Inpatient Coding

Defining Inpatient Coding

Inpatient coding applies when a physician formally admits a patient to a medical facility for an extended stay; this facility may be a nursing home, rehab facility, or long-term care facility. Inpatient coding denotes the patient’s diagnosis and catalogs the services rendered during their extended stay.

Inpatient coding provides a comprehensive overview of the treatments a patient receives throughout their extended stay, which accounting departments use to ensure accurate billing and reimbursement from relevant insurers.

Inpatient coders rely on two standardized coding manuals, ICD-10-CM and ICD-10-PCS. Additionally, inpatient coding requires a present on admission (POA) indicator, which distinguishes between the patient’s condition upon admittance versus any complications or new symptoms that arise during their stay.

Out-Patient Coding

Outpatient coding, on the other hand, applies when a patient receives treatment but does not remain in a facility for an extended period. Typically, outpatient coding means a patient’s stay lasts less than 24 hours.


Inpatient Coding

Like inpatient coders, outpatient coders may use ICD-10-CM, in addition to a standardized coding manual known as CPT®/HCPCS Level II. The latter specifically denotes services and supplies used in an outpatient setting.

In outpatient settings, coders are prohibited from using terms such as “probable” or “likely” about a patient’s diagnosis. Instead, they are tasked with coding conditions to the highest degree of certainty for the patient’s visit, such as signs, symptoms, or abnormal test results. This rule reflects the fact that, in a single outpatient encounter, the physician has limited time with which to observe the patient. Rather than seeking a comprehensive explanation of the patient’s condition, the physician’s job is to reach an educated conclusion based on the physical data available to them.

Inpatient and Outpatient Coding: The Similarities


Both inpatient and outpatient coding are essential to ensure accurate billing. Both types of medical codes summarize the treatments and services that a patient receives, regardless of their clinical care setting. Billing departments share this information with insurance companies to determine the extent of their reimbursement and the amount that patients owe.

Efficient Communication

Both inpatient and outpatient coding employ specific codes to break down complex diagnoses and medical processes into simple, easily transferable information. Both types of coding help relay critical information with maximum efficiency.

Standardized medical codes such as ICD-10 are used by insurers to ensure proper reimbursement. These codes are used universally, which not only helps with accuracy in the billing process but also ensures consistency with how data is communicated between different physicians or departments.


Finally, both inpatient and outpatient coding can be used to request reimbursement from Medicare. In this way, accurate and efficient coding can help hospitals and medical organizations remain as profitable as possible.

Inpatient vs. Outpatient Coding: The Differences

Inpatient coding describes the full spectrum of services delivered to one patient over an extended period, which may reflect the development or resolution of different symptoms as well as a doctor’s findings over an extended period of observation. Outpatient coding, meanwhile, provides what is usually a much briefer assessment of signs, symptoms, and abnormal test results that occur at the time of the patient encounter.


As inpatient coding documents both longer stays and greater intricacy of care, it is generally more complex than outpatient coding. For example, a single patient in the hospital for multiple days may receive services from an admitting ER physician, nurses, a surgeon, an anesthesiologist, and more, all of which the medical code must record.

The Medicare Reimbursement Process Differs 

Another distinction: Processing Medicare reimbursements requires the use of different plans. Outpatient services are submitted under Medicare Part B, where inpatient services are typically coded according to Medicare Severity-Diagnosis Related Groups (MS-DRGs).

Professional Certification Opportunities

Inpatient and outpatient coding each offer their unique professional certifications. Those who are curious about career opportunities in medical coding may consider the merits of one certification over the other, or pursue both.

For those who seek a more challenging role, inpatient coding may be the better option; in addition to assigning codes to medical diagnoses and treatments, inpatient coders are also responsible for determining the POA indicators, which may require some critical thinking and medical detective work.

Another key distinction is a work location: Inpatient coders may find opportunities to work in a hospital billing office, while outpatient coders can find work in smaller medical practices. Both career paths may offer the opportunity to work remotely.

Benefits of Inpatient Coding

Because of these benefits of Inpatient Coding, it is important to ensure that hospital coding staff members comply with all guidelines and procedures regarding the proper use of patient and physician information in the system. For example, it is imperative that all staff members and administrators, including office managers, submit their patient’s first and last name along with their preferred method of communication in order to maximize potential revenues and revenue opportunities. When they do this, they comply with the requirements of HIPAA, which outlines the rules and guidelines regarding proper sentence construction and sentence placement.