Observation Status and the Role of Physician Advisors”, is an upcoming seminar with a whole track of sessions that will help you resolve observation-related questions and problems. Kimberly joins other experts such as ACS’ Deborah Hale, CCS, and Executive Health Resources’ Joe Zebrowitz, MD.
I’ve found the back-and-forth on observation here on the MedicareMentor Blog to be very substantive and illuminating (many thanks to those who’ve commented!), and you can expect the same rigorous, source-based analysis in the forum sessions.
Check out the event brochure, additional tracks, and more on the Medicare Compliance Forum page.
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.
Observation with condition code 44 and physician supervision
Last week, the American Health Lawyers Association held their annual Institute on Medicare and Medicaid Payment Issues in Baltimore. After speaking about observation at a conference session, I had the opportunity to speak to a CMS representative informally about condition code 44 as it relates to observation and also about physician supervision in hospital outpatient departments. [more]
