Condition Code 44 Compliance

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A Condition Code 44 is a billing code used when it is determined that a traditional Medicare patient does not meet medical necessity for an inpatient admission.

  • An order to change the patient status from Inpatient to Observation (bill type 13x or 85x) MUST occur PRIOR TO DISCHARGE.
  • The order is necessary if the patient does not meet medical necessity to support the second midnight of hospitalization, is ready for discharge, and does not meet exception criteria below.
    • Patient only hospitalized one midnight, but is appropriate to be inpatient because of the

      • Exception Criteria
        • Patient expired
        • Patient left AMA
        • Patient discharged to hospice (new election)
        • Patient required a ventilator
        • Patient was transferred to another hospital for higher level of care
        • Patient experienced a “faster than expected recovery”
  • The order must be approved by BOTH the attending physician and a UR/UM Committee member.
  • The change must be fully documented in the record:
    • Change in status order
    • Notes indicating why the change was made
    • The care provided to the beneficiary
    • Participants in making the decision to change the status
  • The beneficiary must be provided with a Medicare Outpatient Observation Notice (MOON).
    • Requirement to notify (not that he/she has to agree)
    • Document in the record MOON given but refusal to sign
  • If notification does not occur prior to discharge, the claim should be filed as a no-pay bill type (110)
    with all days and charges as non-covered.
  • Medicare Advantage (MA) Plans may or may not use this process depending on their contract.

Download the complete tip, Condition Code 44.