Difference between Outpatient Coding and Inpatient Coding

Hospital billing and coding is a very difficult and complicated task. Many people who are employed at the hospital facility make sure that everything is well organized and systematic. From the patient billing process to the reimbursement process everything is a challenge.

Coding serves many purposes from retrieving to reporting the information on the basis of diagnosis and procedure. Coding helps in proper documentation. It basically involves assigning numeric and alphanumeric codes to all the healthcare data of the patients.

During medical billing and coding, one of the most important considerations is whether the patient is an inpatient or outpatient. Based on this choice, the medical code differs. Proper coding system is very crucial for the proper patient care and reimbursement purposes. Hence many organizations depend on medical billing and coding services provided by the experts. This will help in clean claim submission and to facilitate accurate payments.

To understand the difference between outpatient and inpatient coding, it's important to first understand these two terms in detail.

What is Inpatient Coding?

Inpatient means the patient who is officially admitted to the hospital on a doctor's order. The patient may be admitted for an extended stay and it can either be a hospital, nursing home or even a rehab.

Inpatient coding uses ICD 10 diagnostic codes for billing and reimbursement but they use ICD - 10- PCS for the procedural coding system.

Few inpatient facilities include acute and long term care hospitals, skilled nursing facilities, home health services, nursing home or rehab facility. This coding system is used to report a patient's diagnosis and a variety of test runs are done. A lengthy stay usually results in extensive and detailed records which makes it important to have an experienced medical inpatient coder doing the job.

What is Outpatient Coding?

Outpatient refers to the patient who is treated by the doctors but not admitted in the hospital or healthcare facility. Generally outpatients are released from the hospital within twenty four hours. It focuses on the direct treatment offered in a single visit. Even if the patient extends over 24hrs he/she is considered as outpatient.

The outpatient coding is based on ICD 10 diagnostic codes for billing and reimbursement but HCPCS or CPT coding systems for reporting the procedures. Documentation plays a very crucial role in CPT and HCPCS procedures.

Difference between Outpatient Coding and Inpatient Coding

Many people do not know or get confused by these two terms. The following table will help them understand the difference between outpatient and inpatient coding.

FactorsOutpatient CodingInpatient coding
Outpatient coding uses ICD-10- CM for diagnosis and CPT or HCPCS codes.
Inpatient coding refers to the codes used for reporting the patient's diagnosis and procedure performed.
ICD-10-CM and ICD-10-PCS coding is used.

Here, coding for “suspected”, “Probable” or “rule out” conditions are not at all allowed
Coding for “suspected”, “Probable” or “rule out” conditions is allowed.
Medical and surgical procedures
CPT and HCPCS level II
Primarily based on physician fees, insurance contracted rates, ambulatory surgical center rates, etc.
Primarily based on diagnosis related group (DRG)
Outpatient services are covered as part of medicare part B, which covers medical expenses like doctor’s visit, diagnostic tests, preventative care and other outpatient care
Inpatient services fall under medicare part A, which covers hospital insurance, patients care in hospital, skilled nursing facility, nursing home care, hospice care and home health care
Hospital stay
Does not require hospital stay
Require at least two days of hospital stay
Code assignment
Generally based on the encounter/visit
Generally based on the length of the stay or entire admission
Coding for Uncertain diagnosis
Outpatient coding for uncertain Disease does not warrant any kind of code. Coders should not attempt to insert a code based on their judgement.
Uncertain diagnosis should be coded At the time of discharge for inpatient admissions to short term, long term, acute care and psychiatric hospital.
Services are generally billed on the CMS-1500 form.
Services are generally billed on the UB-04 form.
The outpatient prospective payment system (OPPS) is a payment method that provides reimbursement.
The inpatient prospective payment system (IPPS) is a reimbursement system providing reimbursement.
Outpatient coding is comparatively easier
Inpatient coding is much more complicated and complex than outpatient coding.
Principal diagnosis
The term principal diagnosis is not used for outpatient purposes as the diagnoses are not established at the first time of visit
The principal diagnosis is the key in determining the resources required by the patient and also determines whether payments are done thoroughly
If the patient is admitted to the hospital due to complications after the surgery it should be listed under the principal diagnosis for inpatient admission
If a patient requires additional length of stay in the hospital due to complications it should be listed as the principal diagnosis. If the complications lack specificity to a diagnosis, an additional code may be assigned


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. Inpatient and outpatient coding requires professional expertise. By understanding the key difference between inpatient and outpatient coding techniques, overhead costs in health care settings can be reduced.

One may say that outpatient coding is less complex than inpatient coding, but that does not necessarily mean it's easier. A proper understanding will help coders perform more efficiently and accurately in their roles, which is the overall goal in medical coding.

Updated on: 13-Jul-2022


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