Why Revenue Codes Are Important

Revenue codes go on hospital bills to show insurance companies either which department of the hospital a procedure occurred or what type of procedure occurred. The main reason why these codes are requested is because certain types of services can happen in more than one area. Because of that, it's important to get it right for a multitude of reasons.

Let's start with a look at the type of services that could be done in more than one area. Think of something like a blood transfusion. A person doesn't have to be in one particular place to get a blood transfusion. If a patient came in through the emergency room and needed a transfusion, it could be done there and the revenue code 450, Emergency Room, would be used. If a patient was having recurring blood transfusions, the hospital might put them in a treatment room, which would be revenue code 760. The patient might be going to a clinic for continuing transfusions; that would be revenue code. And there are other places where a patient could get a transfusion as well.

The reason the location becomes important it because almost every insurance company pays medical bills based on where a patient might be. For instance, emergency room services are usually capped at certain rates based on the level of care the patient gets overall. So, a transfusion performed in the emergency room would be included within the overall level of service that patient received. Clinics often have their own fee schedule rates, even if they're owned by the hospital, so that has to be accurately captured. The same goes for treatment rooms. Every one of these areas would be paid differently, and legally the hospital is responsible for making sure they don't misrepresent where the service was performed, as that would be considered fraud because the attempt would be to get more money by misidentifying the location of the patient.

It's for this same reason that it's important to identify as thorough as possible within a category where either a service or procedure or even what type of supply was used. Let's look at supplies, which we briefly mentioned on our general page on revenue codes. The revenue code 270 is a generic "catch all" code that just means supplies Many insurance companies won't pay for general supplies, so this basically means the hospital is capturing the amount of costs associated with the supply, but most probably isn't getting any money for it. The same goes for revenue code 271, which means nonsterile supply, and thus often is associated with reusable equipment. Revenue code 273, take home supplies, also isn't covered, and most hospitals won't even use these supplies on a patient, and 277, take home oxygen, is almost never covered either.

Two codes within supplies that may or may not be covered are 274, prosthetic/orthotic devices and 279, miscellaneous supplies. The first code generally isn't covered, but there are some insurance companies that, if you have special plans or contracts, will reimburse some of these supplies. For instance, hospitals that register themselves as what's known as a DMEPOS (durable medical equipment, Prosthetics, Orthotics, and Supplies) provider, they can then bill Medicare for these supplies. Most hospitals don't file for this, however. On the second, most of the time these are new or extraspecial supplies that hospitals wouldn't normally cover. If it's something very expensive and the hospital sends a full report as to why they had to use this supply, sometimes those supplies will be paid. Most of time, though, it's just capturing new costs because the charge doesn't fit anywhere else.

This leaves revenue codes 275, pacemakers; 276, intraocular lens; and 278, implants. Pacemakers and intraocular lenses are expensive specialty items that are often reimbursed by insurance companies because they have identifying HCPCS codes. Implants are items that are left within the body; some have HCPCS codes, others don't. Yet, because they're left in the body, many insurance companies will pay a percentage of these charges.

It's always important for the hospital to represent what they're doing accurately. One of the biggest errors is using revenue code 490, ambulatory surgery center, instead of 360, operating room. Ambulatory surgery centers are offsite, meaning they're not in the hospital but are still hospital owned. Using that code for your operating room services is not only inaccurate but could be considered fraudulent, especially if the hospital doesn't have an ambulatory surgery center.

Revenue codes should be entered into a hospital charge master way before any charging or billing processes occur. But they also should be reviewed at least once a year just to make sure that every charge is in its proper place. Being wrong can cause consequences hospitals probably don't want to deal with on the back end.