Revenue Cycle

CMS provides clarification to condition code 44 billing

Recovery Auditor Report, September 30, 2010

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In the October 2010 update of the hospital outpatient prospective payment system (OPPS), CMS provided some additional language on compliant billing in condition code 44 situations, especially regarding observation.

The clarification is as follows:

When Condition Code 44 is appropriately used, the hospital reports on the outpatient bill the services that were ordered and provided to the patient for the entire patient encounter. However, in accordance with the general Medicare requirements for services furnished to beneficiaries and billed to Medicare, even in Condition Code 44 situations, hospitals may not report observation services using HCPCS code G0378 (Hospital observation service, per hour) for observation services furnished during a hospital encounter prior to a physician’s order for observation services. Medicare does not permit retroactive orders or the inference of physician orders. Like all hospital outpatient services, observation services must be ordered by a physician. The clock time begins at the time that observation services are initiated in accordance with a physician’s order.

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