What is the Difference Between Inpatient and ProFee Coding and the Way it is Reimbursed?

What is the difference between Inpatient and Profee Coding and the Way It Is Reimbursed?

What’s the difference between Inpatient and ProFee coding? Explore the coding basics, definitions, and reimbursement rules for Inpatient and ProFee coding.

Inpatient Coding Basics

Inpatient coding reports a patient’s admission to a medical facility for a prolonged stay and specifies diagnosis and procedures provided to them during the stay. Coding is based on the entire inpatient stay, including all facility-related charges such as days in hospital, supplies used, and procedures done.

what is the difference between inpatient and profee coding

Inpatient coding utilizes ICD-10-CM codes for diagnoses and ICD-10-PCS codes for procedures. The coding process for inpatient stays is as follows:

  1. Identifying the principal diagnosis: The provider selects the principal diagnosis based on the circumstances of the inpatient visit. The Uniform Hospital Discharge Data Set (UHDDS) defines the principal diagnosis as “that condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care1.”
  2. Reporting additional diagnosis: Defined by the condition that affects patient care in terms of requiring: Clinical evaluation; therapeutic treatment; or diagnostic procedures; extended length of hospital stay; or increased nursing care or monitoring. Secondary diagnosis can fall into categories of a CC (complication/co-morbidity) or MCC (Major complication/co-morbidity).
  3. Identifying the diagnosis as present on admission or acquired during the stay.
  4. Reporting of procedures: Code any procedures performed during the patient’s stay.

Reimbursements for Inpatient Encounters

what is the difference between inpatient and profee coding

Inpatient coding uses MS-DRGs, or Medicare Severity Diagnostic Related Groups, for reimbursement. The DRG is based on selecting the principal diagnosis, principle procedures (PCS), secondary diagnosis. And whether the diagnosis was present on admission or acquired during the stay.

DRGs group into different categories based on diagnosis or diagnosis and procedures performed by body system. The DRG is then multiplied by relative weight, meaning the average amount of resources required to care for cases in that DRG. The result calculates the facility’s reimbursement. Providers bill Inpatient services with a UB-04 form. To learn more about Inpatient coding subjects and processes, enroll in our Inpatient coder training.

ProFee Coding Basics

Individual providers who render services for each DOS of a visit use professional fee (ProFee) coding, including for services and surgical procedures performed.

ProFee coding utilizes ICD-10-CM codes for diagnoses and CPT and HCPCS Level II codes for procedures. Details for the diagnosis coding process is above. The extensive code selection process for procedures is in our article, “Weighing the Differences and Similarities of ProFee and Facility Coding.” For additional information and examples of ProFee coding in action, review our article, “Solve Your ProFee Coding Questions With These Examples.”

Reimbursements for ProFee Encounters

what is the difference between inpatient and profee coding

ProFee coding uses RVU, or Relative Value Units, for reimbursement. This method doesn’t define compensation in dollar amount. But rather the value of a service or procedure relative to other services and procedures.

This measure of value is based on the extent of physician work, clinical and non-clinical resources. And expertise required to deliver the healthcare service to patients. RVUs ultimately determine physician compensation when the conversion factor (CF)2, or a number of dollars per RVU, is applied to the total RVU. ProFee services are billed with a CMS-1500 form.

The physician fee schedule, which helps coders select the right CPT code for procedures, is implemented on the principle that payments for medical procedures and services should reflect the costs of providing them2. The RBRVS, or Resource-Based Relative Value Scale, calculates fees for services and procedures based on the RVU. So, a service with six total RVUs means the resources consumed in delivering that service are six times greater than those by a procedure with one RVU.

To learn more about ProFee coding subjects and processes, enroll in our ProFee coding training.

Let YES’ Subject Matter Experts Provide Coding Support

Understanding which code set to use for inpatient, outpatient, and professional fee encounters can be tricky. Let our team of coding subject matter experts provide coding support to your organization. Your patients – and bottom line – will thank you.


  1. Journal of AHIMA
  2. AAPC

Jenn Dilley

what is the difference between inpatient and profee coding

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