CMS Pub. 100-04, ch. 4, § 180.7

Section 1833(t)(1)(B)(i) of the Act allows CMS to define the services for which payment

under the OPPS is appropriate and the Secretary has determined that the services

designated to be “inpatient only” services are not appropriate to be furnished in a hospital

outpatient department. “Inpatient only” services are generally, but not always, surgical

services that require inpatient care because of the nature of the procedure, the typical

underlying physical condition of patients who require the service, or the need for at least

24 hours of postoperative recovery time or monitoring before the patient can be safely

discharged. An example of an “inpatient only” service is CPT code 33513, “Coronary

artery bypass, vein only; four coronary venous grafts.” The designation of services to be

“inpatient-only” is open to public comment each year as part of the annual rulemaking

process. Procedures removed from the “inpatient only” list may be appropriately

furnished in either the inpatient or outpatient settings and such procedures continue to be

payable when furnished in the inpatient setting.

There is no payment under the OPPS for services that CMS designates to be “inpatient-only” services. These services have an OPPS status indicator of “C” in the OPPS

Addendum B and are listed together in Addendum E of each year’s OPPS/ASC final rule.

For the most current Addendum B and for Addendum E published with the OPPS notices

and regulations, see http://www.cms.gov/Medicare/Medicare-Fee-for-Service-

Payment/HospitalOutpatientPPS/index.html.

Excluding the handful of exceptions discussed below, CMS does not pay for an

“inpatient-only” service furnished to a person who is registered in the hospital as an

outpatient and reports the service on the outpatient hospital bill type (TOB 13X). CMS

also does not pay for all other services on the same day as the “inpatient only” procedure.

There are two exceptions to the policy of not paying for outpatient services furnished on

the same day with an “inpatient-only” service that would be paid under the OPPS if the

inpatient service had not been furnished:

Exception 1: If the “inpatient-only” service is defined in CPT to be a “separate

procedure” and the other services billed with the “inpatient-only” service contain a

procedure that can be paid under the OPPS and that has an OPPS SI=T on the same date

as the “inpatient-only” procedure or OPPS SI = J1 on the same claim as the “inpatient-only” procedure, then the “inpatient-only” service is denied but CMS makes payment for

the separate procedure and any remaining payable OPPS services. The list of “separate

procedures” is available with the Integrated Outpatient Code Editor (I/OCE)

documentation. See http://www.cms.gov/Medicare/Coding/OutpatientCodeEdit/.

Exception 2: If an “inpatient-only” service is furnished but the patient expires before

inpatient admission or transfer to another hospital and the hospital reports the “inpatient

only” service with modifier “CA”, then CMS makes a single payment for all services

reported on the claim, including the “inpatient only” procedure, through one unit of APC

5881, (Ancillary outpatient services when the patient dies.) Hospitals should report

modifier CA on only one procedure.

As of January 1, 2020, procedures that have been removed from the inpatient-only (IPO)

list are exempt from certain medical review activities related to compliance with the 2-midnight rule, which states that generally services are considered appropriate for

inpatient hospital admission and payment under Medicare Part A when the physician

expects the patient to require a stay that crosses at least 2 midnights and admits the

patient to the hospital based upon that expectation (78 FR 50913 through 50954).

Specifically, procedures that have been removed from the IPO list are not eligible for

referral to Recovery Audit Contractors (RACs) for noncompliance with the 2-midnight

rule within the 2-calendar years following their removal from the IPO list. These

procedures will not be considered by the Beneficiary and Family-Centered Care Quality

Improvement Organizations (BFCC-QIOs) in determining whether a provider exhibits

persistent noncompliance with the 2-midnight rule for purposes of referral to the RAC

nor will these procedures be reviewed by RACs for “patient status” within the 2-calendar

years following their removal from the IPO list.

During the 2-year exemption period, BFCC-QIOs will have the opportunity to review

claims for procedures that have been recently removed from the IPO list in order to

provide education for practitioners and providers regarding compliance with the 2-midnight rule, but claims identified as noncompliant with the 2-midnight rule will not be

denied with respect to the site-of-service under Medicare Part A.