Inpatient Facility Coding & Compliance Alert

Question: Can the hospital charge a higher room rate for patients in certain situations, such as when the nursing staff begins isolation protocol?

Minnesota Subscriber

Answer: Remember that a hospital gets paid based on DRGs, so there’s no real benefit in charging more for a particular type of room or for special services if the physician hasn’t documented a supporting diagnosis.

Caution: Room charges are reported to Medicare as part of the hospital’s cost report. Overstating costs can be dangerous, especially if it’s done on a regular basis and drives up costs without having proof of medical necessity. That can be considered fraudulent. On the other hand, properly reporting higher room rates when there are justified additional costs helps in properly setting payment rates for payment systems such as DRGs.

Difference: An exception is if a patient requests a private room. In that case, the hospital can charge more for the room, but the difference is billed to the patient instead of the insurer. Any other need for a specialized room should be determined by – and documented by – the physician, including moving the patient to isolation or ICU, starting the patient on a ventilator, etc. You’re putting the hospital at risk if you bill more for these situations without a physician order and proof of necessity.