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inpatient and outpatient coding

Differences between Inpatient and Outpatient Coding

Medical billing and coding are crucial aspects of the healthcare industry. Inpatient and outpatient care is becoming increasingly common, and people could need clarification about billing. Many elements can be changed regarding these two options. In this blog, we will cover the differences between inpatient and outpatient coding so that you can better understand which code assignments are appropriate for your patient’s condition.

Outpatient Care:

Outpatient care refers to medical treatment provided to patients who do not require an overnight stay in a hospital or other inpatient facility. This type of care is typically offered in a doctor’s office or clinic and may include diagnostic tests, minor surgical procedures, and other treatments. Outpatient care is generally less expensive than inpatient and is often covered by insurance.

Inpatient Care:

Inpatient care refers to medical treatment that requires an overnight stay in a hospital or other inpatient facility. This type of care is typically for more severe or complex conditions requiring close monitoring and support, including significant surgical procedures, intensive care, and other treatments. Inpatient care is generally more expensive than outpatient care and may require pre-authorization from insurance.

Key Differences –  Inpatient Coding and Inpatient Coding 

The critical difference between the two is that inpatient coding applies to patients admitted to the hospital for an overnight stay. In contrast, outpatient coding applies to patients who receive medical treatment but are not permitted to the hospital overnight.

Coding systems 

Inpatient coding involves assigning codes to diagnoses and procedures for patients hospitalized overnight. These codes are based on the ICD-10-CM, and ICD-10-PCS coding manuals for billing, with the latter being exclusively used for inpatient hospital settings in the U.S. Inpatient coding is more complex and includes a present-on-admission (POA) reporting requirement to distinguish conditions present at the time of admission from those that develop during the patient’s stay.

On the other hand, outpatient coding involves assigning codes to diagnoses and procedures for patients who receive medical treatment but are not admitted to the hospital overnight. The codes used for outpatient coding are ICD-10-CM diagnostic codes and CPT or HCPCS codes specific to services provided in the outpatient setting. The assignment of codes is based on the visit or encounter, and documentation plays a key role.

Length of stay 

Inpatient coding is more intricate than coding for outpatients as it involves documenting all the services provided to the patient during their entire stay at the hospital. In addition, inpatient coding includes a requirement to report on the conditions present at the time of admission, known as the Present on Admission (POA) indicator. The purpose of the POA is to differentiate between the existing conditions before the patient was admitted and those that developed during their stay at the hospital.

Signs and symptom 

Signs and symptoms associated with the primary diagnosis should not be encoded in inpatient settings. However, if a definitive diagnosis is not provided in the physician’s documentation, coders may code for additional signs and symptoms and suspected conditions. If a diagnosis is uncertain at the discharge time, the condition should be coded as if it was present or established.

In outpatient settings, coders should only assign a diagnosis code when it has been confirmed through diagnostic testing. Uncertain diagnoses include probable, suspected, questionable, “rule out,” or differential. In the outpatient setting, it is acceptable for coders to report the patient visit based on the highest degree of certainty using signs, symptoms, or abnormal test results from the patient encounter. However, before assigning codes for such signs and symptoms, coders should consult with the provider for any new information or results that may provide a definitive diagnosis.

Reimbursement Processes

The reimbursement process for outpatient care is generally simpler and less time-consuming than the reimbursement process for inpatient care. This is because outpatient care is typically provided in a single visit and covered by insurance. Inpatient care requires pre-authorization from insurance, and the reimbursement process can be more complex and time-consuming. Reimbursement for healthcare services can vary depending on the provided services setting. Outpatient services are covered under Medicare Part B, while inpatient services fall under Medicare Part A or hospital insurance. Many rules and regulations govern the reimbursement and copayment of Medicare services.

Inpatient services are typically coded using the Medicare Severity-Diagnosis Related Groups (MS-DRGs) system. This system groups patients based on their diagnosis, treatment, and length of hospital stay. The assignment of a DRG depends on factors such as the principal diagnosis, secondary diagnoses, surgical procedures performed, comorbidities, complications, patient’s age and sex, and discharge status. Complications and comorbidities can impact the severity and reimbursement of the episode of care. Proper assignment of MS-DRGs requires the appropriate tools and codes based on ICD-10-CM and PCS codes and guidelines.


Understanding the differences between inpatient and outpatient coding is essential for healthcare providers and patients. It can ensure that patients receive the appropriate care and are reimbursed for their services. Additionally, understanding these differences can help patients make more informed decisions about their healthcare. It can also help providers ensure that they provide the most cost-effective care possible.

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