CMS has clarified that outpatient procedures that meet preadmission packaging requirements and occur on the day of admission or the three days before admission are to be coded on the inpatient claim with ICD-9 procedure codes. But what about inpatient-only procedures provided on an outpatient basis (i.e., before the inpatient order is written)? (Note that there is an exception allowing for orders immediately after the procedure for inpatient-only procedures provided on an emergency basis and for procedures which were scheduled outpatient procedures that convert mid-procedure to an inpatient-only procedure.)
If this guidance is followed, the inpatient-only procedure is coded with an ICD-9 procedure code on the inpatient claim and it will generate a surgical DRG payment based on the procedure. This conflicts, however, with long standing CMS policy of non-coverage of inpatient-only procedures provided on an outpatient basis. So which policy should be followed?
For those of you who have attended the Medicare Boot Camp, Hospital Version, recall we always address coverage first and once you establish you have a covered service, you then move on to how it is billed and paid. With that framework in mind, the fact that the procedure was provided on an outpatient basis means it is not covered, so you do not get to the question of inclusion on the inpatient claim under the three-day rule.
However, this answer concerned me a bit because there is virtually NO difference in the care received by the patient in this case and a patient who had an inpatient order before the procedure was started. For inpatients and outpatients, the surgical suite is generally the same and the location after leaving recovery is what is different. If the patient leaves recovery, with an order for inpatient care written after the procedure, they will go to a bed on the inpatient floor for the exact same care they would have received if the order had been written prior to the procedure.
Knowing there are significant dollars at stake if the provider has to simply write off the procedure under the non-coverage policy, I posed this scenario to Dr. Hecker, the Medical Director for Noridian Administrative Services, the MAC for jurisdiction 3. She confirmed that the non-coverage policy supersedes any billing requirements under the three day rule. Specifically, the non-covered inpatient only procedure provided on an outpatient basis should not be billed on the inpatient claim because it would allow the non-covered procedure to be paid.
Dr. Hecker is always well reasoned in her responses and verifies her answers before responding if there’s any question. However, she does represent the Noridian jurisdiction so readers from other jurisdications may wish to confirm this with their MACs. However, because coverage always comes before billing and payment, use caution if instructed to bill these non-covered procedures on the inpatient claim as this appears to contradict CMS coverage policy, as indicated by Dr. Hecker.
Lastly, I would like to caution providers to consider these situations carefully. In many cases, the fact that an inpatient-only procedure was provided on an outpatient basis may not be known until the time of billing, when it hits edits in the outpatient billing modules. If the claim was already coded according to the three-day rule coding parameters and submitted only on an inpatient claim, there may be no edit to make the provide aware that this situation occurred, resulting in an inadvertent compliance problem. Therefore, caution should be used to educate coders, as well as billers, about application of this rule for procedures occurring before the inpatient order is written.