Health Information Management

Consider these strategies to bill non-qualifying inpatient

APCs Insider, March 17, 2006

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Consider these strategies to bill non-qualifying inpatient

QUESTION: If hospital staff perform a utilization review and the patient does not meet inpatient criteria, and also does not meet the standard to convert to observation through the use of condition code 44, what are hospital's billing options? Can it do any of the below?

  • Bill as inpatient
  • Bill ancillary services, similar to part B only claim
  • Bill the claim as inpatient, but indicate that the services are not covered

ANSWER: Since the question does not state whether the patient is still in the hospital, there are two billing options, both of which depend on the patient's current status:

1. When the patient is still in the hospital
When the patient is still in the hospital, but doesn't meet inpatient criteria, a hospital cannot bill the claim as an inpatient. Because the patient does not qualify for observation, they are in essence an outpatient in a bed (OIB). Many hospitals use this classification for patients as described in the above scenario. On an "OIB" claim, you can bill everything except for room and observation charges. Bill all ancillary and procedure charges as you would on an outpatient claim.

2. When the patient was admitted, then discharged
When a patient was admitted to your hospital and subsequently discharged, and it was later discovered he or she did not meet inpatient criteria, contact your FI and QIO. Various manual citations such as the Medicare Hospital Manual, Section 210, and the Medicare Intermediary Manual, Section 3110, support a hospital's ability to submit a Part B-only inpatient claim showing the room charges in the noncovered only column of the claim.

Provide a disclosure with a paper claim or in the remarks field for an electronic claim. The disclosure should state that the inpatient admission is being billed as an outpatient service because, while services were medically necessary, the admission itself did not meet medical necessity for inpatient admission. This disclosure is a request that the FI pay for medically necessary services on an outpatient basis. Do not merely submit an inpatient claim or an OPPS claim, as this would not be appropriate.

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