Proper Use of Condition Codes 44 and W2

by Kimberly Anderwood Hoy Baker, JD, CPC

Major differences between condition code 44 and condition code W2

Hospitals use condition code 44 and condition code W2 to bill for Medicare Part B payment in cases where the attending physician orders an inpatient stay that does not meet Medicare’s requirements for Part A payment. In such cases, Medicare will deny payment for inpatient admissions. Condition codes 44 and W2 both allow hospitals to recover some reimbursement for incorrect inpatient orders; however, they require different processes and, depending on the situation, may generate a slightly different payment.

There are several significant differences between condition code 44 and W2. The timing requirements, payable services, and the weight of the attending physician’s concurrence in the UR process will help determine processes for applying condition codes 44 and W2.

Condition code 44

Prior to October 1, 2013, using condition code 44 was the only option for hospitals to receive full payment under Part B for services provided during inpatient admissions not meeting Medicare’s requirements for Part A payment. Condition code 44 allowed the hospital to change a patient’s status from inpatient to outpatient and thereby receive payment under Medicare Part B. The condition code 44 the process first begins with a determination by a physician representative of the utilization review committee that the initial inpatient admission order was incorrect and the patient will not need hospital-level care meeting the 2-midnight benchmark. This determination must be compliant with the Conditions of Participation (CoP) for utilization review (UR). This may be facilitated by a utilization review nurse or case manager. This determination should be documented either in the UR committee’s records or in the medical record of the patient.

Condition code W2

In the 2014 inpatient prospective payment system (IPPS) final rule, CMS gave hospitals the ability to self-deny an inappropriate inpatient admission under the CoP for UR and then rebill all eligible services provided during the hospital stay under inpatient Part B (Type of Bill (TOB) 12X), with a companion outpatient bill for the outpatient services prior to the order (TOB 13X) (CMS, IPPS final rule, 2014).

Similar to condition code 44, in order to apply condition code W2, the process first begins with a determination by a physician representative of the UR committee. This may be facilitated by a UR nurse or case manager. The determination should be documented either in the UR committee’s records or in the medical record of the patient.

Timing

The condition code 44 process for changing a patient from inpatient to outpatient must take place before the patient is discharged from the hospital. This is so the hospital can notify the patient of the determination before he or she leaves the hospital.

To read the complete, detailed artcile that appeared on Medicare Compliance Watch, click here.

To purchase Condition Codes 44 and W2 Training Handbook, click here.