Health Information Management

Correctly bill ancillary bedside procedures in addition to the room rate

JustCoding News: Outpatient, April 18, 2012

Want to receive articles like this one in your inbox? Subscribe to JustCoding News: Outpatient!

As technology evolves, providers can perform more procedures at the patient's bedside than they ever could in the past. Previously, they could only perform these procedures in another department of the hospital, and they had to charge separately for them.

As charges become more specific to provide additional concrete and transparent cost data, providers must consider what procedures they routinely provide to patients and what procedures are specifically related to the patient's condition.

In some cases, hospitals may charge for certain services when the provider performs the service in an ancillary department, but not at a patient's bedside. The facility's staff may believe they are not permitted to charge for a service provided at the bedside of an inpatient or may think the cost is already accounted for in the regular room rate.

"If we're going to charge them in the ancillary department, why can't we charge them when they are done at the bedside?" says Denise Williams, RN, CPC-H, vice president of revenue integrity services for Health Revenue Assurance Associates, Inc., in Plantation, Fla. "They are the same procedures and they are done for the very same indications."

Charging for inpatient services
CMS provides very little guidance regarding how hospitals should bill inpatient services, including ancillary ¬bedside procedures. This lack of guidance confuses facilities because it's unclear what they can bill for in addition to the room rate.
Although it would be helpful if CMS provided additional guidelines, the agency does allow latitude so facilities with different needs can make things work for their structure, says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc., in Danvers, Mass.

Individual payers also add to the confusion by stipulating that facilities cannot bill for certain ancillary bedside procedures or invoking Medicare coverage rules that don't exist, Hoy adds.

So instead of having actual guidelines, many consultants and payers are creating best practices based on Medicare's recommendations, Hoy says. Sometimes these individuals or entities inaccurately cite those recommendations as actual CMS guidance. As a result, third-party payers incorrectly deny items billed separately from the room rate. Apply charges uniformly

CMS specifically says facilities must apply charges uniformly to inpatients and outpatients. This becomes important when providers render ancillary services to inpatients, Hoy says.

Facilities often question whether they can bill something as an ancillary service for an inpatient. In many cases, facilities would absolutely bill those services ¬separately for outpatients, Hoy says.

"What we see is a disparate application of charges between inpatients and outpatients, and it isn't really clear that this is what Medicare intends," she says. CMS seems to intend that facilities separately bill the same services for inpatients and outpatients, she adds.

Each facility has its own charging methodology, so the staff has to look at that methodology as an individual facility or system, Williams says. Then weigh the pros and cons of the decision you're going to make, she adds.

Some providers include everything in the room rate. As a result, these providers have a really high room rate because they believe it's too difficult operationally to list out all of the separate charges. Other providers find it easier to delineate the separate items, resulting in a lower room rate, Hoy says.

"That philosophy of how am I going to set my charges is really up to you, and you need to establish that," Hoy says. "However, facilities should also follow the common practices of other hospitals in the same area."

Determine what's in the room rate
So how should a facility's staff initiate the discussion about what to bill separately? Start by determining and defining what's included in the room rate, Williams says. Generally, the room rate includes:

  • Housekeeping and maintenance services
  • Electricity
  • Water
  • Trash and biohazard disposal
  • Administrative services

Consider avoiding the term "overhead" because this is a generic word that is open to interpretation, Williams says. "If you use that term, you want to specify exactly what your definition of overhead is," she says.

Facilities must also define what they consider standard nursing services. Think about whether any nurse can provide a particular service within his or her scope of practice. "You may decide that something is standard nursing care and happens for most of your patients," Williams says. "Therefore, you're going to include that in your room rate."

Other nursing services, such as specialized wound care, fall outside of that definition. Specialized wound care is not something every nurse can perform, and it is not a service provided to all patients.
Also, determine whether you charge a service separately to any patient in your facility regardless of whether the patient is an inpatient or outpatient. Remember that you must apply charges uniformly to every patient.

"You have to sit down and have a discussion and get away from the idea that everything for an inpatient is included in the room rate," Williams says.

Create a policy for the room rate
Once a facility decides to charge for ancillary bedside procedures, staff must then create a policy definition to describe what is included in the facility's room rate, Williams says. "It's probably a good idea to do it anyway, whether you decide to proceed down the path now or you think you might do it later. It really is important to know for now and for the future exactly what is -included in your room rate," she says.

For example, hospital XYZ defines its room rate to include the following services:

  • Nursing care provided by any RN without additional certification or training required, such as vital signs and routine postoperative care
  • All dietary requirements eaten or provided via the gastrointestinal tract (meals, snacks, enteral nourishment)
  • Housekeeping services
  • Electricity, water, and other systems required to operate the facility
  • Disposal of trash, biohazard materials, etc.
  • Supplies that are available to the general patient population and not specifically ordered by a physician
  • Alcohol, Betadine®, and other skin cleansing products
  • Cotton balls and cotton tip applicators

All other items/services not defined by the above categories are considered to be nonroutine and patient-specific services. When provided for an individual patient, hospitals should report these services as a separate line item on the patient's bill.

Once a facility creates its policy, it will be able to demonstrate to CMS and to other auditors that it is charging all patients in the same way, Williams says.

"If you don't have some of these things defined, you can tell CMS what you think is happening," she says. "If I'm CMS or a CMS entity that is auditing, and I ask six different people this question and I get six different answers, I'm going to start to wonder if all patients really are being charged the same."

In addition to serving as defense during an audit, the written policy will document the decision-making process and provide guidance for the future, says Williams.

Define bedside procedures
After defining what is included in the room rate for the inpatient room, review what services remain, and determine whether a line-item charge is appropriate and/or feasible, Williams says. Define bedside procedures the facility does not currently report on inpatient claims. The trick is to actually create the definition, Williams says, because the phrase "bedside procedures" is similar to the term "overhead" in that its meaning is somewhat subjective.

"We've coined that phrase for things done for the patient at the bedside and they are an inpatient," Williams says. When patients are in observation, facilities often already capture many of these charges.

Consider using outpatient procedures as a guide to determine whether a service meets the facility's definition of what is and isn't included in the room rate. Consider procedures such as:

  • Lumbar punctures
  • Insertion of Foley catheter
  • Declotting of implanted vascular access device

Also, consider ICD-9-CM procedure codes that providers don't perform in the OR. "¬Surgeries are charged so the cost is captured for the individual patient," ¬Williams says. "We are interested in those procedures that are not currently line item reported."

Charging methodologies
Facilities can use a variety of methods to charge for ancillary procedures.

Consider establishing a line-item charge for bedside procedures using a revenue code that HIM coders report (e.g., 0369). HIM can then report the appropriate CPT® code based on the documentation in the record. The data is then stored internally for costing and trending purposes, Williams says.

Even though facilities don't report CPT codes on inpatient bills, some hospitals have decided to put the CPT code on the bill for their internal information and to ensure they capture every service, Williams says.

Not every bedside procedure results in an identical charge, she says. Facilities must consider what to charge for each procedure, or they can choose to bill the same amount they would in the outpatient setting.

For inpatient claims, report the service with revenue code 0230. Most payers consider revenue code 0230 to be a "routine service" revenue code and an extension of the room rate.

For outpatient claims, report the service with an ancillary revenue code (e.g., 0361, 0761, or 0260).

Effect on payment rates
CMS has determined that billing for ancillary ¬services affects APC and MS-DRG payment rates. CMS uses cost reporting to set these payment rates, and when facilities don't appropriately report ancillary charges, CMS does not account for those charges in the reimbursement.

When facilities group a large number of services into a category that is not well defined, CMS cannot easily determine the differential costs between patients. "If your room rates include a lot of different things that only a few patients receive, then it's very hard to tell which patients are more expensive and need more services compared to ordinary patients," says Hoy.

CMS' inability to distinguish each of the different nursing services across multiple types of patients presents a large challenge when it comes to setting PPS payment rates because the agency can't tell which patients require more expensive services.

By separating specialized nursing services and reporting more detailed incremental charges, facilities provide CMS with additional data that it can use to set appropriate payment rates.

Providers also need more specific cost information to ensure the reimbursement they negotiate with third-party payers is commensurate with their costs, Williams says. "So we have to consider what procedures are routinely provided to patients and which ones are patient-condition specific," she explains.

The bottom line is facilities must charge all patients the same way, Hoy says. Facilities must also establish a charge structure that is separate from the one in the chargemaster. They need a way to consistently mark up charges as well as a plan for how they will structure their charges, Hoy says.

Look at one example
In the 2009 IPPS final rule, CMS discusses ¬charging for blood transfusions. This service is not specifically mentioned in the list of routine services or the list of ancillary services. Transfusions are arguably a specialty service, Hoy says. So providers must consider the common charging practices of hospitals in the same state as well as charging practices in their own subunits or other settings.

Facilities must separately bill transfusions in the outpatient setting because they are separately paid. In general, facilities bill transfusion ancillary cost centers (i.e., OR or ED) separately. In fact, facilities cannot bill for the blood itself without reporting the transfusion code as well.

In some ancillary areas, such as the ED, facilities also normally bill blood transfusions separately. It may be inappropriate to not bill transfusions separately for inpatients, Hoy says.

Determining which procedures to include in the room rate and which to charge separately is not an easy process, says Williams.

"This is definitely an Olympic-sized exercise," she says. "Decisions will not be made overnight. This is going to take some work."

Editor’s note: This article was originally published in the March issue of Briefings on APCs. Email your questions to Senior Managing Editor Michelle A. Leppert, CPC-A, at

Want to receive articles like this one in your inbox? Subscribe to JustCoding News: Outpatient!

Most Popular