Inpatient vs. Outpatient Coding: What’s the Difference?

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An inpatient coder works on a computer.Medical coding refers to the process by which healthcare diagnoses, treatments and even equipment are translated into universal alphanumeric codes. Medical coding professionals take data, often drawn directly from patient files and physician notes, and transform it into codes. These codes then facilitate collaboration with other medical providers and ensure accuracy in the billing process. Ultimately, coding helps minimize the risk of miscommunication and also improves process efficiencies within and between healthcare organizations.

For example, a patient may go to the doctor expressing moderate brachial symptoms, including difficulty breathing. The doctor runs a series of tests and determines the patient has streptococcal pneumonia. The physician submits full notations to the billing department, where a coding specialist consults the ICD-10-CM coding manual used in inpatient care settings that covers respiratory diseases. Billing professionals see that streptococcal pneumonia is coded J13, and use this brief alphanumeric code in their communication with the insurance company, ensuring a clear understanding of the diagnosis that’s being submitted for review.

Those interested in pursuing medical coding as a career must master its many complexities, including the distinctions between inpatient and outpatient coding. One way to develop a keen understanding of these differences and how they impact healthcare processes is to pursue an advanced degree in health information management.

Defining Inpatient and Outpatient Coding

In considering inpatient vs. outpatient coding, one determinative factor is whether the patient receives care for a one-time visit or over the course of an extended stay.

About 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 over the course of 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.

About Outpatient 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.

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” with regard to 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

While these two kinds of coding differ in certain respects, they also carry important similarities.


Both inpatient and outpatient coding are essential to ensuring 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.

Universal Adoption

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 and outpatient coding also diverge in some important ways.

Each Type of Coding Reflects the Nature of Clinical Care

Inpatient coding describes the full spectrum of services delivered to one patient over an extended period of time, 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 own 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 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.

Learn More About the Significance of Medical Coding

Both inpatient and outpatient coding help ensure medical organizations run efficiently, and that patients are billed fairly and consistently. For those who are interested in medical coding careers, one of the best ways to master inpatient and outpatient guidelines is to pursue a Master of Science in Health Information Management from the University of Illinois at Chicago.

This program provides immersive instruction in the use of healthcare data to improve resource allocation, aid executive decision making and enhance standards of care. Explore the university’s program to learn more about how it can shape your career in medical coding.

Recommended Readings

Human Anatomy and Physiology Study Guide

How to Become a Health Information Manager

Networking Tips for a Career in Healthcare: Putting Your Best Foot Forward


American Academy of Professional Coders, How to Get a Medical Coding Job in a Facility

American Health Information Management Association, Certifications & Careers

American Health Information Management Association, Inpatient Coding

American Health Information Management Association, Outpatient Coding

Beckers Hospital Review, 15 Things to Know About Medical Coding

Health Information Associates, Coding Tip: Coding Diagnoses on Outpatient Encounters

Journal of AHIMA, Developing Facility-Specific Coding Guidelines

MedConverge, Key Differences Between Inpatient Coding and Outpatient Coding

Medical Billing and Coding, Try Coding

Medisys, What Is Inpatient Coding?