COCReadingAssignmentch1 (PDF)

2016

Medical Coding Training:
Certified Outpatient Coder (COC™)
Volume 1

Introduction
AAPC would like to introduce the Medical Coding Training: Certified Outpatient Coder (COC™) for 2016. This material was developed to help billers/coders and other medical professionals better understand the rapidly changing medical coding and billing
environment in outpatient facilities, including hospital outpatient facilities and ambulatory surgical centers (ASC).
AAPC has prepared a program of study aimed at providing the most up-to-date information relating to CPT®, HCPCS Level II,
and ICD-10-CM procedural and diagnostic coding, as well as payment processes, for facilities.
The course curriculum is presented in a 27-chapter format. Chapters include medical terminology, anatomy overviews, CMS
payment processes for facilities, and CPT®, HCPCS Level II, and ICD-10-CM coding issues — all organized in a way that is consistent with the most current guidelines. The course also includes end-of-chapter review questions to enhance comprehension of the
material covered. A midterm and final examination also are provided. Students may choose to achieve COC™ certification upon
successful completion of the course.

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Disclaimer
Decisions should not be made based solely on information within this study guide. All judgments impacting career and/or an
employer must be based on individual circumstances including legal and ethical considerations, local conditions, payer policies
within the geographic area, new or pending government regulations, etc.
AAPC does not accept responsibility or liability for any adverse outcome from using this study program for any reason including
undetected inaccuracy, opinion, and analysis that might prove erroneous or amended, or the coder’s misunderstanding or misapplication of topics.
Application of the information in this text does not imply or guarantee claims payment. Inquiries of your local carrier’s bulletins,
policy announcements, etc., should be made to resolve local billing requirements. Payers’ interpretations may vary from those in
this program. Finally, the law, applicable regulations, payers’ instructions, interpretations, enforcement, etc., may change at any
time in any particular area. Information in this program is solely based on CPT®, ICD-10-CM, and HCPCS Level II rules and
regulations.
AAPC has obtained permission from various individuals and companies to include their material in this manual. These agreements do not extend beyond this program. It may not be copied, reproduced, dismantled, quoted, or presented without the
express written approval of AAPC and the sources contained within.
No part of this publication covered by the copyright herein may be reproduced, stored in a retrieval system or transmitted in any
form or by any means (graphically, electronically, or mechanically, including photocopying, recording or taping) without the
express written permission from AAPC and the sources contained within.

Medicare Disclaimer
This publication provides the student with coding and reimbursement examples and explanations, of which many are taken from
the Medicare perspective. The coder, however, should understand that while private payers typically take their lead regarding
reimbursement rates from Medicare, it is not the only set of rules to follow.
While federal and private payers have different objectives (such as the age of the population covered) and use different contracting
practices (such as fee schedules and coverage policies), the plans and providers set similar elements of quality in common for all
patients. Nevertheless, it is important to consult with individual private payers if you have questions regarding coverage.

AMA Disclaimer
CPT® copyright 2015 American Medical Association. All rights reserved.
Fee schedules, relative value units, conversion factors and/or related components are not assigned by the AMA, are not part of
CPT®, and the AMA is not recommending their use. The AMA does not directly or indirectly practice medicine or dispense
medical services. The AMA assumes no liability for data contained or not contained herein.
CPT® is a registered trademark of the American Medical Association.
The responsibility for the content of any “National Correct Coding Policy” included in this product is with the Centers for
Medicare & Medicaid Services and no endorsement by the AMA is intended or should be implied. The AMA disclaims
responsibility for any consequences or liability attributable to or related to any use, nonuse or interpretation of information
contained in this product.

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2016 Medical Coding Training: Certified Outpatient Coder (COC™) Volume 1

CPT ® copyright 2015 American Medical Association. All rights reserved.

Reviewers: Katherine Abel, CPC, CPB, CPMA, CPPM, CPC-I, CRMS





Brad Ericson, MPC, CPC, COSC
Karen Chappell, LPN, EJD, MBA, CCS, CIRCC
Lindsay-Anne McDonald Jenkins, RN, CPC, COC, CIRCC, CPC-I, CANPC, CPMA, CRNA (Retired)

© 2016 AAPC
2233 South Presidential Drive, Suites F–C, Salt Lake City, Utah 84120
800-626-2633, Fax 801-236-2258, www.aapc.com
Printed 123015. All rights reserved.
ISBN 978-1-626882-140 (Volume 1 of 2)
CPC®, CIC™, COC™, CPC-P®, CPMA®, CPCO™, and CPPM® are trademarks of AAPC.

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iii

Chapter
1

Outpatient Facilities and Departments

Introduction
The Certified Outpatient Coder (COC™) credential recognizes
expertise in the area of outpatient hospital and ambulatory
surgical center (ASC) coding. A facility is a building that
is built for a specific purpose. In this text, we refer to both
hospitals and ASCs as facilities. Hospitals are built primarily
for providers to care for inpatients, and provide diagnostic
and therapeutic services for medical diagnosis, treatment, and
care of injured, disabled, or sick persons. Hospitals may also
provide rehabilitation services for the rehabilitation of injured,
disabled, or sick persons. ASCs are built to provide outpatient
surgical services to patients not requiring hospitalization. The
topics discussed in this chapter provide a high-level overview.
Each topic will be discussed in more detail in the appropriate
chapters.
The coding in this textbook focuses on the services provided
by the facility, not by the physician who performs the service
for the patient. These services represent use of surgical suites,
medical monitoring devices, recovery room time, and nursing
services associated with the procedure or service provided.
Typically, the physician’s service is reported separately by the
physician, using CPT® and HCPCS Level II codes (discussed
later). When providers perform procedures in the outpatient
facility, two bills (claims) are generated. One claim is for the
physician services, which are submitted on a CMS-1500 claim
form. The other is for the facility services, which are submitted
on a UB-04 claim form.
In most cases, the codes selected for surgical procedures and
diagnostic procedures are the same whether coding for the
outpatient facility or the provider. What will be different is the
payment methodology and modifier use. For example, a patient
is seen in the emergency department (ED) and the physician
assesses the patient and performs a wound repair. For this
encounter, the physician bills for the evaluation and management (E/M) and the wound repair procedure performed.
Wound repair codes are selected based on the type of repair,
anatomic location, and length. The coding requirements do
not change whether you are coding for the physician or the
facility. The criterion for the E/M code selection is different.
Throughout this textbook, we will discuss specific coding
concepts and reimbursement methodology for the outpatient
hospital facility and the ASC.
The reimbursement process begins when a patient presents to
a facility or outpatient hospital department. It usually requires
the involvement of several departments within a facility or

CPT ® copyright 2015 American Medical Association. All rights reserved.

hospital for a claim to be completed. A facility coder needs to
understand the departments involved in the reimbursement
process and how each department contributes.
There are many different services performed in outpatient
facilities. Each of the departments involved with patient care
will have charges to submit for reimbursement. In this chapter,
the departments involved with delivering outpatient services
will be reviewed. The different types of outpatient facilities will
also be reviewed, including teaching facilities, ASCs, critical
access hospitals (CAH), and comprehensive outpatient rehabilitation facilities (CORF). The various departments involved
in the reimbursement process will also be addressed.

Objectives:
ll
ll
ll
ll
ll

Understand the services provided by different
departments in outpatient hospitals
Understand the services provided in an ASC
Understand the services provided in a CAH
Understand the services provided in a CORF
Understand the typical patient flow through a facility

Hospital Outpatient Services
Hospital outpatient services include all services rendered in
a hospital not requiring an inpatient admission. Outpatient
is defined by the Centers for Medicare & Medicaid Services
(CMS) as:
“A person who has not been admitted by the hospital as
an inpatient but is registered on the hospital records as
an outpatient and receives services (rather than supplies
alone) from the hospital or CAH.”
The most common outpatient services are same-day surgeries,
emergency department encounters, outpatient clinic encounters, and therapeutic and diagnostic testing (eg, X-rays, stress
tests and echocardiograms). Although the patient may present
at different departments for services in the hospital, one claim
is generated for each date of service. All departments report
the services performed and all charges are consolidated on one
claim (UB-04) for the date of service.
For each hospital department to receive credit for services
rendered, the services performed must be reported. There are
different methods for code selection. In some departments, the
charge for the service is selected by a technician performing

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Outpatient Facilities and Departments

the test (eg, X-ray technician performing a CT scan) or it
is selected by the secretary for the department by using the
hospital’s chargemaster. A chargemaster is a master inventory list of everything that can be reported or performed in
the hospital. It may also be called a charge description master
(CDM) or a service master. Codes for surgical procedures and
emergency department encounters are selected by coders.
Although the coding staff is not always involved in every
aspect of code assignment, it is important for the coding staff
to have an overall understanding of coding and billing and its
impact on reimbursement for the hospital facility.
When coding outpatient services, it is important to understand
the different levels of supervision required by physician and
non-physician practitioners (NPP). Not all services rendered
must be performed by a physician or an NPP. NPPs include
physician assistants (PA), nurse practitioners (NP), certified
registered nurse anesthetists (CRNA), clinical nurse specialists
(CNS), certified nurse-midwives, clinical psychologists, and
licensed clinical social workers (LCSW).

The levels of supervision defined by CMS include:
General supervision: The physician or NPP must be immediately available to furnish assistance and direction throughout
the performance of the procedure. The physician is not
required to be present in the room where the procedure is
performed or within any other physical boundary as long as
he or she is immediately available. CMS has not defined the
meaning of “immediate.”
Direct supervision: The procedure or service is furnished
under the physician’s overall direction and control, but the
physician’s presence is not required during the performance of
the procedure. The supervising physician is required to be on
the campus where the procedure is being performed.
Personal supervision: The physician must be in attendance in
the room during the performance of the service or procedure.

Example
A patient seen in a hospital clinic requires intravenous (IV) antibiotics. The physician orders the IV. A nurse starts the IV, administers
the antibiotic and monitors the patient. In this example, the
physician bills for the E/M of the patient, and the hospital facility
bills for the E/M based on use of facility resources, the IV administration and supply of medication. The physician does not need
to perform the IV or be in the room while the nurse performs the
IV services.

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2016 Medical Coding Training: Certified Outpatient Coder (COC™) Volume 1

Chapter 1

Hospital Outpatient Surgery
With the advances in medical technology, more procedures
are safely being performed in an outpatient setting instead of
requiring an inpatient stay. Performing surgical services on an
outpatient basis decreases the costs because the patient does
not incur the expenses of room and board for an overnight
stay. Each year, CMS determines the surgeries safe to perform
in an outpatient hospital and ASC. This information is released
in the Outpatient Prospective Payment System (OPPS) Final
Rule on the CMS website. All services and supplies associated with performing surgery are reported on the claim. Some
services will be considered packaged and will not be reimbursed separately.
When billing for hospital outpatient surgeries, the facility is
charging costs for providing those services to the patients. The
facility component includes costs incurred for:
ll Nursing personnel
ll Room costs (operating, treatment, cast, etc.)
The following items are not included in the facility ambulatory payment classifications (APC) reimbursement and may be
billed separately if supplied by the hospital:
ll Provider and anesthesiologist professional fees
ll Durable medical equipment (DME) - if the hospital has a
DME license
ll Prosthetic devices (except intraocular lenses)
ll Ambulance services
ll Outside laboratory services
ll Certain drugs and biologicals (pass-through payments)
The reimbursement for surgeries is based on APC payment.
The surgeries performed as outpatient, the charges associated with the surgeries, and proper reimbursement will be
discussed throughout this curriculum.

Hospital Emergency Department
There are two types of emergency department visits defined
by CMS: type A for a facility open 24 hours per day, 7 days per
week, for immediate attention and urgent and emergent care;
and type B for a facility meeting specific licensing requirements for emergent or urgent care patients, not open 24 hours
per day. These types of services will be discussed in chapter 12.
In the hospital, the ED is used for patients who require immediate attention for emergent and urgent patient care. When a
patient is treated in the ED, additional charges for diagnostic
testing and therapeutic services may result from the ED
encounter. Professional charges for patient care, interpretation
of diagnostic studies, etc., are billed separately by the professional entity rendering the individual services.

CPT ® copyright 2015 American Medical Association. All rights reserved.

Chapter 1

Example
A patient is seen in the ED for chest pain. The ED physician orders
a chest X-ray, electrocardiogram (EKG), and laboratory tests (CBC,
basic metabolic panel, PT, PTT, and troponin). Even though this
is one encounter, multiple departments will provide a service.
There will be a charge from the cardiology department for the
technician who performs the EKG. There will be a charge from
radiology for the X-ray technician who performs the chest X-ray.
There will be charges from the laboratory department for the lab
tests performed. The nurse(s) in the ED will select an E/M facility
charge for monitoring the patient and for the use of facility
resources. All of the charges from the different hospital departments will be sent on one claim from the facility. The physician will send a separate claim for treating the patient and the
interpretation of the X-ray and EKG (unless performed by another
physician such as a radiologist or cardiologist).

Hospital Clinic
Patients present to clinics for services performed by physicians
and NPPs. The services include outpatient visits, consultations,
and minor office procedures (eg, lesion removals). Services
provided in the clinic can be scheduled or non-scheduled. For
example, if a patient presents to the ED and, during the Emergency Medical Treatment and Active Labor Act (EMTALA)
screening, it is determined the patient’s condition is not an
emergency, the patient can be seen in the outpatient clinic
instead of the ED.

Outpatient Diagnostic Testing
Diagnostic tests can be performed in conjunction with other
facility services (eg, ED and clinic visits) or independently
without other facility services. Some patients only require
diagnostic services that cannot be performed in a physician’s
office or an independent diagnostic testing facility (IDTF).
These patients present to the laboratory, radiology, or other
outpatient department for the performance of a diagnostic
study. The results of the test will be sent to the ordering physician, who will evaluate the results and communicate them to
the patient. The hospital bills for the technical component of
the diagnostic study performed, and the patient will receive
a separate bill for the professional interpretation, when
necessary.
Certain laboratory services will not require a professional
interpretation, and — in some cases — do not require the
presence of the patient. When a hospital receives a specimen
for analysis and the patient is not physically present at the
hospital, it is considered a non-patient. Services performed for
non-patients include the processing and analysis of laboratory samples (blood, tissue, etc.) sent from a physician’s office

CPT ® copyright 2015 American Medical Association. All rights reserved.

Outpatient Facilities and Departments

or clinic to the hospital facility for processing and report
generation.
The hospital facility must have an order from the physician to
perform a diagnostic test. The order needs to include the test to
be performed and the reason for the tests (diagnosis).

Outpatient Therapy
When a patient is prescribed a course of treatment involving
therapy (eg, physical, speech, occupational, etc.), the patient
will present to the outpatient department on a regular basis
(daily, biweekly, weekly) to receive the authorized services. In
this situation, the hospital utilizes a recurring account number
to capture all therapy charges under the same account for
billing purposes. Therapy services have specific documentation requirements, limitations on the frequency of services
and certain diagnoses considered medically necessary. CMS
publishes the requirements for billing therapy services. The
information is found at http://www.cms.gov/Medicare/Billing/
TherapyServices/index.html?redirect=/TherapyServices.

Outpatient Cancer Center
Patients receiving chemotherapy or radiation therapy will also
present to the cancer center or other designated outpatient
department to receive treatment at the frequency prescribed by
the oncologist.

Partial Hospitalization
Partial hospitalization services are full day programs for
psychiatric services. The goal is to help patients transition to
daily life. It is also known as a step down program because it
is common for patients to transition from inpatient treatment
to partial hospitalization. The services are performed in an
outpatient hospital department or a community mental health
center (CMHC).

Teaching Hospitals
Teaching hospitals are affiliated with medical schools to train
physicians. There are teaching hospital guidelines and documentation requirements, which will be discussed later in the
curriculum.
Graduate Medical Education (GME) is a residency program
approved by the Accreditation Council for Graduate Medical
Education (ACGME) of the American Medical Association
(AMA) and other accrediting agencies for training physicians
in specialties (eg, ENT, orthopedics, family practice).
Teaching hospitals take part in an approved GME residency
program in medicine, osteopathy, dentistry, or podiatry.
Teaching physicians oversee residents providing patient care.

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Outpatient Facilities and Departments

Teaching settings receive direct Medicare GME payments for
residents’ services.
The direct payments include resident salaries, fringe benefits,
and teaching physician compensation for services not payable
on a fee schedule. These payments are made on a per-resident
basis and are hospital-specific. Medicare Part A payments
are made for inpatient hospital stays through a prospective
payment system, better known as Medicare severity diagnosisrelated group payments (MS-DRG). Additional payments are
made to a teaching facility for higher indirect costs incurred
with MS-DRG payments. These indirect costs include administrative and supervisory services by a provider unrelated to the
GME program or other approved educational activities.
Interns and fellows are defined as follows for Medicare
purposes:
1. Interns are usually in their first year following graduation from medical school and are completing a one-year
rotation in various departments of the teaching facility
departments of the hospital that depend on specialties.

ll

ll

meet all of the requirements with regard to health and
safety and agrees to the same regulations applied to
independent ASCs; and
be surveyed and approved as complying with conditions
for coverage in an ASC.

Medicare allows payment for any surgical procedure
performed in an independent ASC if determined payable
under the independent ASC benefit. CMS covers procedures
published on a list (Addendum AA of the OPPS final rule)
of ASC-approved procedures for the independent facility.
Procedures on this list do not require an overnight stay (after
midnight) and the patient is expected to be released within a
few hours following surgery. Surgical procedures commonly
considered office-based have a payment limit in ASCs in an
attempt to mitigate potentially inappropriate migration of
services from the physician office setting to the ASC.

2. Residents are licensed physicians and, depending on
the specialty, have two to five (possibly more) years
of training in that specialty (eg, internal medicine,
orthopedics).

Medicare has published a list of approved procedures in the
ASC and a list of non-approved (out of scope) procedures
considered higher risk, which might require a hospital stay.
This list is updated yearly in the OPPS final rule. Typically
office-based procedures/surgeries are paid at a lower rate in the
ASC. Procedures in the ASC are subject to multiple procedure
reduction and are reimbursed based on a payment indicator,
which will be discussed later.

3. Fellows are physicians who are obtaining additional
training in a subspecialty (eg, vascular surgery/general
surgery) after residency training.

CMS requires ASC services to be billed on a CMS-1500 claim
form. Some private payers will require a UB-04 claim form for
ASC services.

Ambulatory Surgical Center (ASC)
ASCs can be either independent or affiliated with a hospital.
Both types of ASCs perform similar services. Independent
ASCs are privately funded and are not part of a provider of
services or any other facility.
Hospital outpatient surgery centers located independently of
the hospital have the option to be considered a provider-based
department of the hospital or an ASC. As a provider-based
department of the hospital, reimbursement is based on outpatient hospital reimbursement (OPPS, Addendum B). If the
facility chooses to participate in Medicare as a hospital-owned
ASC, reimbursement is based on the ASC payment system
(OPPS, Addendum AA, BB). The reimbursement for these
services is discussed later in this curriculum.
To be considered an ASC, the hospital-owned ASC must:
ll

4

Chapter 1

be a separately identifiable entity, physically,
administratively, and financially independent and
distinct from other operations of the hospital. Costs for
the ASC are treated on the hospital cost-report as a nonreimbursable cost center;

2016 Medical Coding Training: Certified Outpatient Coder (COC™) Volume 1

Critical Access Hospital (CAH)
Medicare beneficiaries in rural areas can receive services
from critical access hospitals. CAHs offer 24-hour emergency
services seven days a week, hospital inpatient stays, inpatient
rehabilitation, and psychiatric services.
CAHs can have no more than 25 inpatient beds used for either
inpatient or swing bed services. CAHs may also operate a
distinct part rehabilitation or psychiatric unit, each with up
to 10 beds to be used exclusively for inpatient rehabilitation
and psychiatric services, in addition to the 25-bed maximum.
Services provided by CAHs are reimbursed based on the
Standard Payment Method unless it elects to be paid under
the Optional Payment Method. Under the Standard Payment
Method, the CAH bills for only CAH facility fees and is reimbursed the lesser of:
ll 80 percent of the 101 percent of reasonable costs for
outpatient CAH services; or
ll 101 percent of the reasonable costs of the CAH in
furnishing outpatient CAH services, less the applicable
Part B deductible and coinsurance amounts.

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