1. Condition Code 44 was introduced on September 10, 2004 in Transmittal 299, Change Request 3444, "Use of Condition Code 44, 'Inpatient Admission Changed to Outpatient'" and followed by MLN Matters SE0622, "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.'"
2. Prior to Condition Code 44, if an inpatient admission was found to be medically unnecessary, the hospital's only option was to self-deny and bill for a limited number of eligible ancillary services.
3. When the Condition Code 44 process is used, the entirety of the hospital stay becomes an outpatient encounter. This necessitates the use of outpatient hospital as the place of service for all professional and hospital claims.
4. The Condition Code 44 process must be completed, including written notification to the patient, before the patient is formally discharged from the hospital. CMS has defined formal discharge as when the patient's discharge is effectuated but has never stated what it means to effectuate a discharge. (See Becker's Hospital Review article here.)
5. The decision to use Condition Code 44 must come from a member of the Utilization Review (UR) Committee and must be a physician, osteopath or other practitioner as specified in 42 CFR §482.12(c) who is on the hospital staff.
6. The attending physician must agree with the change from inpatient to outpatient. If the attending does not agree, the patient remains an inpatient. Two members of the UR committee can overrule the attending and determine that the admission was not medically necessary but that admission would remain inpatient and require self-denial.
7. If a patient has been formally admitted, the only process to change their status to outpatient is with the Condition Code 44 process. Even the attending who initially wrote the inpatient admission order cannot unilaterally change the status to outpatient. CMS has never defined formal admission. (See Becker's Hospital Review article here.)
8. There must be documentation of the physician's concurrence in the chart. The UR physician does not need to examine the patient, document in the chart or sign the status order change.
9.Condition Code 44 changes a patient from inpatient to outpatient. If that patient continues to need hospital care, observation may be ordered at the time of the change and observation hour counting for billing purposes would begin at that time.
10. The second condition for the use of Condition Code 44 is that the hospital has not submitted a claim to Medicare for the inpatient admission. There is no possible scenario where the claim would have already been submitted on a patient who is a candidate for Condition Code 44.
11. Although an inpatient has immediate discharge appeal rights with the Quality Improvement Organization (QIO), the patient has no immediate rights to appeal the change from inpatient to outpatient with the QIO.
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