Ensuring Compliance with Condition Code W2 and 44 Processes

Condition Code W2 (CCW2), referred to by some as a “Medicare self-denial” or “Medicare Part B rebilling,” has been around for over a decade, since it was initially referred to in Chapter 6 of the Medicare Benefit Policy Manual. Dr. Alvin Gore, member of the Emeritus Board of the American College of Physician Advisors, wrote for RACmonitor.com back in May 2019, comparing CCW2 to Condition Code 44 (CC44). He recommended hospitals attempt to utilize the latter process over the former, opining that the CC44 process was more efficient, from a billing and reimbursement standpoint, and more transparent, from a patent status standpoint. 

I agree with Dr. Gore, and also refer to the Centers for Medicare & Medicaid Services (CMS) direction in the Federal Register from August 2013, which includes the following:

“Use of Condition Code 44 or Part B inpatient billing pursuant to hospital self-audit is not intended to serve as a substitute for adequate staffing of utilization management personnel or for continued education of physicians and hospital staff about each hospital’s existing policies and admission protocols. As education and staffing efforts continue to progress, inappropriate admission decisions, and the need for hospitals to correct inappropriate admissions or report Condition Code 44, should become increasingly rare.” 

This clearly states that hospitals may not default to CC44 or CCW2 to address lack of utilization review (UR) coverage, physician advisor coverage, or medical staff education about patient status assignment. Unfortunately, this continues to be a strategy for many hospitals challenged with staffing limitations.

Similarly, hospitals must ensure that they are compliantly following all of the steps in the CC44 and W2 processes. In 2021, I wrote in-depth about CC44, deconstructing the concepts between the code itself and the mandated Medicare process. While the CCW2 process applies to Medicare cases only, it’s imperative to understand that the details must be followed, no matter how complex and daunting they feel to carry out. Indeed, as Dr. Gore illustrated in 2019, the CCW2 process is complicated and time-intensive. However, it’s also mandated by CMS – and is not optional.

A common practice for retrospective “Medicare short stay” reviews involves Medicare patients discharged from the hospital in inpatient status following a hospitalization lasting fewer than two midnights. I believe that best practice extends this sampling to patients hospitalized for fewer than three midnights, capturing potential cases wherein an overzealous clinician or utilization manager changed the patient’s status to Inpatient solely based on the passage of a second midnight, without considering the medical necessity. 

CMS notes that there are specific caveats to the Two-Midnight Rule, including death, transfer to a higher level of care, and others, wherein inpatient billing is still appropriate, even if the hospitalization did not involve at least two midnights. Following review by an experienced utilization nurse, these cases should pass along to billing for completion as-is. Tricky cases, where it’s not clear if the patient who left against medical advice (AMA) early in the morning on hospital day two actually had a condition supporting a two-midnight anticipation on hospital day one, or all of the cases for which the “patient improved more quickly than anticipated” is referenced in the documentation, should be referred to a physician advisor for additional review.

If the physician advisor does not feel that the documentation supports a two-midnight anticipation, which would support Medicare re-billing under Part B, they must reach out to the physician who entered the inpatient order. Notification need not be lengthy, but should include the following points:

1. Retrospective review of the case does not find a two-midnight anticipation was warranted and (briefly) why;
2. The hospital plans on billing the case as outpatient to Medicare Part B instead of inpatient to Medicare Part A, but this does not affect or apply to provider billing;
3. The physician has an opportunity to disagree with the decision and must respond to request further discussion with the physician advisor by a specific deadline; and 
4. If the deadline passes and there is no response from the physician, Part B re-billing will proceed.

In the event the physician disagrees, there must be a discussion between her/him and the physician advisor. If the physician provides additional information that persuades the physician advisor that inpatient billing criteria was met, the physician advisor should pass the case along for Medicare Part A billing and advise the physician to include the missing clinical information in their H&P, progress note, or discharge summary, as appropriate. If the physician and physician advisor continue to disagree, a second physician on the hospital’s utilization management committee (UMC) should be required to review the case and weigh in. If this second UR physician agrees with the clinician that inpatient status was supported, the claim goes forward with Medicare Part A billing. If the second UR physician agrees with the physician advisor, the claim is re-billed to Medicare Part B.

Finally, patients associated with claims re-billed to Medicare Part B must be notified by the hospital. This can be automated within the electronic health record, utilizing a templated letter format, but should include information about where and how the patient can contact the hospital to discuss the situation, if they wish. 

How is your hospital reviewing and managing CCW2s? Is your physician advisor or other physician member of the UMC involved? Are attending physicians receiving notification and allowed a chance to respond? Are patients notified of the change in their claim? If you’re not sure, I encourage you to investigate and confirm that the process is being followed compliantly.

Programming note:

Listen live today when Dr. Juliet Ugarte Hopkins reports this story during Talk Ten Tuesday, 10 Eastern, with Chuck Buck and Angela Comfort.