Medical coding is the first stage in the medical billing process. It involves assigning standardized codes to diagnoses and medical procedures. One of the main challenges for healthcare organizations is knowing the thousands of ICD-10 codes and CPT codes as well as keeping track of updates to report the correct codes for the services physicians provide. This is crucial for proper patient care and reimbursement purposes and many organizations rely on medical billing and coding services provided by experts to ensure clean claim submission and facilitate accurate payments. Experienced medical coders are also knowledgeable about the differences between the codes for inpatient and outpatient visits.

Inpatient vs Outpatient Coding

To understand the differences between inpatient and outpatient coding, it is necessary to clearly distinguish between the terms inpatient and outpatient.

“Inpatient” means that the patient is formally admitted to the hospital on the physician’s order. The facility where the patient is admitted for an extended stay may be a hospital, nursing home, rehab facility, or long-term care facility. Staying in the hospital overnight does not necessarily make the patient an inpatient.

“Outpatient” refers to a patient who is treated but not admitted to the hospital for an extended stay. In most cases, outpatients are released from the hospital within 24 hours. The outpatient status remains even if the patient stays in the facility for more than 24 hours, but the physician has not written an order for their admission as an inpatient. For instance, a patient who comes to the facility and is treated and undergoes tests but is not admitted, will remain an outpatient even if they spend the night in the hospital.

Inpatient Coding and Inpatient Coding – Key Differences

  • Codes

Inpatient coding refers to the codes used for reporting the patient’s diagnosis and procedures performed on inpatients. Both ICD-10-CM and ICD-10-PCS coding manuals are used for inpatient coding. ICD-10-PCS is exclusively used for inpatient, hospital settings in the U.S. ICD-10 PCS excludes common procedures, lab tests, and educational sessions that are not unique to the inpatient, hospital setting.

Outpatient coding uses ICD-10-CM diagnostic codes and CPT or HCPCS codes, which specifically apply to services and supplies provided in the outpatient setting. Documentation plays a key role in assigning CPT and HCPCS codes.

  • Length of Stay

Inpatient coding is more complex than outpatient coding. Inpatient codes report the full range of services provided to the patient over an extended period of time or the period of hospitalization. Inpatient coding also comes with a present on admission (POA) reporting requirement. Present on admission is defined as the conditions present at the time the order for inpatient admission occurs. The aim of the POA indicator is to distinguish conditions present at the time of admission from the complications or conditions that develop during the patient’s stay at the hospital.

In outpatient coding, code assignment is based on the visit or encounter. Outpatient coding applies when a patient receives treatment but remains in a facility less than 24 hours.

  • Signs and Symptoms

Signs and symptoms reported as part of the primary diagnosis should not be coded in inpatient settings. However, when a definitive diagnosis is not included in the physician’s documentation, inpatient coders may code additional signs and symptoms and suspected conditions. If a diagnosis remains uncertain at the time of discharge, the condition should be coded as if it existed or was established.

Many outpatient procedures do not have a definitive diagnosis. In the outpatient setting, coders should never assign a diagnosis code unless that diagnosis has been confirmed by diagnostic testing, or is otherwise certain. Uncertain diagnoses are those indicated by the following terms:

  • Probable
  • Suspected
  • Questionable
  • “Rule out”
  • Differential

In the outpatient setting, it is acceptable for coders to report the patient visit to the highest degree of certainty based on signs, symptoms, or abnormal test results that occur at the time of the patient encounter. However, before assigning the codes for such signs and symptoms, coders should check with the provider for any new results and information that can offer a definitive diagnosis.

  • Reimbursement

Outpatient services are covered as part of Medicare Part B, while inpatient services fall under Medicare Part A or hospital insurance. Many rules and regulations govern Medicare reimbursements and the copay for which the patient may be responsible.

Inpatient services are typically coded according to Medicare Severity-Diagnosis Related Groups (MS-DRGs). DRGs group patients according to diagnosis, treatment and length of hospital stay. The assignment of a DRG depends variables such as: principal diagnosis, secondary diagnosis or diagnoses, surgical procedures performed, comorbidities and complications, patient’s age and sex, and discharge status. Complications and comorbidities (CC) add to the severity and reimbursement of the episodes of care. Proper assignment of MS-DRG requires the right tools based on ICD-10-CM and PCS codes and guidelines.

Inpatient and outpatient coding requires professional expertise. Partnering with a medical billing outsourcing company that has certified and experienced coders on board can help hospitals and practices ensure accurate code assignment, successful claim submission, and timely and appropriate reimbursement.