In this episode, we are joined by Mary Devine, Director of Revenue Cycle for BESLER, to discuss the appropriate uses of condition code 42 on Medicare claims.
Highlights of this episode include:
- Background on condition code 42 and when providers should be using it.
- How hospitals should correctly use condition code 42.
- Ways in which condition code 42 is impacted by the transfer rule.
- How the OIG has initiated audits to review the use of condition code 42
- And more…
To view the transcript of this podcast episode, click HERE
Properly applying condition code 42 to hospital claims
Discharge status code 06 indicating the patient is being discharged/transferred to home with a written plan of care for home care services is clear and simple in its intended use. When providers apply condition code 42 (CC42) to claims, things can become complicated. The application of condition code 42 is not easy, nor is developing the required documentation to support its use.
The appropriate use of Medicare condition code 42
In Med Learn Matters SE0801, CMS states condition code 42 is to be used to indicate home care continuing post-discharge that is not related (i.e. condition or diagnosis) to the inpatient admission.
For patients discharged to home care that is unrelated to the reason the patient was admitted to the hospital, a discharge status code of 06 is appropriate and a condition code should be appended to the 06. This indicates to Medicare that the patient is in a home health span, but the care is unrelated and the provider is due the full DRG.
What is less clear is whether or not the home care is unrelated and how is this can be determined and supported in the medical documentation.
“The hospital will make a conscious selection that the home care the patient is to receive is not related to the hospitalization and would be expected to have documentation in the patient’s record to that effect.”
Condition code 42 is most applicable to patients who are admitted to the hospital in the middle of a home health care episode.
For patients admitted to home care post-discharge, the home care is most likely related. Hospitals are responsible for deciding whether the home care received post-discharge is related to the diagnosis/condition for the hospital admission. If any of the post-discharge services noted in the discharge plan are related to the reason for admission (primary diagnosis) then condition code 42 must be appended to the discharge status of 06.
CMS is not clear on how this exact determination is made. CMS does not expect hospitals to compare hospital claims to home health claims as this is not typically feasible or even possible. CMS requires providers to have documentation in the medical record to support the use of the condition code 42. The preamble to the post-acute transfer rule indicates that hospitals should make this decision at time of discharge.
In lieu of a hospital’s ability to match hospital claims to home health claims for the purpose of determining their relation to each other, CMS expects that physicians should know the reason for home care at time of discharge. Additionally, physicians should document new or additional needs for home care based on the patient’s condition at time of discharge and diagnosis. CMS is clear there must be documentation to support the use of condition code 42. If there is nothing in the medical documentation to support its use, condition code 42 should not be used.
OIG audits target the use of condition code 42
The OIG has begun to review inpatient hospital claims at risk for noncompliance such as those with unreported discharges to home health services. Audits specifically focus the use of condition code 42 including included whether it was on the claim or not. The audit uses hospital claims and home health claims to determine if the home care was received and related. Although CMS did not state that the primary diagnosis codes are the signal the claims being related, it is something they review in the audit. The error rate is found to be 13% on average with 82% of claims being overpaid and 18% underpaid.
Providers have disagreed with audit findings and often stated that they determined the care to be unrelated due to the lack of a physician order for home care and the existing services prior to the admission. Neither of these reasons are supported by CMS.
CMS does not require providers to review diagnosis codes but instead wants providers to understand the needs of the patient at the time of service and document in the chart that care is related if the reason for admission or condition of the patient requires service post-discharge.
If hospitals do not use condition code 42, claims may not be represented correctly from a coding perspective. Providers should review their use of condition code 42 and perform audits on the use of it. Audits should include the review of case management and physician notes. Retrospective reviews of condition code 42 use should include directly verifying home health stays with the relevant facility and EMR review.
The appropriate use of condition code 42 can assist hospitals in capturing reimbursement they are entitled to.
Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.
Use of condition code 42 on Medicare claims is not always easy, but the required documentation to support the use of CC42 is not easy either. To help us understand more about condition code 42 and its appropriate uses, I’m joined my Mary Devine who is the Director of our Revenue Cycle Team here at BESLER.
Mary, welcome back to the podcast.
Mary Devine: Mike, thanks for having me. I think condition code is a really hot topic to be talking about today.
Mike: I couldn’t agree more. And for those in our audience who are not familiar with what condition code 42 is, can you just talk to us about that a little bit and when a provider should be using it as well?
Mary: Sure! So, Medicare defines it really well in the MedLearn Matter SC0801. The condition code 42 is used to indicate the homecare/continuing care post-discharge. And it really further says that it is not related to the condition or the diagnosis of why the patient was admitted to the hospital.
And again, just to further clarify, a patient being discharged to home care that is unrelated to the reason the patient was admitted to the hospital, a discharge status code of 06 needs to be on the claim when it is billed to Medicare. And you would then append the condition code 42.
And that lets Medicare know you recognize the patient is in a home health span, but the care that they’re going to receive post-discharge is unrelated to the reason they were in the hospital. And the provider, should they be impacted by the rule, is due the full DRG and not that per diem payment you would get with a discharge status code of 06.
Mike: Okay. Mary, does CMS have a clear definition of “related” as you said? How is that determined and documented?
Mary: I think that their stance on what is the definition of “related” is somewhat clear, but always open for interpretation. And their definition of “related” means that was it in fact—when the doctor discharges the patient, is the patient going to receive home care that is related to the condition or the diagnosis at time of discharge.
And really, where they’re not clear is how you absolutely define that.
And CMS does further go on to say that the hospital will make a conscious selection that the home care the patient is to receive is not related to the hospitalization and would be expected to have documentation in the patient’s record to that effect.
And if that’s the case, it is not related, the condition code would be appended to the claim. But what they’re not sure of is really how you make that related or not. Do you line up diagnosis codes? And that’s where the real interpretation comes into play.
Mike: Yeah, it certainly has been cause for some confusion among hospitals.
Mary, how should hospitals correctly use condition code 42?
Mary: Again, Medicare is certainly clear on this, that hospitals are responsible for deciding whether the home care received post-discharge is related to the diagnosis or the condition accountable for the hospital’s admission. And if any of the post-discharge services noted in the discharge plan are related to the reason for admission—and I think they even go as far to say the primary diagnosis—then the condition code 42 would be appended to the discharge status of 06.
Mike: Mary, is CC42 one of the discharge status codes impacted by the transfer rule?
Mary: You know, it is but it isn’t.
So, when you talk about the transfer rule, the transfer rule is specific to discharge status and specific to, at this point in time, in 2019, about 280 DRGs.
So, when you apply a discharge status code of 06, and it is below the geometric mean length of stay, and it is one of the 280 DRGs when you applied the discharge status code of 06 indicating that the patient is going to go off and receive home care, it would then become impacted by the rule and the provider would receive their per diem payment.
When you append that condition code 42 stating that the post-acute services are unrelated to the hospital admission, well then on that same 280 DRG below the geometric mean length of stay, that says to Medicare, “Although I am receiving post-acute services, they are unrelated to why the patient was in the hospital. And I am due the full DRG.”
And really, what we’re speaking about here are patients that are in a home health episode prior to being admitted to the hospital. It certainly could apply to home care that starts post-discharge, but more than likely, those are really related to why the patient was in the hospital. It is those patients that are in a span prior to being admitted to the hospital.
So, again, when you apply that condition code 42, you’re saying to Medicare, “Hey, Medicare, these services are not related to my hospital admission. Please pay me the full DRG.”
And that’s why there continues to be a focus on the condition code 42 and the use of it because Medicare is paying more money than if it was just a regular discharge status code of 06.
Mike: Mary, we know that condition code 42 is on the OIG risk area. Have there been any audits that you’re aware of? And if so, what were the results of those audits?
Mary: There was talk that the RAC would be focusing on this. And I have not seen any RAC involvement at this point in time. But what I have read and am fully aware of is that the OIG has begun to review hospital claims at risk for non-compliance to include the in-patient claims with unreported discharges to home health services.
And the audit specifically reviewed the use of CC42. This included whether the 42 was on the claim or not on the claim. So, potentially, the provider billed an 06, but should’ve had a 42 on there and they didn’t, or they billed it as an 06 and they had the 42 on there and they shouldn’t have. So it just depends. And they’re looking at both aspects of it.
And the way they went about doing the audit was that they used the hospital claims data and the home health claims data to determine if the home care was received and related.
And it’s funny because Medicare never intended that for the relatedness to rely solely on the primary diagnosis codes or other diagnosis codes. But when the OIG went about the audit, that is exactly what they relied on. They relied on the home health diagnosis codes and the hospital diagnosis codes.
And what they found was that, on average, of all the audits that they did, there was an error rate of about 13% and 82% of the claims were overpaid. So that means that the claim was either billed an 01 stating the patient did not receive home care or they billed an 06 and put the condition code 42 on there and when Medicare reviewed the home health data compared to the hospital data, they in fact found the care related and they stated that it was overpaid.
And then, additionally, about 18% of them were in fact underpaid. So these were claims that were billed with a discharge status code to an 06 and they should’ve had a condition code 42 on there because when Medicare lined up the diagnosis codes for both the home health and the hospital, the care was determined to be unrelated.
And Mike, I did just want to mention quickly that the providers of course did not agree with all the hospital’s findings and found that some of the claims that they marked as related, they found them to be unrelated. And the reasons that they were stating that the condition code 42 was on the claim was due to either the physician did not ever mention home care in the chart or one of the providers actually mentioned that because the home care was started before the patient went into the hospital, it could never be related. And neither of those cases will really support the unrelated care.
Mike: Mary, do you have any recommendations on the use of CC42?
Mary: When providers consider the use of the condition code 42, it is important and required by CMS that you do use it because if you don’t use it, they audit on that equally. So you just have to be aware of how you’re using it and why you’re using it.
CMS does not require you to review, as I mentioned above, diagnosis codes from the home health chart but understand the needs of the patient at the time of service and at the time of discharge. And if the reason for admission or condition of the patient requires services post-discharge, obviously, the care is related, and you should never append that condition code 42.
If they just found that he post-acute services have nothing to do with why the patient was in the hospital—and I’ll use the example of the patient is at home being monitored for diabetic management, then the patient is admitted for pneumonia—there’s no services required for that pneumonia post-discharge, but they go home and continue to receive diabetic management, well that right there would be an example of the condition code 42.
The key there is to make sure that the physician or the case management notes that in the medical record.
And just as a recommendation, I encourage providers to review their use of condition code 42 and perform audits on that. And this should include reviews of case management notes as well as physician notes.
Mike: Okay. Any recommendations related to retrospective transfer reviews?
Mary: You know what? That’s really a great question, and it’s really something to think about.
When you think about the post-acute transfer rule and the retrospective review, Medicare says the physician should make the decision at time of discharge whether the patient is needing the home services or whether they’re related or not. So you really want to be careful when you are making that decision retrospectively.
That’s not to say that you can’t. Again, you should make sure that whether you do it internally or use a vendor, that they are reviewing the documentation on the chart as well as speaking with the home health agency to determine why the home health agency determined that they were going to see that patient. And then make a decision based on that both with the combined effort of the conversation with the home health agency and the review of the documentation.
And if it is stated in the chart that the care is related, that is what you have to go with. It does not matter what the home health agency says.
But certainly, the proper use of it, and going through those steps just to ensure that you are getting every piece of reimbursement that you’re due, is important.
Mike: Mary, thanks for stopping by today and providing some clarification on this rather complex issue.
Mary: Thank you for having me.