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Should a facility use condition code 44 on a claim if the admitting physician decides the patient should be in observation rather than an inpatient setting?

(Additionally, when the physician decides the patient should be in observation without prompting by the utilization review (UR) committee or case management and prior to the discharge of the patient and submission of the claim.)

No. When a physician orders a patient to be placed under observation, the patient's status is outpatient. The purpose of observation is to determine the need for further treatment or for inpatient admission.

Condition code 44 is used when an inpatient admission is being changed to outpatient. According to the CMS IOM Pub. 100-04, Medicare Claims Processing Manual, Chapter 1 -- General Billing Requirements, condition code 44 is:

  • For use on outpatient claims only, when the physician ordered inpatient services, but upon internal utilization review performed before the claim was originally submitted, the hospital determined the services did not meet its inpatient criteria.
  • Note: For Medicare, the change in patient status from inpatient to outpatient is made prior to discharge or release while the patient is still a patient of the hospital.
  • Additionally, concurrence of the UR committee and the physician must be documented in the medical record.

 

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