The Ins and Outs of Condition Code 44

The Code may be used less often than some but is very frequently improperly applied.

Condition Code 44 is probably the least understood and possibly most misused of all billing codes.

OK, that’s an exaggeration. Condition Code 44 should be used significantly less often than many other billing codes. Condition Code 44 is likely used less than any of the 17 anesthesia codes. It should be used less than Modifier 59 for distinct surgical procedures. So statistically, many other codes are more misused. But I’m suspicious that the percentage of times Condition Code 44 is properly used is vanishingly small.

To explain what I mean by that, let me back up to what Condition Code 44 is. Several Monitor Mondays contributors have reviewed Condition Code 44. Notably, Dr. Juliet Ugarte Hopkins did an outstanding review in February of 2021. Because of this well-documented background, I’ll only hit the crucial points.

I see two critical issues regarding Condition Code 44:

  • First, a condition code is just a billing code that lets a payor know that the record contains a valid inpatient order, but an outpatient claim is being submitted, because an effective utilization review (UR) process could not validate inpatient medical necessity. In this case, my concern is that Condition Code 44 is not appropriate if the inpatient order is, for any reason, invalid.
  • Second, in the case of essentially all government payors, and probably managed government payors, the code tells the payor that a specific set of required steps has been followed to assure comprehensive documentation and preservation of patient rights – especially the right to be informed.

Part of the required medical record documentation includes the physician’s concurrence with the utilization management (UM) committee’s recommendation. This is the most common error in Condition Code 44 usage.

For example, a few years ago several hundred Condition Code 44 claims were reviewed. The length of stay for the claims was between zero and four midnights. That the lengths of stay exceeded two midnights in some cases raised other concerns, but that’s for another day.

Not a single record contained documentation of physician concurrence with the committee’s status recommendation. Almost all the records contained an observation order. Of the records containing an observation order, none had documentation of medical necessity for observation services. In the vast majority of cases, the observation order was followed by a discharge order within an hour.

The results of this review are similar to those of other reviews I’ve conducted since the two-midnight rule was established. I can count on one hand the number of times I’ve seen documented concurrence by the physician. I’ve never seen documentation of medical necessity for observation services at the end of a hospital stay.

What has been your experience in reviewing compliance with Condition Code 44?


John K. Hall, MD, JD, MBA, FCLM, FRCPC

John K. Hall, MD, JD, MBA, FCLM, FRCPC is a licensed physician in several jurisdictions and is admitted to the California bar. He is also the founder of The Aegis Firm, a healthcare consulting firm providing consultative and litigation support on a wide variety of criminal and civil matters related to healthcare. He lectures frequently on black-letter health law, mediation, medical staff relations, and medical ethics, as well as patient and physician rights. Dr. Hall hopes to help explain complex problems at the intersection of medicine and law and prepare providers to manage those problems.

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