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May 17, 2012

Medicare Billing Regulations in Relation to Inpatient Only Procedures Administered in an Outpatient Setting

Procedures designated as inpatient only are not reimbursed under the Medicare Outpatient Prospective Payment System (OPPS). Because an inpatient only designated procedure does not have an Ambulatory Payment Classification (APC) group, it will only be paid when the patient is an inpatient at the time the procedure was performed.

The following are some of the reasons these procedures were identified by OPPS as inpatient only:

  • The invasive nature of the procedure
  • The need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged
  • The underlying physical condition of the patient who would require the surgery

To receive payment for such a procedure, an inpatient order should be present in the medical record (making the patient an inpatient) prior to performing the procedure. The integral component is the status of the patient when the procedure is performed, not where it was performed.

Medicare recommends that facilities have systems in place to ensure that patients are admitted to the appropriate patient status (i.e., identifying those procedures designated as inpatient only procedures). Basically, a patient should be admitted as an inpatient before an inpatient-only procedure is performed to receive reimbursement for performing the procedure.

The other alternative is for those scheduled procedures, the procedure be reviewed for the possibility of inpatient-only status during the scheduling phase of the encounter and if identified, the patient be notified that they are responsible and have them complete an Advanced Beneficiary Notice (ABN). The patient then assumes responsibility if they choose to proceed and can be billed. However, this can only occur if the ABN is signed prior to the service.

Inpatient-only procedures (procedures assigned status indicator C) are generally, but not always, surgical services that require inpatient care because of the nature of the procedure, the typical underlying physical condition of patients who require the service, or the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged. Inpatient-only procedures and other services provided on the same day are not paid when performed on an outpatient basis. Payment may only be made in the following situations:

  • If the inpatient-only procedure is defined in CPT to be a separate procedure and the other services billed with the inpatient-only procedure include a procedure assigned status indicator 'T,' the inpatient-only procedure is denied, but payment is made for the separate procedure and other payable services
  • If the inpatient-only procedure is performed emergently on an outpatient basis and the patient expires prior to being admitted as an inpatient, modifier CA is reported with the inpatient-only procedure code. The procedure is assigned APC 0375 and any additional services furnished on the same date are bundled into that APC payment.

Inpatient-only procedures provided to a patient in the outpatient setting within the three-day/one-day payment window that would otherwise be deemed related to the admission are not paid by CMS. Providers should bill for these services on a no-pay claim. If there are covered services/procedures provided during the same outpatient encounter as the non-covered inpatient-only procedure, providers are then required to submit two claims:

  • One claim with covered services/procedures on a Type of Bill (TOB) 11X (with the exception of 110)
  • The other claim with the non-covered services/procedures on a TOB 110 (no-pay claim)

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