A conversation was recently had with a CMS representative regarding their policy and billing instructions associated with observation hours and services in situations when a patient is admitted as an inpatient but is subsequently found to be only eligible for observation; thus billed as an outpatient on the UB-04 reporting the Condition code 44.

One of the more difficult issues facing hospitals today is related to the timely claim filing rules associated with re-billing ancillary charges for denied inpatient stays.

Under the RAC demonstration project, CMS allowed hospitals to re-bill their RAC denied inpatient short stay hospitalization cases as outpatient claims. The UB-04 claim type used to submit these claims for benefits was the traditional 13x; and Medicare Part B hospital benefit policies dictated coverage of services and payments.