50.3 -When an Inpatient Admission May Be Changed to Outpatient Status
Patients are admitted to the hospital as inpatients only on the recommendation of a physician or licensed practitioner permitted by the State to admit patients to a hospital. For more detail, see the hospital Conditions of Participation (CoP) at 42 C.F.R. §482.12(c).
In some instances, a physician may order a beneficiary to be admitted as an inpatient, but upon reviewing the case, the hospital’s utilization review (UR) committee determines that an inpatient level of care does not meet the hospital’s admission criteria.
50.3.2 - Policy and Billing Instructions for Condition Code 44
In cases where a hospital utilization review committee determines that an inpatient admission does not meet the hospital’s inpatient criteria, the hospital may change the beneficiary’s status from inpatient to outpatient and submit an outpatient claim (bill type 13x or 85x) for medically necessary Medicare Part B services that were furnished to the beneficiary, provided all of the following conditions are met:
1. The change in patient status from inpatient to outpatient is made prior to discharge or release, while the beneficiary is still a patient of the hospital;
2. The hospital has not submitted a claim to Medicare for the inpatient admission;
3. A physician concurs with the utilization review committee’s decision; and
4. The physician’s concurrence with the utilization review committee’s decision is documented in the patient’s medical record.
When the hospital has determined that it may submit an outpatient claim according to the conditions described above, the entire episode of care should be billed as an outpatient episode of care on a 13x bill type and outpatient services that were ordered and furnished should be billed as appropriate.
There is more to read but I've provided some of the "highlights"...
http://www.cms.gov/manuals/downloads/clm104c01.pdf
