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.
What Is Inpatient Care?
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.
What Is Outpatient Care?
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:
- Minor surgery
- Hyperbaric or oxygen treatments
- Wound care
- Lab tests or lab work
- Injections or other on-site medication
- Consultations and exams
- Preventive care
Patients often favor outpatient care in medical treatment for several reasons:
- Time: outpatient procedures tend to have quicker home recovery periods: patients may be able to return to work or resume regular activity more quickly.
- Transportation: outpatient hospital services often leave patients able to drive home independently rather than being picked up (this depends on specific outpatient care scenarios).
- Cost: Outpatient services are typically much less expensive than inpatient care.
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).
How Are Admissions and Discharge Different?
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.
What Are Some Examples of Inpatient Care?
Here are five typical examples of medical care that classify as inpatient care:
- Hospital stay: some with severe conditions or needing major surgery will be admitted to a hospital, surgery center, or medical facility and released on a later date.
- Nursing home: the patient will enter a nursing home and may stay for any number of days (or weeks or months) under what's called skilled nursing care.
- Rehabilitation hospital: a patient will enter a rehabilitation hospital, often after a stay in a traditional hospital, to build strength and get various kinds of physical therapy and other treatment in an inpatient setting.
- Long-term acute care hospital: a patient with severe conditions may be kept in a long-term critical care hospital (LTAC) in between visiting a regular hospital and staying in a rehab care facility.
- Inpatient behavioral health and addiction services: someone who is struggling with addiction may enter an inpatient rehabilitation health center to be treated for addiction in a long-term stable environment.
What Are Some Examples of Outpatient Care?
Here are some typical examples of outpatient care:
- Radiology: a patient will schedule CT scans, MRI or PET scans, or other diagnostic radiology scans. They’ll check in and be released the same day for radiation treatment.
- Endoscopy: a patient may be checked in for a colonoscopy or similar procedure and released the same day.
- Monitoring: a patient may make an appointment at an outpatient clinic for a wearable heart rate monitor or other medical device.
- Oxygen treatments: a patient may get oxygen or a nebulizer in an outpatient setting
- Wound care: a patient may get debridement or other wound care and be released the same day.
- Minor surgery: all sorts of surgeries can be delivered outpatient by a healthcare provider. Even fairly significant surgeries can be done through the veins with new surgical methods.
- Respiratory distress: a patient in respiratory distress may get outpatient treatment and be in adequate condition to leave the facility in less than a day.
- Emergency departments: a patient may be admitted to the emergency room and not found to have a serious illness or condition that requires lengthy medical procedures and an inpatient stay.
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.
Evolving Care Models
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.
What Is the Cost of Inpatient 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.
How Does Billing Work for Inpatient and Outpatient Care?
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.
What Are Inpatient and Outpatient Surgery Categories?
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):
- Heart valve repair or replacement
- Gastric bypass for obesity
- Certain types of heart bypass surgery
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.
What Is Planned and Unplanned Inpatient Care?
Some inpatient care is planned, for example:
- Joint surgeries
- Heart valve surgeries
Some are unplanned, such as:
- Recovery from stroke or heart attack
- Traumatic brain injury
- Severe burns
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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