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Hospital inpatient settings of care — coverage and reimbursement
This guide includes general descriptions of coding, billing, coverage, and reimbursement matters related to the use of Activase (Alteplase) and is provided for informational purposes only. Please consult Centers for Medicare & Medicaid Services or other payers to verify appropriate codes and learn about payer coverage policies, reimbursement rates, or billing requirements. The submission and completion of reimbursement- or coverage-related documentation are the responsibility of the patient and healthcare provider. Genentech, Inc. and its subsidiaries make no representation or guarantees concerning reimbursement or coverage for any service or item.
When a patient is admitted to a hospital for at least an overnight stay, the patient is considered an "inpatient." The two predominant inpatient payment mechanisms among public and private insurers are diagnosis-related groups (DRGs) and per diems. A third payment system, cost- or charge-based payment, is becoming increasingly rare.
- DRGs: DRGs were first used by Medicare in 1983 but have been adopted widely by other public and private insurers. DRGs are predetermined, bundled payments for almost all care provided for a single patient stay, but do not include payment for physician services. The payment amount is based on the patient's diagnoses and the procedures performed during hospitalization.
- Per diems: Private insurers and some Medicaid agencies use per diems. Per diem rates are predetermined, bundled daily payments for almost all care provided for a single patient stay, but do not include payment for physician services.
The following provides more detailed information on coverage and reimbursement as it relates to the inpatient setting.
Medicare hospital inpatient payment overview (DRGs)
Medicare established the inpatient prospective payment system (IPPS) to provide payment to hospitals for the treatment of Medicare beneficiaries in the hospital inpatient setting. Under the IPPS system, each hospital inpatient stay is assigned to a DRG based on the patient's characteristics and the procedures performed during his or her inpatient stay. Medicare then pays the hospital a prospectively determined amount that is associated with the DRG selected.
Each case is assigned to a DRG according to:
- Patient's diagnoses (identified by ICD-9-CM diagnosis codes)
- Procedures performed (identified by ICD-9-CM procedure codes)
- Complications and comorbidities that occurred during the stay (identified by ICD-9-CM diagnosis codes)
- Patient demographics (age and sex), and
- Patient discharge status (alive, deceased, discharged, or transferred for further treatment)
Beginning October 1, 2007, Medicare expanded the number of DRGs to 745 in order to better reflect the severity of cases within particular DRGs. The resulting DRGs are termed Medicare severity DRGs, or MS-DRGs. Individual cases may be assigned to a DRG reflecting greater severity on the basis of whether the patient exhibits one or more of an extensive list of complications and comorbidities (CCs) or major complications and comorbidities (MCCs).
The MS-DRG payment amount is an all-inclusive, fixed payment that is intended to cover practically all of the facility's services during the hospital stay. A hospital receives only one MS-DRG payment for all covered services; the hospital must accept this payment as payment in full. Payment for virtually all drugs, devices, and supplies is included in the MS-DRG payment amount. Exceptionally high-cost cases may qualify for outlier payments. Additionally, services of physicians are not included in the MS-DRG and are paid separately.
Private payers and some Medicaid programs may provide coverage and reimbursement for patients under DRG-like systems which provide a single bundled payment for each inpatient stay.
Hospital inpatient payment overview (per diem)
A per diem is a single payment for a day of inpatient care. For example, if a patient is in the hospital for 5 days, the hospital will receive 5 times the per diem payment amount. As with the DRG system, hospitals bear the financial risk for the care that they provide. Payment for drugs, devices, and supplies are typically included in the per diem amount. Some exceptions are made for very expensive products. Physician services typically are not included and are paid separately. Some payers use a single per diem for all types of services; other payers use multiple per diems, including medical-surgical, maternity, and intensive care. The per diem system is popular among private health plans. Some state Medicaid programs also rely on per diems. Coverage and reimbursement may vary by private payer or state Medicaid program.
Helpful links
Genentech support
Genentech is neither affiliated with nor endorses any of the following organizations.
Professional organizations
- American Medical Association Current Procedural Terminology payment search
- American Academy of Neurology Supplementary ICD-9 'V-Code'
Government sites
