Blog, Revenue Cycle, The Hospital Finance Podcast®

Use of Condition Codes in the Transfer Rule Webinar [PODCAST]

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In this episode, Mary Devine, BESLER’s Vice President of Revenue Integrity, provides us with a glimpse into our next webinar, Use of Condition Codes in the Transfer Rule, presented live on Wednesday, July 10, at 1 PM ET. 

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Highlights of this episode include:

  • Overview of condition codes
  • Purpose of using condition codes on a claim
  • Some of the common situations for condition codes
  • How condition codes impact reimbursement

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome back Mary Devine, BESLER’s Vice President of Revenue Integrity. In this episode, Mary will provide us with a glimpse into our next webinar, Use of Condition Codes in the Transfer Rule. We’re presenting it live on Wednesday, July 10, at 1 PM Eastern Time. Welcome back and thank you for joining us, Mary.

Mary Devine: Thank you for having me.

Kelly: All right, well, let’s go ahead and jump in. So can you tell us a little bit about condition codes?

Mary: Absolutely. So, condition codes are two-digit numerical or alphanumeric representation of aspects of a patient service provided, maybe the type of service or venue that they’re in. And it certainly helps with different types of billing situations that can impact the way that the claim is processed from an institutional perspective. This is not about professional claims. These codes impact the processing of only the institutional claims, as I said, and where you put these claims are going to be on the UBO4, I’m sorry, the 1450, however you want to refer to it. But it’s in boxes 18 through 28. So, there’s a lot of space to put these on your claim. And if you think about the hard copy of the UB, they’re at the top, kind of after the discharge status code. So again, they’re at the top quarter of the claim, and that’s where they would go if you needed to submit them on your claim. Typically, these are used for Medicare and they’re driven by CMS, but certainly not isolated to Medicare and can be used for other payers as well.

Kelly: Well, they sound pretty important. So, what is the purpose of using a condition code on a claim?

Mary: So, as I mentioned, these condition codes indicate the situation of the patient, if you will. And again, talks about potentially the services that provided, where they’re receiving that service, and as well as the billing situation. Maybe if it’s an adjustment claim or cancel claim, any of those things that you want to let Medicare or your payer know what you’re doing, that is why you would use a condition code on your claim. And again, they’re going to impact the way that claim is reviewed and processed. And again, they’re used for various different situations, and they might let some Medicare know that the patient is qualified for TRICARE, or potentially that they’re performing the abortion due to a rape situation, or there’s a do not resuscitate directive on that patient. So, it can say a whole bunch of things. The condition codes also help explain why a procedure was performed, such as in the case of a procedure for a recalled device, you would use condition code 50. When you understand what these condition codes mean, medical billing professionals can more accurately code claims and ensure that patients receive the correct level of care and services. When you understand what that condition code 50 means or any of the condition codes, it really reflects what is going on with that patient and it can describe to the insurance why something’s being done. So again, going back to the 50 on the claim, that’s going to let Medicare know, “Hey, that implant that the patient has is being recalled and they need to take it out and put in a new one.” So, Medicare is going to say, “Hey, even though they had a knee done two weeks ago, they need another knee because that device is being recalled.”

Kelly: Okay, that makes sense. So, what are some of the common situations for condition codes?

Mary: There’s a whole bunch of them, but just to talk about a few of them, it would talk about hospitalizations, home care, any type of chronic conditions, Medicare secondary payer information, something about the SNF stay, and then there’s condition codes specific for adjusting claims or information only claims. There are 149 condition codes and to review all of the situations that are indicated would take us way too long. But I think the point is here is to really illustrate the importance of a condition code.

Kelly: They do seem quite important. So do you always need to use a condition code when submitting a claim?

Mary: By no means, do you need a condition code 100% of the time you are submitting a claim to Medicare or to any other payer for that matter. There are plenty of times you should use a condition code in order to ensure the claim is paid correctly or future claims are paid correctly. Equally as important to that is you want to make sure that you’re not putting a condition code on there when you shouldn’t.

Kelly: Yeah, that makes sense too. So, is there any harm in not using any condition codes when submitting claims to Medicare?

Mary: That’s kind of a funny question to me because condition codes are silent and kind of under the radar. Nobody cares about a condition code until their claim is paid wrong or worse yet, it’s rejected. And as I mentioned, there are so many condition codes, and although many of them are for informational purposes only, there are so many others that have such an impact on whether claims pays or not. So very, very important. And the error would be that it would be rejected potentially or paid wrong. And one other thing I want to say, I keep referencing Medicare because it’s where I spend most of my day working, focusing on Medicare claims and the reimbursement, but other payers certainly require condition codes and claims can get rejected by those payers as well and not just Medicare.

Kelly: Great, good to know. Do condition codes impact reimbursement?

Mary: 100%. 100% there are condition codes that will impact your reimbursement. The number one way, as I just mentioned, it impacts your reimbursement is if the claim rejects, and if it rejects, then your reimbursement is zero versus whatever you should be getting paid on. There’s the first way that condition codes can impact reimbursement. In addition to that, claims are at risk for being underpaid or overpaid, and both are equally important. You don’t want to be overpaid because that’s inappropriate with Medicare, and nobody wants to be underpaid. So, you want to make sure you put them on when they’re needed, and you don’t put them on when they’re not, and you use the correct one. So, as I’ve been mentioning today, condition codes are important, and you should become familiar with ones that are relevant to the type of billing you are doing, whether it is inpatient, outpatient, acute, sniff, Medicare, commercial, or whatever the case is. But just they’re important and they impact reimbursement.

Kelly: Thank you for sharing that with us. Are there any other condition codes you would like to call out for us today?

Mary: I’d like to mention a few that are important to me with the Transfer DRG review. And I think these two are consistently underused and misunderstood. So, this kind of indicates about the discharge test code of 06, so it would be in coordination with that. You would put these condition codes on when you’re referencing the discharge status code 06 and the situation of the patient post-discharge. We talk about the situation of the patient. So, if you utilize a condition code 42, that says to Medicare, “Hey, I know that this patient is in a home health span, but it is unrelated to why that patient was in the hospital. So, I want to receive full reimbursement.” And once you put that condition code 42 on there, then in fact, you’ll receive the full DRG. And equal to that has the same result, but means something completely different, is the condition code 43. It describes the situation of the home care with the patient again. So, it says to Medicare, “Hey, I know this patient is in a home care span, but they did not receive home care within three days. It was the fourth day or the fifth day that the nurse went out to the house to see the patient.” So again, you would be entitled to that full DRG. Again, talking about the condition codes, the importance, and how they impact reimbursement. And then there are a couple for IME shadow claim, which I’m sure most of you are familiar with, but I’ll mention it. So, the condition code 69, which lets them know that you’re looking for the IME portion of the claim only. You’re not looking for the full reimbursement. If you forgot to put that on there, the claim would certainly reject because the patient is Medicare Advantage eligible. And then with that, you should use the condition code 04 if it’s for information purposes only, and you are not looking for reimbursement. If it’s not an acute stay or if you’re not a teaching institution.

If you’re not a teaching institution, you still need to get that shadow claim submitted, but you need to apply that condition code 04, or again, it would reject. And then finally, I think condition code 44 is one that I’d like to mention. And quite honestly, there’s a whole host of rules and regulations that go along with utilizing it correctly, but it lets Medicare know that, “Hey, this patient wasn’t an inpatient status, and before they were discharged, we rolled it back to an outpatient only.” And what that does, it lets you as a provider bill as an outpatient claim versus billing it as a party inpatient or inpatient party only claim, which certainly you can put different charges on those claims, and you would get paid a lot more if it was billed as just an outpatient and not an inpatient Part B. And I think that’s enough for today, Kelly. I think we’ve reviewed a lot of the condition code.

Kelly: Yeah, no, we appreciate you calling those out for us. And thanks so much for joining us today, Mary, and for sharing this sneak peek into our upcoming webinar, Use of Condition Codes in the Transfer Rule that you’re presenting live on Wednesday, July 10th at 1 PM Eastern Time. Thanks again, Mary.

Mary: Thank you.

Kelly: And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…

[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.


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