Beware: Is Your Written Notification for Condition Code 44 Compliant?

The topic of Condition Code 44 is not new. Detailed by the Centers for Medicare & Medicaid Services (CMS) in September 2004 via MLN Matters SE 0622, titled 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, many others have also described the requirements and rules of use.

Every health system should have a firm process in place for when a patient covered by Medicare is admitted to a hospital as an inpatient, then later is determined to be appropriate for outpatient classification (with or without observation services.) The change from inpatient to outpatient must be agreed upon by the treating practitioner and by a member of the hospital’s utilization review (UR) committee.

Additionally, per MLN Matters SE 0622, “if the UR committee determines that the admission is not medically necessary, the committee must give written notification, no later than two days after the determination, to the hospital, the patient, and the practitioner responsible for the care of the patient.”

While CMS has provided forms such as the Important Message From Medicare (IMM or IM), the Advanced Beneficiary Notice (ABN), and a few versions of the Hospital-Issued Notice of Non-Coverage (HINN), depending on the situation, no such standardized form was provided for notification of the patient when Condition Code 44 is in play. Once the Medicare Outpatient Observation Notice (MOON) was put into effect March 8 of this year, many chose to use it as the mandated written notification to the patient in the event of a Code 44. However, this decision may be flawed.

The MOON informs a patient that he or she is an outpatient in the hospital receiving observation services. It further describes why the patient is not an inpatient and what the difference could mean to them, financially and otherwise. It does not inform patients that they are being changed from inpatient to outpatient. Does this then fit the bill for the patient notification required in a Code 44? Possibly not.

In instances when a patient comes to the hospital for a pre-scheduled procedure and is inappropriately admitted as an inpatient, using the MOON is likewise not appropriate. Again, the MOON explains to patients that they are outpatients receiving observation services. But for a patient who is placed into the hospital for routine recovery following a scheduled procedure, observation services are not indicated. Therefore, much of the information in the MOON is not applicable to their situation.

These problems can be solved in two ways. First, educate your case managers to include on the MOON form that the patient is being changed from inpatient to outpatient. This can be done in the “additional information” section on the second page, which CMS allows to be altered. Second, create a form that specifically informs the patient that they are being changed from inpatient to outpatient.

While the MOON format can be used as a guide, this form for use in Code 44 situations when observation services are not at play should be altered accordingly, excluding discussion about observation implications.