by Betty B. Bibbins, MD, FACOG, CHC, C-CDI, CPEHR, CPHIT
Condition code 44 is difficult to implement because CMS does not provide clear guidance regarding its usage. For example, CMS has not yet answered these important questions:
What is the purpose of condition code 44?
What do physicians need to know regarding documentation of these equivocal patient status cases?
How can hospitals maintain compliance?
Yet despite this lack of guidance, hospitals must have a plan in place to ensure compliance, particularly in light of the national recovery audit contractor (RAC) program set to roll out in March.
One reason why hospitals struggle with condition code 44 is because CMS does not clearly define observation status. Instead, it only uses the following two terms to describe patient status:
There is no classification of ‘outpatient observation’ status. Thus, this question arises: Does the term outpatient only encompass ambulatory care (e.g., care provided in the ED or a clinic), or does it also include a greater depth of care, such as outpatient observation?
CMS provides the following definitions:
Inpatient admission: This occurs when a licensed practitioner provides an order for inpatient admission. This practitioner must be permitted by the state to do so.
Outpatient status: This refers to a person who has not been admitted as an inpatient but who is registered as an outpatient and who receives services (rather than supplies only) directly from the hospital.
Know the reasons to report code 44
In some instances, a physician may order an inpatient admission, but upon subsequent review, staff members determine that the inpatient level of care does not meet the hospital’s admission criteria. The National Uniform Billing Committeeissued condition code 44 to identify cases when this scenario occurs and hospitals must change the patient’s status from inpatient to outpatient.
Providers should use this code on outpatient claims only. Condition code 44 allows hospitals to treat the entire episode of care as an outpatient encounter and to receive payment under the outpatient prospective payment system.
Providers should not use code 44 as a “catch-all” solution at the end of short stays when medical necessity is subsequently deemed unjustified after a patient is discharged. Rather, providers are expected to use condition code 44 for specific scenarios.
CMS set the policy for the use of condition code 44 to address those relatively infrequent occasions, such as a late-night weekend admission when no case manager [or hospital personnel whose responsibility is determine whether inpatient criteria have been met] is on duty to offer guidance. In these kinds of extenuating circumstances, when an internal review subsequently determines that an inpatient admission does not meet hospital criteria and that the patient would have been registered as an outpatient under ordinary circumstances, it would be appropriate to use condition code 44.
Take these steps to ensure compliance
Providers must take the following steps before reporting condition code 44:
A utilization review (UR) committee (i.e., two or more practitioners) must determine whether admission criteria have been met once the clinical documentation improvement or case management team raises the question of whether the inpatient admission was appropriate. The UR committee may review the medical record for inpatient admission criteria before, during, or after hospital admission. At least two members of the committee must be doctors of medicine or osteopathy. The following individuals do not have the authority to change a patient’s status from inpatient to outpatient:
Other types of utilization management staff members who are not licensed practitioners permitted by the state to admit patients to a hospital
Doctors of medicine or osteopathy who do not have the authority to change a patient’s status from inpatient to outpatient
The UR committee must consult with the practitioner(s) responsible for the patient’s care and allow them to present their views before making a determination. It may also be appropriate to include the practitioner who admitted the patient if this is a different person. In the end, these physicians must agree with the decision to append condition code 44, and this agreement should be documented in the patient’s medical record.
Two members of the UR committee must determine whether an admission or continued stay is medically necessary. One member of the UR committee may make this decision only when the practitioner(s) responsible for the patient’s care either concurs with the determination or fails to present his or her views when afforded the opportunity to do so.
When the UR committee determines that the admission is not medically necessary, it must give written notification—within two days of the determination—to the hospital, the patient, and the practitioner responsible for the patient’s care.
The UR committee must make the change in patient status from inpatient to outpatient prior to discharge or release, and before the hospital submits the claim to Medicare.
Considering the CMS explanations that include comparing and monitoring one day admissions to outpatient status, it strongly suggests that the conversion to outpatient observation status may be an appropriate equivalent conversion when the term “outpatient” is used as long as the medical record contains the appropriate documentation.
With the increased scrutiny in today’s regulatory environment of one-day admissions, UR and CDI personnel need to be diligent in reviewing physician documentation regarding appropriate inpatient criteria to support their admitting diagnosis.
To boost quality-of-care efforts and provide physician support, consider implementing the following at your facility:
Application of hospital admission protocols and criteria by case management staff
Facilitation of communication between practitioners and the UR committee (or quality improvement organizations
Encouragement for practitioners to proactively assist the UR committee in the decision-making process
Continuous distribution and postings of the hospital’s criteria for inpatient admissions for practitioner education (including education regarding capturing the severity of illness through appropriate documentation to justify the intensity of resources used)
CMS expects providers to decrease their use of condition code 44 as they provide additional education and make efforts to staff departments around the clock. When hospitals routinely report the code, this could send up a red flag to a RAC that implies a lack of standards and protocols that help providers determine a suitable level of patient care.
Editor’s note: For more information, refer to the following resources:
Medlearn Matters article SE0622: Clarification of Medicare Payment Policy When Inpatient Admission Is Determined Not to Be Medically Necessary, Including the Use of Condition Code 44: “Inpatient Admission Changed to Outpatient”
Transmittal 299: Clarification of Medicare Payment Policy When Inpatient Admission Is Determined Not To Be Medically Necessary, Including the Use of Condition Code 44: “Inpatient Admission Changed to Outpatient”
Editor’s note: Betty B. Bibbins, MD, FACOG, CHC, C-CDI, CPEHR, CPHIT, is the president and chief medical officer at DocuComp LLC in Cape Charles, VA. E-mail her at BibbinsMD@DocuCompLLC.com.