Updated on: June 22, 2012

Recent Legislation Requires Refresher on Hospital Three-Day Payment Window: Part I

Original story posted on: July 11, 2010

wiitalaRED. NOTE:

On June 25, 2010, President Obama signed into law the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (HR 3962).  Among other provisions, this law clarifies Medicare's policy for payment of services provided in hospital outpatient departments on either the day of, or during the three days prior to, an inpatient admission (known as the three-day payment window and also the 72-hour rule). In this, the first of a two-part series, RACmonitor contributing editor Randy Wiitala offers additional insight.


With all that's been said and done, it's prudent for providers to re-familiarize themselves with the current CMS requirements related to the three-day payment window. The questions answered below may help.

What outpatient services are treated as inpatient services?


For hospitals paid under the Medicare inpatient prospective payment system (IPPS), diagnostic services provided to a Medicare beneficiary by the admitting hospital, or by an entity wholly owned or operated by the hospital, within three days before the admission date, are deemed to be inpatient services and are included in the inpatient diagnosis-related group (DRG) payment.


Medicare has defined "diagnostic" as all charges on a claim with the following UB-04 revenue codes and Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT) codes associated with that claim line.


UB-04 REV Code

Description and Related HCPCS/CPT Codes


Drugs incident to other diagnostic services


Drugs incident to radiology




Laboratory pathological


Radiology diagnostic

0341 and 0343

Nuclear medicine, diagnostic; diagnostic radiopharmaceuticals


Computed tomography (CT) scan


Anesthesia incident to radiology


Anesthesia incident to other diagnostic services


Other imaging services


Pulmonary function


Audiology diagnostic

0481 and 0489

Cardiology (cardiac catheterization lab and other cardiology services billed with CPT codes 93501, 93503, 93505, 93508,93510, 93526, 93541, 93542, 93543, 93544, 93556, 93561 or 93562)


Cardiology stress test


Cardiology echocardiology


Osteopathic services


Magnetic resonance tomography (MRT)


Medical/surgical supplies, incident to radiology or other diagnostic services


Electrocardiogram (EKG/ECG)


Electroencephalogram (EEG)


Testing, behavioral health


Other diagnostic services


Additional guidance on making the determination to roll outpatient services into an inpatient admission does not solely depend on the listing above. For example, when patients are treated in the emergency room (ER) (revenue code 045X) and then admitted, you would not combine the outpatient claim with the inpatient claim unless there is an exact match on all digits of the ICD-9-CM code for the principal diagnosis.


Guidance from the Centers for Medicare & Medicaid Services (CMS) states that each service provided in the ER needs to be identified, and the proper billing requirements must be followed. The ER visit alone does not automatically place all services under the non-diagnostic services umbrella.


Part II: Non-diagnostic or therapeutic services


About the Author


Randy Wiitala, BS, MT (ASCP) is a senior healthcare consultant with Medical Learning, Inc. (MedLearn), St. Paul, MN. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that will equip healthcare organizations with their coding, chargemaster, reimbursement management and RAC solutions.


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