CurrentCareSource GeorgiaPolicy MP-AD-1428

Inpatient Services Allowed in the Outpatient Setting

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Defines CareSource Georgia's approach to reimbursing services designated as Medicare inpatient-only when performed in an outpatient setting for Marketplace members; affects providers submitting claims and seeking prior authorization for such services.

Policy Summary

PayerCareSource Georgia

PolicyInpatient Services Allowed in the Outpatient Setting

Policy CodePolicy MP-AD-1428

Change TypeReferences updated (non‑material)

Effective DateJan 1, 2026

Last ReviewSep 24, 2025

Next Review Date

Key ActionRefer to the PA Lookup Tool to determine if prior authorization is required prior to performing the service.

SourceLink

POLICY UPDATE CHANGES

Updated references were made during the 09/24/2025 review.

40%outpatient site-of-service reduction applied to inpatient-derived outpatient reimbursement

FY2026IPPS/OPPS references used for code mapping and rates

4-step methodsteps described to determine outpatient reimbursement from inpatient DRG

Marketplace memberspopulation explicitly noted as potentially different from Medicare

Coverage and Reimbursement Criteria

Reimbursement Calculation Procedure

Coverage depends on medical necessity and prior authorization requirements; when approved, reimbursement is calculated as follows:

Reimbursement is allowed only when medical necessity is met and any required prior authorization (PA) is obtained.

ALL of the following

Step 1: Map the procedure code designated as an inpatient-only (IPO) code from the OPPS fee schedule file to its corresponding CMS diagnosis-related group (DRG).
Step 2: Multiply the DRG base rate by the specific case mix index (CMI) assigned to the mapped DRG.
Step 3: Multiply the result by the average wage index for the provider's state.
Step 4: Apply a 40% reduction to the computed value to account for the outpatient site of service.

Operational note: Refer to the PA Lookup Tool to determine whether prior authorization is required and for any medical necessity review prior to performing the service.

Reference: This methodology uses CMS OPPS/IPPS guidance and FY2026 rates for mapping and rate bases.

Codes and Payment Adjustments

OPPS Inpatient-Only Codesmixed

Inpatient-only procedure codes (OPPS IPO list)

Procedure codes designated by CMS as inpatient-only are mapped to corresponding DRGs for reimbursement calculation.

Outpatient payment reduction — 40% reduction applied to calculated inpatient-derived outpatient value

Outpatient payment reductionA 40% reduction is applied to the calculated inpatient-derived outpatient value to account for outpatient site of service.

Application pointApplied as the final step after mapping the IPO procedure code to a DRG, multiplying by the DRG-specific CMI and the provider state average wage index.

PurposeAdjusts inpatient-based reimbursement to reflect differences in setting and care provided when services are performed in an outpatient setting for Marketplace members.

Referenced guidanceUses CMS OPPS/IPPS mapping and FY2026 rate bases when determining the inpatient-derived outpatient value.

Provider Requirements and Prior Authorization

Prior Authorization

Verify Prior Authorization and Medical Necessity

Coverage may be subject to medical necessity review; providers must check the PA Lookup Tool to determine whether prior authorization is required before performing the service.

Definitions

Inpatient — definition

DefinitionRelating to a patient admitted to a hospital, skilled nursing facility, inpatient hospice, long term acute care, respite care, or inpatient rehabilitation facility.

ContextTerm used to distinguish services performed in an admitted (inpatient) setting from those performed in outpatient settings for reimbursement decisions.

Policy relevanceCareSource maps inpatient-only procedure codes to DRGs and uses inpatient definitions when determining reimbursement conversions for outpatient performance of these services.

Prior Authorization (PA) — definition

DefinitionA required review of a service, treatment, or admission for a benefit coverage determination, which must be obtained prior to the service, treatment, or admission start date, pursuant to the terms of this Plan.

When requiredCoverage may be dependent on medical necessity review; refer to the PA Lookup Tool to determine if prior authorization is required prior to performing the service.

PurposeEnsures benefit coverage determination and medical necessity review are completed before services designated inpatient-only are performed in an outpatient setting.

Outpatient — definition

DefinitionRelating to a patient who has not been admitted to a hospital, skilled nursing facility, or inpatient rehabilitation facility.

Contrast to inpatientUsed to determine when inpatient-only procedure codes may be performed and reimbursed in non-admitted settings for Marketplace members.

Policy implicationWhen medically appropriate outpatient performance of IPO services occurs, CareSource applies an inpatient-to-outpatient conversion methodology to determine reimbursement.

Policy Summary

PayerCareSource Georgia

PolicyInpatient Services Allowed in the Outpatient Setting

Policy CodePolicy MP-AD-1428

Change TypeReferences updated (non‑material)

Effective DateJan 1, 2026

Last ReviewSep 24, 2025

Next Review Date

Key ActionRefer to the PA Lookup Tool to determine if prior authorization is required prior to performing the service.

SourceLink

On This Page

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Inpatient Services Allowed in the Outpatient Setting

Customize your policy alerts

Sign up for CareSource Georgia Policy MP-AD-1428 alerts

Get alerted when Policy MP-AD-1428 changes without checking for updates manually.

Monitor payer policy activity

Receive email alerts as soon as relevant payer policies are published or updated.

Coverage and Reimbursement Criteria

Reimbursement Calculation Procedure

Coverage depends on medical necessity and prior authorization requirements; when approved, reimbursement is calculated as follows:

Reimbursement is allowed only when medical necessity is met and any required prior authorization (PA) is obtained.

ALL of the following

Step 1: Map the procedure code designated as an inpatient-only (IPO) code from the OPPS fee schedule file to its corresponding CMS diagnosis-related group (DRG).
Step 2: Multiply the DRG base rate by the specific case mix index (CMI) assigned to the mapped DRG.
Step 3: Multiply the result by the average wage index for the provider's state.
Step 4: Apply a 40% reduction to the computed value to account for the outpatient site of service.

Operational note: Refer to the PA Lookup Tool to determine whether prior authorization is required and for any medical necessity review prior to performing the service.

Reference: This methodology uses CMS OPPS/IPPS guidance and FY2026 rates for mapping and rate bases.

Codes and Payment Adjustments

OPPS Inpatient-Only Codesmixed

Inpatient-only procedure codes (OPPS IPO list)

Procedure codes designated by CMS as inpatient-only are mapped to corresponding DRGs for reimbursement calculation.

Outpatient payment reduction — 40% reduction applied to calculated inpatient-derived outpatient value

Outpatient payment reductionA 40% reduction is applied to the calculated inpatient-derived outpatient value to account for outpatient site of service.

Application pointApplied as the final step after mapping the IPO procedure code to a DRG, multiplying by the DRG-specific CMI and the provider state average wage index.

PurposeAdjusts inpatient-based reimbursement to reflect differences in setting and care provided when services are performed in an outpatient setting for Marketplace members.

Referenced guidanceUses CMS OPPS/IPPS mapping and FY2026 rate bases when determining the inpatient-derived outpatient value.

Definitions

Inpatient — definition

DefinitionRelating to a patient admitted to a hospital, skilled nursing facility, inpatient hospice, long term acute care, respite care, or inpatient rehabilitation facility.

ContextTerm used to distinguish services performed in an admitted (inpatient) setting from those performed in outpatient settings for reimbursement decisions.

Policy relevanceCareSource maps inpatient-only procedure codes to DRGs and uses inpatient definitions when determining reimbursement conversions for outpatient performance of these services.

Prior Authorization (PA) — definition

When requiredCoverage may be dependent on medical necessity review; refer to the PA Lookup Tool to determine if prior authorization is required prior to performing the service.

PurposeEnsures benefit coverage determination and medical necessity review are completed before services designated inpatient-only are performed in an outpatient setting.

Outpatient — definition

DefinitionRelating to a patient who has not been admitted to a hospital, skilled nursing facility, or inpatient rehabilitation facility.

Contrast to inpatientUsed to determine when inpatient-only procedure codes may be performed and reimbursed in non-admitted settings for Marketplace members.

Policy implicationWhen medically appropriate outpatient performance of IPO services occurs, CareSource applies an inpatient-to-outpatient conversion methodology to determine reimbursement.