Inpatient services, those involving an overnight stay, are provided by general and specialized hospitals, skilled nursing facilities, and longterm care facilities. Outpatient services are provided by ambulatory surgical centers or units, by home health agencies, and by hospice staff.
The first major step in the hospital claims processing sequence is admission, when the patient is registered. Personal and financial information is entered in the hospital’s health record system; insurance coverage is verified; consent forms are signed by the patient; a notice of the hospital’s privacy policy is presented to the patient; and some pretreatment payments are collected. In the second step, the patient’s treatments and transfers among the various departments in the hospital are tracked and recorded. The third step, discharge and billing, follows the discharge of the patient from the facility and the completion of the patient’s record.
Diagnostic coding for inpatient services follows the rules of the Uniform Hospital Discharge Data Set (UHDDS). Two ways in which inpatient coding differs from physician and outpatient diagnostic coding are that (1) the main diagnosis, called the principal rather than the primary diagnosis, is established after study in the hospital setting, and (2) coding an unconfirmed condition (rule-out) as the admitting diagnosis is permitted.
Volume 3 of the ICD-9-CM, Procedures, is used to report the procedures for inpatient services. It is organized by surgical procedures divided into body systems, followed by diagnostic and therapeutic procedures. The three- or fourdigit codes are assigned based on the principal diagnosis.
Medicare pays for inpatient services under its Inpatient Prospective Payment System, which uses diagnosis-related groups (DRGs) to classify patients into similar treatment and lengthof- hospital-stay units and sets prices for each classification group. A hospital’s geographic location, labor and supply costs, and teaching costs also affect the per-DRG pay rate it negotiates with CMS.
The 837I—the HIPAA standard transaction for the facility claim—or, in some cases, the UB-04 form (CMS-1450) is used to report patient data, information on the insured, facility and patient type, the source of the admission, various conditions that affect payment, whether Medicare is the primary payer (for Medicare claims), the principal and other diagnosis codes, the admitting diagnosis, the principal procedure code, the attending physician, other key physicians, and charges.
