These two categories of care, inpatient and outpatient, are essential in medical operations and billing.
They are very different paradigms where providers usually focus on either one or the other type of care. The inpatient and outpatient care facilities are also different, and the staffing models are different.
Knowing more about what constitutes inpatient and outpatient care can be helpful in looking at different kinds of healthcare revenue cycles and billing situations.
Inpatient care is when a patient is kept overnight (or more than 24 hours) in a healthcare facility. Inpatient care requires beds, and bed use often tracks occupancy.
Inpatient care may include treatment-related admittance, observation, or both.
Outpatient care happens when a patient does not need to be in an outpatient facility overnight or for more than 24 hours.
Many different types of treatment can be provided as outpatient care, including:
Patients often favor outpatient care in medical treatment for several reasons:
Many other kinds of efficiencies are also associated with outpatient care in health services. For one thing, the provider's office does not need beds and rooms. Inpatient facilities must also provide patients with meals and other long-term care.
This is costly and has contributed to the large bills patients see from hospital stays (or other inpatient care).
Registration processes are also different for inpatient or outpatient treatment.
Many inpatient situations involved a formal admission for a patient, followed by a discharge on a later date.
Outpatient care, on the other hand, typically involves a check-in and a workflow process where the patient gets released the same day.
Here are five typical examples of medical care that classify as inpatient care:
Here are some typical examples of outpatient care:
Generally, outpatient care applies when a patient is not found to have severe conditions requiring observation or admittance and where the procedure does not require general anesthesia.
Many of the above examples used to require inpatient care but can now be provided as types of outpatient care.
Some of those surgeries now done through the vein can be outpatient. Certain kinds of conditions that may have required 24-hour observation can now be monitored at home.
The shift towards better medical technologies generally favors more outpatient treatment services and fewer inpatient services.
Some items, like rehabilitation services, still work better in an inpatient model or are impractical in delivering them as outpatient services.
One of the reasons for a shift to outpatient care is the high cost of inpatient services that require an overnight stay, in contrast to other items like ambulatory care or outpatient services.
A look at insurance payers such as Medicare or private HMOs shows why inpatient care is so expensive and how it is handled in billing.
Government agencies relevant to the health insurance market have been interested in how inpatient billing works. The Agency for Healthcare Research and Quality, or AHRQ, undertook the Healthcare Cost and Utilization Project (HCUP) program that looks at inpatient care costs and cost drivers.
Looking at cost-to-charge ratios, HCUP helps pinpoint how different elements of inpatient charges add up.
So to limit costs, many doctor’s offices will take on services that used to be inpatient care; hospitals and in-patient facilities are reserved for more urgent types of cases.
Billers will typically use various kinds of codes for inpatient and outpatient care. These include ICD-10 diagnosis codes, CPT procedure codes, and other billing designations.
A place of service code will also provide clues as to whether the medical care was delivered in an inpatient or outpatient environment. For inpatient services, a DRG or Diagnosis Related Group code may provide part of a “narrative” on care and costs, bringing single isolated items into a collective billing group to more carefully control cost.
There is also a big difference in how payers handle outpatient or inpatient surgical procedures.
For example, Medicare covers outpatient surgery services under its Part B designation and inpatient surgery services under Part A. Medicare and supplementary Medicare Advantage plans can treat these types of surgeries differently.
Patients may pay different amounts for items like x-rays and other routine care under an outpatient billing model instead of an inpatient billing model.
Medicare has also released certain types of surgeries that are considered “inpatient only” (IPO):
These include:
Many surgeries have been removed from that list, including various spinal procedures.
Then there are timeline rules like the “two-midnight rule” that apply to whether Medicare Part A will cover a hospital stay.
As mentioned, observation services have also been moved around under inpatient and outpatient models. Rule changes are regularly announced by Medicare and other government payers: as far as private health insurance companies, patients or advocates must consider the contractual obligations in place.
Some inpatient care is planned, for example:
Some are unplanned, such as:
Hospitals have billing and coding designations for these types of longer-term care.
That’s a little bit about the main difference between these two types of care. Think about how inpatient or outpatient care applies to billing for healthcare services.
These days, patients have many more options for electing care, some of which can have a significant financial impact. Knowing how Medicare and other payers treat services is part of better understanding the outcomes of your care choices.
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Sources:
What are long-term care hospitals? | Medicare.gov
AHRQ
ICD-10-CM - Browser Tool | CDC
