Inpatient coding professionals are used to DRG systems where all of the diagnoses and procedures map to a single DRG. So they may not look for additional procedures and services to report outside of that DRG.
However, in some cases, coding professionals can—and should—report ancillary services provided to inpatients.
CMS provides little specific guidance on hospital inpatient charging practices in general, which creates plenty of confusion for facilities, says Denise Williams, RN, CPC-H, vice president of revenue integrity services for Health Revenue Assurance Associates, Inc., in Plantation, Florida. Consultants further muddy the waters when they state with authority that something "can't" be billed, even saying they are following Medicare rules, Williams adds.
"The payer denies the ancillary services, and then says you can't incorporate that into your room rate," Williams says.
Charging practices
CMS does not dictate the charge structure for hospitals, Williams says.
The Medicare Provider Reimbursement Manualstates in Section 2202.4 that charges refer to the regular rates established by the provider. It goes on to state, "Charges should be related consistently to the cost of the services and uniformly applied to all patients whether inpatient or outpatient."
Many times, inpatients and outpatients are in the same nursing unit, are taken care of by the same nursing staff, and receive many of the same services, Williams says. "Why shouldn't our charges be the same?"
Remember also that observation is an outpatient service, not a status. Observation patients often receive services and procedures such as drug administration, lumbar punctures, and Foley catheter insertions in addition to observation.
Outpatient coders routinely report those services in addition to observation. If a facility charges for these services for a patient in observation, Williams asks, why wouldn't the facility also charge for the same services in the inpatient setting?
Room and board
In Section 2202.6 of the Medicare Provider Reimbursement Manual, CMS defines inpatient routine services as "those services included by the provider in a daily service charge—sometimes referred to as the 'room and board' charge."
Generally, the room rate includes:
- Administrative services
- Regular room, dietary, and nursing services
- Minor medical and surgical supplies
- Medical social services
- Psychiatric social services
- Use of certain equipment and facilities
"These are items for which a separate charge is not 'customarily made,' and that's the key phrase," says Williams. For example, facilities generally do not charge for a nurse to come in and take a patient's vital signs. That service is included in the room rate or the observation services charge. "But we don't customarily charge every patient for a bedside procedure," she adds. "We charge them only if that bedside procedure is applicable to them."
Consider whether your facility has ever defined what is included in its room rate, says Valerie A. Rinkle, MPA, associate director with Navigant Consulting in Seattle.
The room rate also includes:
- Housekeeping and maintenance services
- Electricity
- Water
- Trash and biohazard disposal
"Consider staying away from the term 'overhead' as this is a generic term that is open to interpretation," Rinkle adds.
In Section 2202.8, CMS classifies the following as ancillary services:
- Laboratory
- Radiology
- Drugs
- Delivery room (including maternity labor room)
- Operating room (including post-anesthesia and postoperative recovery rooms)
- Physical, speech, and occupational therapy
This list is not all-inclusive. Ancillary services may also include other special items and services for which charges are customarily made in addition to a routine service charge. Nor does the ancillary services list include services such as drug administration or lumbar punctures. However, those services are considered ancillary services because the facility provides them based on an individual patient's needs, Williams says.
In the 2008 IPPS final rule, CMS addressed nursing services provided in addition to the regular nursing services every patient receives. Specifically, CMS stated that if a service is not specifically listed as a routine or ancillary service, facilities should follow common practice for similar facilities in the same state. "If there is no common or established classification for whether an item is routine or ancillary, the provider can use their own customary charging practice as long as it's consistently followed for all patients," Williams says.
Ancillary or routine
Not all services or items are classified the same way in every department, Rinkle says. A service or item may be routine in the surgical unit (because all patients there receive it), but in another department where not all patients receive the service, it may be ancillary.
Supplies that are stored in bulk on the nursing floor are generally routine supplies, Rinkle says, which are not usually identified to the individual patient. These supplies include:
- Alcohol preps
- Iodine swabs
- Paper masks
- Gloves
These are different from items that are kept on the shelf for easy/quick access, are separately identifiable to a patient, and are usually related to a physician's order, such as Foley catheters and IV solutions, Rinkle says.
Facilities should also look at nursing services to determine whether they are routine or ancillary. One way to make the determination is to consider whether "any nurse" provides the service within his or her scope of practice, Rinkle says. For example, specialized wound care is different than routine wound care/prevention.
New guidance
Billing ancillary services becomes even more complicated when facilities factor in CMS' three-day payment window and the new Part B rebilling.
CMS addressed the proper way to do a Part B rebilling in Transmittal 2877, CR 8445, dated February 7, 2014. Hospitals may choose to rebill a medically unnecessary inpatient stay either when a Recovery Auditor denied the claim or when the facility does a self-denial, Rinkle says.
Hospitals can only bill for Part B services that would have been covered if the patient had been correctly treated as an outpatient. They cannot bill for services that require outpatient status, such as observation services and ED visits.
CMS focused on the date and time of the physician's inpatient order in the transmittal, Rinkle says. Prior to the inpatient order, the three-day bundling rule applies. If the facility decides to rebill the stay using the Part B rebilling, it becomes a 131 type of claim for all services up to the date and time of the inpatient admission order, Rinkle says.
From the time of the inpatient order to discharge, use a 121 Part B-only claim to receive OPPS payment, Rinkle says.
In the transmittal, CMS states:
Inpatient routine services in a hospital generally are those services included by the provider in a daily service charge--sometimes referred to as the "Room and Board" charge ... These services are never outpatient services, and therefore are not separately billable Inpatient Part B ancillary services ... (such as IV infusions and injections, blood administration, and nebulizer treatments), which are not separately billable Inpatient Part B ancillary services."
"That's a very strong statement, and it was very concerning," Rinkle says. It seems to contradict the Medicare Provider Reimbursement Manual's definitions of ancillary and routine services as well as the 2008 IPPS final rule, which specifically identified blood administration as a separately billable service.
On November 6, CMS issued Transmittal 3106 to specifically address drug administration. In the new transmittal, CMS states that if providers are already carving out injection and infusion services and other services listed in Transmittal 2877 from room rates on inpatients, these will then be allowed on 12x claims.
"If you do not separately charge injections and infusions on inpatients and you simply reload an inpatient claim as an outpatient Part B-only 12x claim, then none of the codes will be on the 12x claim for OPPS payment," Rinkle says. "And you will not receive OPPS payment for those services."
Transmittal 3106 also includes additional information about nursing services, such as IV infusions and injections, blood administration, and nebulizer treatments, the same examples it used in the Provider Benefit Manual. The transmittal states that these services may or may not have a separate charge depending on whether they are classified as routine or ancillary among providers of the same class in the same state.
Unfortunately, hospitals don't often know what other hospitals in their state do, Williams says. Hospitals can try reaching out to their state hospital association to see if the association can provide that information.
Some providers have established separate charges for these services following the Provider Reimbursement Manual instructions. If the facility did not follow the Provider Reimbursement Manual instructions, it cannot bill these services as separate charges.
In essence, CMS is telling providers that they can bill for the ancillary services as long as they follow the Provider Reimbursement Manual instructions. "You have to do it for all patients and all payers consistently, and you have to report the correct revenue code to make sure it is appropriate for apportioning your costs," Rinkle stresses.
CMS' 2-midnight rule adds another layer of complexity to charging for ancillary services. Hospitals' average length of stay and inpatient volumes are decreasing due to this rule, Rinkle says.
More patients start as outpatients receiving observation and bedside services prior to becoming an inpatient. While the patient is outpatient, correct charging practice is hourly observation services plus injections, infusions, and other bedside services. This is all included on the IPPS claim as part of the three-day bundling rule if the patient is subsequently admitted as an inpatient, Rinkle says. What often happens is once the physician orders inpatient status, the hospital stops charging those ancillary procedures separately, which doesn't necessarily make sense, she adds.
Editor’s note: This article was originally published in the January issue of Briefings on Coding Compliance Strategies.Email your questions to Senior Managing Editor Michelle A. Leppert, CPC, at mleppert@hcpro.com.