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CMS announces new code for changing status from inpatient to outpatient

HIM Connection, November 16, 2004

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CMS implemented a new condition code on October 12 to ease administrative problems related to changing an inpatient admission to outpatient. The change, published September 10, is retroactive to claims filed as of April 2004.

Facilities can only use Condition Code 44 on outpatient claims in instances when the physician orders inpatient services, but upon internal review before claim submission, the hospital determines the services do not meet its inpatient criteria, according to CMS.

To change a beneficiary's status from inpatient to outpatient, submit an outpatient claim for medically necessary Medicare Part B services furnished to the beneficiary. Also do the following:

• Make the change in patient status from inpatient to outpatient prior to discharge or release, while the beneficiary is still a hospital patient
• Do not submit a claim to Medicare for the inpatient admission
• Make sure a physician agrees with the utilization review committee's decision
• Document the physician's concurrence in the patient's medical record

"I believe this provides an opportunity for correction of inpatient admissions that did not meet criteria if within the concurrent time frame," says Gloryanne Bryant, BS, RHIT, CCS, corporate director of coding and HIM compliance for Catholic Healthcare West, San Francisco.

"I think Medicare is taking a balanced approach here," says Darren Carter, MD, president and CEO of Provistas, Inc., New York City. "What it has provided is a way for utilization review to make a determination that an admission wasn't warranted and still be paid for outpatient services. This seems quite fair." The underlying idea, Carter says, is that an audit would show that some admissions do not meet medical necessity. For example, perhaps an audit would reveal that unnecessary admissions would be reclassified as outpatient. In this scenario, the facility would have to return the difference in payment, not the whole admission inpatient prospective payment system payment.

This change affects admitting, registration, and billing, Bryant says. Members of these departments need to be aware of this guidance and the need for the condition code on the claim when an account is changed from inpatient to outpatient. Click here to access the entire transmittal.

This excerpt is adapted from Medical Records Briefing, the monthly newsletter that provides the best new ideas in health information management and a complete set of professional resources to benefit the medical records department.

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