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Meet Criteria for IP-only Procedures Under the OPPS

Reimbursement depends on whether services are inside or outside the scope of payment.

By Denise Williams, RN, CPC-H
Since the initiation of the Outpatient Prospective Payment System (OPPS), the Centers for Medicare & Medicaid Services (CMS) has maintained a list of procedures that are covered and reimbursed to facility providers only when provided on an inpatient (IP) basis.

What Is an “IP-only Procedure?”

Section 1833(t)(1)(B)(i) of the Social Security Act gives the secretary “broad authority” to decide which services will be covered and reimbursed under the OPPS, and which services fall outside the scope of payment under the OPPS. CMS bases its coverage decision on three established criteria:
1. The invasive nature of the procedure
2. The need for at least 24 hours of postoperative recovery time or monitoring before the patient can be discharged safely
3. The underlying physical condition of the patient undergoing the procedure
Based on a review of all invasive procedures performed for the Medicare population, CMS’ medical advisors and staff determine which procedures always should be performed on an IP basis—either because they are not safe or appropriate to perform on an outpatient (OP) basis, or because acceptable medical practice dictates that IP status is the only acceptable environment.
The IP-only list is reviewed yearly by the CMS medical staff and APC Advisory Panel, is opened to public comment regarding which procedures might be removed, and then is updated each year in the OPPS rulemaking cycle. The procedures are assigned to Status Indicator C in Addendum B, and listed as a group in Addendum E.
The IP procedure list is national coverage policy and binding on all entities providing care (hospitals, ambulatory surgical centers (ASCs)) or adjudicating payment (fiscal intermediaries (FIs)/Medicare administrative contractors (MACs), Peer Review Organizations) under the OPPS. If a procedure on the IP-only list is performed on an OP basis and reported on an OP claim, no payment is made to the facility for the IP procedure or for any other services provided on the same date of service. All services that would have been paid as an OP are not reimbursed because they were performed with an IP-only procedure.
There are two exceptions to the non-payment rule:
1. An IP-only procedure is provided to a patient who expires before being admitted as an IP, or is transferred before being admitted as an IP. The IP-only procedure is reported with modifier CA Procedure payable only in the IP setting when performed emergently on an OP who dies prior to admission and a flat rate payment is made to the facility.
2. The IP-only procedure is defined by CPT® as a “separate procedure,” and there is another procedure on the claim that is payable under OPPS and assigned status indicator T Significant procedure subject to multiple procedure discounting that is paid by APC. The line item for the IP-only procedure is denied but the other services are reimbursed.

Why It Matters

CMS believes that physicians consider what is in the best interest of the individual patient, and take into account both the risk of providing the service in an OP scenario and the individual clinical situation. Hospitals and ASCs provide services based on physician order and direction. Yet, although payment is denied on the OPPS side for these procedures, payment is not denied to the physician because professional reimbursement is not provided under OPPS.
For example, a physician can determine that OP status is appropriate for the individual procedure, document this in the patient’s record, perform the invasive procedure and receive reimbursement, while the facility that provided the surgical suite, staff, and equipment is denied payment because the procedure HCPCS code is assigned to the IP-only list, and national coverage policy states this is not a reimbursable service under the OPPS.
To prevent this outcome, the hospital/ASC needs the physician to write an order for IP status to meet the CMS requirements for the service that was rendered.

Education Is Key

CMS has tasked hospitals and ASCs with educating physicians on the need to admit the patient as an IP for procedures on the IP-only list so the facility can receive reimbursement for the procedure. This has been difficult because the payment methodologies for the same service are different, and physicians may not be familiar with the IP-only list.
Hospitals have attempted to educate physicians on the IP-only rule with mixed reviews. There is a lot of pressure on physicians to practice based on insurance rules, and here is yet another “rule” to follow that doesn’t affect them directly.
Over time, the most difficult scenario under which to manage an IP-only procedure has been when the planned procedure is an OP procedure, but based on the clinical scenario present during the performance of the procedure, an IP procedure ultimately is performed. Coding is not done during the procedure, so the actual code assignment is not known until the physician’s dictated report is available. For OP procedures, the patient has been discharged and no IP order was written. And, no order equals no payment.
There usually are a specific number of IP-only procedures that are identified as being most commonly performed on an OP basis for an individual facility. Using this list as a starting point will help focus education efforts. Education is most successful when physicians understand that what affects the hospital in this case, also affects physicians and their patients. A team effort is required to provide appropriate care for the beneficiary while meeting the rules/requirements for Medicare reimbursement.
The mechanism of providing this education depends on the individual hospital environment: Some have found one-on-one education with physician and office staff to be effective; some have found that a group gathering is beneficial; others have disseminated information through the individual discipline divisions with assistance from the MedExec committee or division chiefs.


CMS Claims Processing Manual (pub 100-04), chapter 4, section 180.7
CMS-1504-FC (Federal Register/vol. 75, No. 226 / Wed., Nov. 24, 2010)
HCFA-1005-FC (Federal Register/vol. 65, No. 68 / Friday, Apr. 7, 2000)
CMS-1206-FC (Federal Register/vol. 68, No. 216 / Friday, Nov. 7, 2003)

Certified Inpatient Coder CIC

Denise Williams, RN, CPC-H, is the director of revenue integrity services for Health Revenue Assurance Associates, Inc. She has been involved with APCs since their initiation. Denise also has worked as corporate chargemaster manager for two health care systems, and is heavily involved in compliance and coding/billing edits and issues.
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