Using Condition Code 44 Correctly for Pre-Admissions

Gabby Nunez from Community Memorial Health System in Ventura, Calif. recently asked the RAC Relief user group about the patient who insists on being admitted as an inpatient solely to try to get the three days to qualify for a Part A nursing home payment.

This is not an infrequent problem in hospitals; many patients and families are under the mistaken impression that their Medicare insurance pays for long-term care in a skilled nursing facility (SNF) when they are no longer able to live independently. The word on the street is that if you get admitted as an inpatient and stay for at least three days, Medicare will pick up the tab. Of course, this is false, as I have addressed in the RACmonitor article Issues Arise When They Can’t Live at Home.

I and others have suggested that one way to deal with this is to get an admission order and then give the patient a pre-admission, Hospital-Issued Notice of Non-coverage (HINN) and ask them to immediately call the Quality Improvement Organization (QIO) and appeal. Of course, the admission order must come from the physician; some physicians may choose not to write such an order, but many more would prefer to avoid a confrontation with a family and risk a poor patient satisfaction score by simply going ahead with it.

The question posed by Gabby poses the issue of what to do next. If the order is written and the family appeals to the QIO, and the QIO rules that admission is not medically necessary, should the hospital use the condition code 44 process and change the admission to outpatient? Or should they leave it inpatient and submit a no-pay claim? What a good question!

And the answer here is “it depends.” When you give a HINN, it means you intend to charge the patient if Medicare payment is denied. To do that, you have to bill the inpatient stay and include the condition code C4. The claim will be processed by the Medicare Administrative Contractor (MAC), and once the denied payment is posted to the system, the hospital can bill the patient. But in this case, we really gave the HINN to get the QIO involved in the case, allowing them to explain to the patient and family that there is no reason for hospital admission.

Now that we know the admission is not medically necessary, we must decide if we want to charge the patient $10,000 for the three days they sat here waiting for the QIO appeal – or do we want to let them off the hook now that their appeal failed? If we choose the latter, we have an inpatient admission that we want to revert to outpatient from the beginning. And that, of course, is the condition code 44 process. If we do that, we have to accept that we will get no revenue to cover the room-and-board and nursing care, but we also won’t have a family running to the local newspaper about an outrageous bill from a heartless hospital.

What’s the answer? As with many of these issues, there is no specific guidance that addresses it, so we must apply the applicable rules and try to come to a reasonable resolution. I think in these cases we need to ask the patient what they want. If we leave them as inpatients, they will need to pay the hospital bill. We also need to tell them that the nursing home will be informed in writing that the admission was determined to be medically unnecessary by the QIO and that the hospital will be submitting a no-pay claim – so even though there were three (or more) inpatient days spent waiting for the QIO to gather the information and make a determination, there is a high likelihood that the nursing home stay will not be covered. In fact, the nursing home may not even accept the patient without a private pay agreement. Then you let the patient and family make a choice.

If the patient does agree to let you revert the admission to outpatient status, then you still have to go through the condition code 44 process, with review by a physician member of the utilization review committee and discussion with the attending and concurrence. Once this is done, the whole stay reverts to outpatient, and the hospital will be able to bill for any Part B services provided to the patient. Hopefully by this point the family has had adequate time to come up with a contingency plan for the patient.

But what if the hospital is a Medicare-certified Accountable Care Organization (ACO) with the ability to waive the three-day inpatient admission requirement? That waiver is issued for use in specific circumstances, the most important of which, in our case, is that the patient must have “an identified skilled nursing or rehabilitation need that cannot be provided on an outpatient basis or through home health services.” Patients seeking this three-day admission in general have purely custodial needs and therefore do not qualify for the waiver.

Thanks again to Gabby Nunez for posting a great question, and I hope others will continue to challenge me.