Health Information Management

Tip: Billing condition code 44 and observation

APCs Weekly Monitor, April 9, 2010

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Condition code 44 changes a patient’s initial inpatient status to outpatient for purposes of billing and payment. Use of condition code 44 affects billing for observation.  

In May 2009, CMS rewrote most of the observation language in the Medicare Claims Processing Manual and clarified that observation is a service, not a status. Patients are either inpatients or outpatients, and patients receiving observation services are outpatients. CMS removed all references to admitting patients to observation.
 
CMS also made clear that you may not start billing for observation until the physician writes the order for observation. That means you can’t count the hours during which patients received inpatient services before their conversion to outpatient as observation. 
 
The time from when a physician admits the patient until writing the order for observation is designated as outpatient in a bed.
 
This tip is adapted from “Observation, physician supervision requirements add additional complications when coding condition code 44” in the April issue of Briefings on APCs.



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