Medicare Condition Code 44

by  Jeanette Anderson, CPC CPMA
Sep 30th, 2016 - Reviewed/Updated Aug 17th

Medicare Condition Code 44 is used when an inpatient admission needs to be changed to outpatient status. There are some instances where a Medicare patient was admitted to the hospital with an inpatient status, but upon review it is deemed more appropriate for the entire encounter to be an outpatient encounter. This decision must come from a member of the Utilization Review Committee within the hospital with agreement from the attending provider; it cannot be the attending alone. This status change is known as the Condition Code 44 process.

The below criteria for Condition Code 44 must be met in order for a status change to occur:

• The decision to change the patient status must be made prior to discharge, while the beneficiary is still a patient. The beneficiary must also be notified.

• The decision must come from a member of the Utilization Review (UR) Committee; and the provider must agree.

• The change must be fully documented in the patient's medical record, including:

  • When the change was made

  • The care that was provided

  • The participants in making the decision to change the patient's status

  • No inpatient claim has been submitted to Medicare

When Condition Code 44 criteria is met, the hospital will report all appropriate outpatient services that were provided to the patient for their entire encounter.

The standout exception to this would be reporting HCPCS code G0378 which is Hospital Observation Services Billed Per Hour. Code G0378 can only be reported beginning at the time of the physician order for observation services after the patient's status has changed to outpatient. This code cannot be reported for retroactive hours in the scenario for the entire patient encounter.

For example:

2:00AM: Patient is admitted from the emergency department as inpatient by Dr. X

11:00AM : The utilization review committee reviews the case and consults with Dr. X. Together, they determine the admission to inpatient was not medically necessary and agree to change the patient status to outpatient. All criteria is met for Condition Code 44.

12:00PM : Dr. X determines the patient is in need of observation services for 10 hours and places the order.

10:00PM: Observation services are stopped and the patient is discharged in stable condition.

For the example above, Condition Code 44 would be reported for the entire encounter (2:00am to 10:00pm) on an outpatient claim form. To report observation services, code G0378 for the period of 12:00pm - 10:00pm. While Condition Code 44 should not be used on a regular basis, it is used in rare circumstances where the above criteria are met.