Reminder: Priority Health does not accept condition code 44 

Sometimes a member is admitted to a hospital as an inpatient but, upon internal review, the hospital determines the services did not meet inpatient criteria and the admission is changed to observation. This rule has become informally known as "condition code 44." CMS and the QIO use this code to track and monitor these occurrences.

Criteria for the change in status

The change in status is permissible if all of the following conditions are met prior to discharge. If status is changed post-discharge, services are not billable.

  • The hospital has not submitted a claim for inpatient admission
  • A physician concurs with the utilization review committee's decision
  • The physician and utilization review committee's decision is documented in the patient's medical record

The medical record should contain orders and notes that indicate why the change was made, the care was furnished to the member, and the participants making this decision to change the status.

Billing the status change

Priority Health does not accept 12X type of bill for status changes. Under uniform billing guidelines, the hospital submits an outpatient claim using bill type 13x.

More information on billing observation claims and condition code 44.