Health Information Management

Understand nuances of reporting inpatient-only procedures

JustCoding News: Inpatient, May 26, 2010

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Inpatient-only procedures are published in the annual outpatient prospective payment system (OPPS) final rule, and coders and billers would do well to understand the implications the list of procedures has on inpatient coding and reimbursement.

Inpatient-only procedures are those for which CMS has determined a patient requires at least 24 hours of postoperative care due to the nature of the procedure or the assumed underlying condition of the patient. CMS updates its list of inpatient-only procedures annually and publishes it in Addendum E of the OPPS final rule. Coders can also locate them in Addendum B of the rule by identifying procedures with status indicator C. To access Addendum B (available online only), go to the CMS website and select “Addendum A and Addendum B updates.”

The list of inpatient-only procedures may seem straightforward, but in some instances, billing for these procedures can be complicated, says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance at HCPro, Inc., in Marblehead, MA. For example, coders may question how to report inpatient-only procedures in the following two scenarios:

  • An inpatient-only procedure is started on an urgent or emergent basis when the patient is still an outpatient
  • A planned outpatient procedure becomes an inpatient-only procedure during surgery

Coders and billers generally must understand that because a patient is considered an inpatient only after a physician issues an order for inpatient admission, a written physician order for inpatient admission must precede an inpatient-only procedure, according to the Medicare Claims Processing Manual, Chapter 3, Section 40.2.2K.

If the physician doesn’t issue the order until afterward, the hospital could be facing a pretty significant denial, Hoy explains.

“Medicare considers orders written after the surgery to be backdated,” says Hoy.

Does this mean hospitals don’t have any recourse when providing inpatient-only services if no inpatient order is obtained before rendering those services?

Not quite, says Hoy. “There are special circumstances that can allow payment for procedures when you don’t have the inpatient order prior to the procedure, but you have to be careful you’re following Medicare policy,” she says.

For example, in the first scenario described, when a patient survives the emergency procedure, providers have two options for the remainder of the patient’s care:

  • Admit the patient for inpatient care. In this case, hospitals can include the inpatient-only procedure as part of the inpatient admission and expect reimbursement according to the specific MS-DRG.
  • Admit the patient after the procedure and before transferring him or her to a higher level of care. In this case, the facility that provided the inpatient-only procedure and stabilized the patient will receive a transfer/per diem DRG payment.

When patients expire during an inpatient-only procedure before the provider has an opportunity to admit them, coders should append modifier -CA (procedure payable inpatient) to the inpatient-only procedure code on an outpatient bill type, says Hoy. When reporting modifier -CA, the UB-04 also should include patient status code 20 to indicate that the patient expired.

When providers file the claim correctly, CMS reimburses according to APC 0375, says Hoy. During calendar year (CY) 2010, the national unadjusted payment amount for APC 0375 is approximately $5,965, according to the CY 2010 OPPS Addendum A.

In the second scenario described, the planned procedure was outpatient, which makes obtaining a physician order for inpatient admission beforehand essentially impossible, says Hoy.

During a December 2007 Open Door Forum call, CMS stated that hospitals may bill procedures as inpatient when they meet the following criteria:

  • The planned procedure is appropriate as an outpatient procedure
  • The planned outpatient procedure becomes inpatient-only during the session
  • Inpatient care is ordered immediately upon completion of the procedure

Debunk a common inpatient admission myth
There are many myths related to inpatient admissions and their prerequisite criteria. The following question addresses one common misconception:

Q. I’ve always heard that inpatient status requires a specific time frame? For example, must a patient remain in the hospital for at least 24 hours to be considered an inpatient?

The answer is no, Hoy says. Medicare has said that although it generally expects inpatients to remain overnight, a 24-hour time frame is not a prerequisite to a medically necessary inpatient admission. This is evidenced by the multitude of one-day stays that Medicare has deemed appropriate.

The decision to admit a patient is complex and requires medical judgment that considers the following factors, none of which reference a time frame:

  • Patient’s medical history and current needs
  • Types of inpatient and outpatient facilities available
  • Hospital’s bylaws and admission policies
  • Appropriateness of treatment in each setting
  • Severity of signs and symptoms
  • Medical probability of an adverse outcome

Refer to the Medicare Benefit Policy Manual, Chapter 1, Section 10, for more information.

Note that CMS has said planned procedures, which include a known diagnosis and intended stay of fewer than 24 hours, should be treated on an outpatient basis.

Editor’s note: The information in this article was presented during HCPro’s February 22 audio conference, “RACs and Medical Necessity: Limit Recoupments and Appeal Successfully.”

This article was originally published in the May issue of Briefings on Coding Compliance Strategies. E-mail your questions to Contributing Editor Lisa Eramo, CPC, at

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