What is the Medicare Code 44 and why is it so important? Read on for detailed explanations on how to define Inpatient vs Observation hospitalization across a variety of situations. With the Medicare recovery audit contractors moving full speed ahead, they will be searching to recovery billions of dollars of inappropriately paid claims. Their efforts will mostly be directed toward hospital billing practices not physician CPT® medical coding. One they will be looking carefully at is whether the inpatient status or observation status was paid appropriately. And that's where Code 44 becomes applicable.
It comes as no surprise that hospitals every where are solidifying the rules. I present to you several scenarios and what happens behind the scenes for your hospital to get paid by the Medicare National Bank.
When you get admitted to a hospital, your physician has a choice: admit you as an inpatient or as an observation stay. The implications are mostly in how much your deductibles will be, whether you will have to pay for your own medications while in the hospital (you do as observation status) and whether you need three midnights in the hospital to qualify for your skilled nursing benefits.
Medicare has a giant book of criteria that must be met for you to qualify for inpatient stay. Did you know ordering fluids at 100 cc/hour would help qualify you for inpatient under the "intensity of hospital services" component, but ordering fluids at 75 cc/hour would not? I learned that a few weeks ago. How am I ever supposed to know that? And why is it up to a physician to decide whether you are inpatient or observation. These are Medicare rules. It should not matter what I write. If they qualify for inpatient, they should be inpatient. If they don't, they should be observation status.
But under the current rules, I the physician get to write what status I want my patient. So what happens if I get it wrong? Read through these scenarios to see what goes on behind the scenes in order for your hospital to get paid.
Scenario 1: Admit observation and qualifies for inpatient the next day
The doctor writes the order to admit observation status on Sunday. The observation status is correct on Sunday. On Monday, the care management team identifies that inpatient criteria are now met on Monday. What needs to happen?
- Care management obtains an inpatient order from the physician on Monday
- The patients status is changed on Monday to inpatient
- The observation day on Sunday will be rolled into the hospital admission for DRG payment purposes
- The counting of inpatient midnights begins Monday night
- Patient will not be charged for their outpatient medications on Sunday
For physicians, they bill their observation admission codes (99218, 99219, 99220) on Sunday. On Monday, they could bill a full History and physical examination (99221, 99222, 99223) if they did the work to support it. I usually just bill an inpatient follow up code (99231-99233). I can only assume that Medicare will still pay the physician for both their Observation admission on Sunday and their inpatient admission (if they wish to do one) on Monday.
Scenario 2: Admit observation but meets inpatient criteria
The doctor writes an order to admit observation status on Sunday. On Monday, care management realizes that inpatient criteria was met on Sunday. What needs to happen?
- The physician needs to write an order to change to inpatient status on Monday. The physician cannot back date the order to Sunday EVEN THOUGH the criteria was met.
- Change the status to inpatient effective on Monday.
- The observation charges for Sunday will be rolled into the inpatient DRG, so no money is really lost by the hospital.
- However, counting of inpatient midnights won't begin until Monday, EVEN THOUGH the criteria was met on Sunday. This could impact the three midnight requirement for skilled nursing benefits.
- The patient will not be charged for their medications during their observation stay on Sunday
The problem I see with this scenario is that Medicare, is reneging on their stated obligations. If the patient meets criteria for inpatient on Sunday by their rules, they should start paying for inpatient on Sunday. They should start counting midnights on Sunday night. And the physician should be allowed to change their billing to an inpatient admission H&P on Sunday. Whether a patient is observation or admission should have nothing to do with a physician order and everything to do with whether the criteria for inpatient are met. Whether a patient meets inpatient criteria or not depends on a giant book, hundreds of pages, that no physician could possibly know the answers to.
Did you know if a patient came into the hospital with a diagnosis of acute renal failure with a creatinine of 6, used a vein light for IV access and and was placed on IV fluids at 75cc/hour, they would not qualify for inpatient? As I stated above, the fluids must run at 100cc/hour or greater to qualify for inpatient status. I have discussed inpatient vs observation many times with my care management folks. That's what they do for a living. You can't possibly expect physicians to know the correct status on admission.
One solution is to make every patient inpatient from admission and let the care managers sort it out. The real loser here is the patient who increases their risk of hospital acquired complications, and the hospital which spends valuable hospital resources so the patient can get their necessary unnecessary third midnight to qualify for a skilled nursing bed at the local nursing home. That Medicare would allow the rules under this scenarios to exist is blatant stupidity. To believe that patients don't spend an extra night in the hospital to qualify for their skilled nursing benefits is ignorance.
Scenario 3: Admit inpatient but only meets observation
The doctor writes an order for inpatient on Sunday. On Monday care management realizes that inpatient criteria was not met on Sunday. What needs to happen?
- The physician needs to write an order to change to observation status on Monday.
- The observation order cannot be back dated to Sunday EVEN THOUGH they only met observation criteria on Sunday
- Submit a Medicare Code 44 status
- The claim will be rolled together and inpatient rates will not be paid on Sunday
For physicians, I'm not sure how this would get paid. I can only assume that I would change my inpatient code (99221-99223) from Sunday to an observation admission code (99218-99220), since the inpatient status on Sunday will be rolled into the Observation status. If I submit an inpatient code for Sunday and the hospital does not, I will definitely not get paid for Sunday. I have no idea if the hospital will get paid for Sunday. I suspect that by submitting the Code 44, they will.
One of Medicare's benefits involves 100 days a calendar year of skilled nursing benefits at a nursing home. But for Medicare to pay for it, the patient must have been hospitalized for three midnights within the last 30 days. In the above situations, if a patient is admitted observation status but qualified for inpatient, Medicare is saying they will not recognize the midnights where the patient was listed as observation, even though a retrospective analysis indicates the patient qualified for inpatient. The solution is to write inpatient admission status for EVERYONE and then let the care management team sort it out.
Or perhaps I should simply start writing an order for "admission status per care management recommendations". And let them sort it out. Deciding whether a patient is inpatient or observation should not be a physician's responsibility. It is what ever it is and me writing an order one way or another doesn't change that.
Why Medicare is making it harder than it has to be is beyond me. If the patient meets inpatient criteria, they are in patient. If the patient doesn't, they don't. And it shouldn't matter what the physician orders. But since it does, you get more bureaucracy and layers of paper work that does nothing but add cost to the hospital's bottom line and raises all our premiums in one way or another.
You can see much more for free in my free lectures on medical billing and coding.
You can see much more for free in my free lectures on medical billing and coding.
