Condition Code 44 or Condition Code W2?
CMs should know the difference
When a review of an admission determines that a Medicare patient didn't meet inpatient criteria and the patient has already gone home, hospitals now have a way to be reimbursed for diagnostic and therapeutic services.
The Centers for Medicare & Medicaid Services' Inpatient Prospective Payment System final rule for fiscal year 2014 allows hospitals to file a provider liable claim using Condition Code W2 if the hospital performs a self-audit and makes a post-discharge determination that a patient stay wasn't medically necessary or if the Medicare Administrative Contractor (MAC) or Recovery Auditor (RA) deny the claim. However, the claims must be filed within a 12-month period after discharge and RAs are looking at claims that are as old as three years, so a hospital's best recourse is to rely on internal auditing, says Deborah Hale, CCS, CCDS, president and chief executive officer of Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK.
"Much of this is a billing issue, but case managers need to understand the concept and the difference between filing a Condition Code 44 and a provider liable claim using Condition Code W2 and know which one is appropriate," she adds.
Hospitals can file Condition Code 44 to change a patient's inpatient status to outpatient with observation services and to bill all medically necessary outpatient services but only if the change in patient status is made before discharge, the hospital has not submitted a Medicare claim for the admission, and the attending physician and a member of the utilization review committee concur in the decision.
"It's always advantageous to get it right from the beginning, but the Condition Code 44 rules still apply. If hospitals can't get the care order right from the beginning, Condition Code 44 is the most financially beneficial avenue for hospitals to take," Hale says.
In the final rule, CMS emphasized that only a person with admitting privileges can make the decision to admit and added that case managers should be available at all times to assist the physician in making the decision, Hale says.
If hospitals miss an opportunity for Condition Code 44 because they did not determine that a patient didn't meet inpatient criteria until after discharge, and they make the determination within 12 months, they can file a provider liable claim with a Condition Code W2, Hale says.
Hospitals still have to go through the physician advisor and utilization review committee process to file a provider liable claim using Condition Code W2, she adds. If the utilization review committee determines that the patient did not meet criteria for an inpatient stay after discharge, CMS will pay hospitals for all hospital services that were furnished and would have been reasonable and necessary if the patient had been treated as an outpatient rather than being admitted, except for services that specifically require an outpatient status, such as emergency department visits, outpatient treatment, and observation services.
When the provider liable claim and Condition Code W2 is used, hospitals can bill only for services provided after the admission order is written, Hale points out. The hospital must also file separate claims for emergency department treatment, observation services, and any other outpatient services the patient received before being admitted.
In the past, if hospitals missed out on an opportunity to file Condition Code 44, they could file a provider liable claim but could bill only for a limited list of diagnostic services and not therapeutics.
After the Recovery Audit appeals process began, in some cases when a hospital appealed a denial for an inpatient stay, the administrative law judge would order the MAC to pay for all Medicare Part B services as though the patient had been an outpatient from the beginning, Hale says.
"The administrative law judge instruction wasn't popular with CMS, but it led to the 2014 IPPS Final Rule instruction allowing hospitals to file a provider liable claim for therapeutics as well as the diagnostics," Hale says. Effective Oct. 1, 2013, the final rule allows hospitals to self-audit after patients are discharged, and if the utilization review committee determines that the stay didn't meet inpatient criteria, the hospital can file a provider liable claim with a Condition Code W2 and bill for therapeutic and diagnostic services under Medicare Part B, Hale says.
"What the rule did was shift from RA, MAC and Comprehensive Error Rate Testing (CERT) denials to allowing the hospitals to self-audit and self deny," she says.