Outpatient Reimbursement

Hospital Outpatient Coding and Reimbursement Process

Similar to physicians, hospitals use ICD-9-CM codes for diagnoses and CPT or HCPCS II codes for procedures for outpatient encounters. For Medicare, hospital outpatient reimbursement is under the Ambulatory Payment Classification (APC) system.

Each CPT and HCPCS II code is assigned to an APC group with a unique relative weight, which is then converted into the payment amount. Unlike DRGs, multiple APCs can be assigned and paid for each outpatient encounter, depending on the procedure performed. Additional amounts may also be available for specific pass-through devices.

Medicare has used APCs for hospital outpatient reimbursement since 2000.

Changes to APCs and CPT procedure codes are effective January 1^st

Inpatient Reimbursement

Hospital Inpatient Coding and Reimbursement Process

Hospitals assign ICD-9-CM codes for both diagnoses and procedures for inpatient admissions. For Medicare, inpatient hospital reimbursement is under the Diagnosis Related Group (DRG) system.

For each admission, the ICD-9-CM diagnosis and procedure codes are grouped into one of more than 800 DRGs. Regardless of the number of codes, only one DRG is assigned per admission. Each DRG has a unique relative weight, which is then converted into the payment amount.

Medicare has used DRGs for hospital inpatient reimbursement since 1983.

Changes to ICD-9-CM procedure and diagnosis codes as well as DRGs are effective October 1st of each year.