Key Differences Between Inpatient Coding and Outpatient Coding

One of the most importance considerations during the medical billing and coding process is to choose whether the patient is an inpatient or an outpatient.  Based on the choice, the medical codes associated differ.  At times, inexperienced medical coders may unintentionally misrepresent the patient status which could result in denied claims and even accusations of fraud.


An inpatient is an individual who has been officially admitted to the hospital under a physician’s order.  The patient will remain classified as an inpatient until the day before the day of discharge.  However, staying in the hospital overnight does not necessarily mean that the patient is considered an inpatient.

Inpatient Medical Coding

Inpatient coding is related to the patient’s extended stay service.  Examples of Inpatient facilities include acute and long-term care hospitals, skilled nursing facilities, hospices, and home health services.  During the stay, the patient may have a variety of tests run, will have changes in diagnosis and treatments. A lengthy stay usually results in extensive and intricate patient records which makes it important to have an experienced medical inpatient coder doing the job.


A patient that comes to the ER or practice, and is being treated or undergoing tests, but has not been admitted is considered an outpatient, even if the patient spends the night.

Outpatient Medical Coding

Outpatient coding focuses on the direct treatment offered in a single visit, which is usually a few hours.  A basic rule of thumb to is that outpatient care has a duration of 24 hours or less.  With the increased development in the medical field, many services that used to be considered inpatient treatments are being assigned to outpatient services.


Original Medicare inpatient claims are paid under Part A, whereas Outpatient claims are paid under Medicare Part B.  Inpatient medical coding is reported using ICD-10-CM and ICD-10-PCS codes, which results in payments based on Medicare Severity-Diagnosis Related Groups (MS-DRGs).  Outpatient medical coding requires ICD-10-CM and CPT®/HCPCS Level II codes to report health services and supplies.  Examples of Medicare Part B services include hospital care, emergency department services, lab tests, X-rays, outpatient surgeries, and doctors’ office visits.


In an inpatient facility, medical coders need to must determine the principle diagnosis for the admission, as well as present on admission (POA) indicators on all diagnoses.  Diagnoses listed as “probable,” “suspected,” “likely,” “questionable,” and other such terms, may be coded when documented as existing at the time of discharge and no definitive diagnosis has been established. The diagnostic workup, arrangement for further workup or observation, etc. needs to relate to the established diagnosis.  A common mistake is to code uncertain diagnoses that are not documented at the time of discharge/on the discharge summary – do not do that as they may have been ruled out during the stay.  An example of an uncertain diagnosis is ‘Appears to be’ while ‘evidence of’ is not considered an uncertain diagnosis.

Difference Between Inpatient and Outpatient Coding (Inpatient vs Outpatient)

In comparison, for Outpatient medical coding, coding for uncertain conditions is not allowed.


An overview of Inpatient and Outpatient Coding:


No matter what the situation, medical coders need to keep abreast of the changing regulations along with inpatient coding guidelines and outpatient coding guidelines with respect to medical billing. The hospital facility may have it’s own set of standard protocols that need to be followed.

One may say that outpatient coding is less complex as compared to inpatient coding – but that does not necessarily mean that it’s any easier.  Experience, knowledgeable and certified coders specific to outpatient and inpatient coding can be the difference between a denied claim and receiving the reimbursements you deserve. Get in touch with us if you’d like to know more or need assistance with your medical billing and coding.



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