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Inpatient status and billing

Compliance Monitor, February 24, 2006

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Q: If a patient has a lengthy stay in the emergency department where he or she is treated and receives medications and is later admitted, should the services and medications administered during their stay in the emergency department become part of the inpatient billing or should they be billed as outpatient services if the services and medications were provided prior to admission? Also, can you please define "formal admission?" Can inpatient status only be ordered by a physician?

A: The answer to the first question is that if a patient is admitted from the emergency department, Medicare requires that the emergency department services and billing must be included in the inpatient stay. No additional sums can be billed over and above the DRG payment. Medicaid typically follows the same requirements. For private payers, the answer is governed by the hospital's contract, but generally the same requirements apply.

An inpatient only can be admitted by a member of a hospital's medical staff who has admitting privileges, who is always a physician. Under most medical staff bylaws the physician has to be a member of the active staff, though sometimes other categories of staff have limited admitting privileges. Emergency department physicians generally do not have admitting privileges.

A formal admission is a physician's order to admit as an inpatient-not for observation. This is a very hot "bone-of-contention" with insurers who frequently downgrade inpatient admissions to observation-and a problem for physicians who often do not understand (or care about) the different pricing of observation stays from inpatient stays-and who often do not adequately distinguish the type of admission in their orders. Medicare has stringent rules regarding observation days that limit the duration of observation to 24 hours unless there are clearly documented clinical reasons for the observation period to be extended.

Various organizations have established criteria for inpatient admission, including InterQual and Millimen and Robertson, but these standards are not included in Medicare regulations, and are seldom included in third-party payer contracts, so there remains much room for dispute.

Thanks to John Reiss, Ph.D., J.D., an attorney with the law firm Saul Ewing LLP, in Philadelphia, PA, for answering this week's question.

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