Updated on: June 22, 2012

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

Original story posted on: July 13, 2010

wiitalaRED. NOTE:

On Tuesday, July 13th we published "Part 1" of "Recent Legislation Requires Refresher on Hospital Three-Day Payment Window".  If you missed Tuesday's article, simply Click Here to read it now.


With the passage of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (HR 3962) (see previous RACmonitor post) comes the need for hospital billing staff to revisit the billing rules related to the three-day payment window (also known as the 72-hour rule).


As reported, Congress closed a legal loophole that allowed the unbundling of services and submission of adjustment claims seeking separate and additional Medicare payments. Hospital billers are surely to have a few questions about what this means to the requirements that must be met, and a few of these are provided and answered below.

Non-diagnostic or therapeutic services are deemed to be inpatient services and, therefore, are included in the inpatient payment as long as:

· They are related to a patient’s hospital admission; and

· The hospital or an entity wholly owned or operated by the hospital provides the services to the patient during the three days immediately preceding the patient’s admission date.


The term “related to” is defined as an exact match of all digits of the principal diagnosis code on the inpatient claim and the outpatient claim.


The key here is to determine whether the non-diagnostic service is related to, or not related to, the inpatient admission. If there is an exact match of the principal diagnosis for the non-diagnostic services, then the three-day payment window provision does apply such that the outpatient services are deemed to be inpatient services and are included in the inpatient payment. If there is not an exact match, hospitals may submit a separate outpatient claim for services only if they are not related to the admission.


Which providers are subject to the three-day payment window?


The Medicare program requires the bundling of most non-physician services (known as pre-admission services) furnished by a PPS hospital directly or under arrangements within three days prior to the date of hospital admission. The three-day payment window provision of the IPPS applies to all hospitals paid via IPPS payment methodology.


Which providers are subject to the one-day payment window?


Like the three-day payment window, the one-day payment window addresses the bundling of services. The one-day payment applies to the following non-PPS providers:

· Psychiatric hospitals and units;

· Inpatient rehabilitation facilities;

· Long-term care hospitals;

· Children’s hospitals; and

· Cancer hospitals.


Which providers are exempt from the inpatient bundling provisions?


Critical access hospitals (CAHs) are exempted from both the one- and three-day window provisions. Services rendered to a beneficiary in a CAH outpatient department who then becomes an inpatient are NOT bundled into the inpatient bill. Even outpatient services rendered on the date of admission to an inpatient setting are still billed and paid separately as outpatient services.


What other Part A issues should be considered?


There are several other billing situations that could potentially be tied to the bundling window. Hospitals should be proactive to ensure compliance with CMS billing requirements in the following situations:

· Services subject to the skilled nursing facility (SNF) consolidated billing rule;

· Hospice and home health episodes; and

· Interrupted stays.



Wrapping It Up


It is obvious that CMS does not want hospitals to re-bill for services that they mistakenly bundled in the past. The agency promises that it will provide instructions to the hospital community through its contractors advising them how to bill for related therapeutic services provided during the one- or three-day payment window.  Until those instructions are issued, hospitals should include charges for all diagnostic services and all non-diagnostic services that it believes meet the requirements of this provision.


If a hospital believes that a non-diagnostic service is truly distinct from, and unrelated to, the inpatient stay, it may separately bill for the service provided as long as the documentation supports that it is unrelated to the admission, consistent with the new provision.  Such separately billed services may be subject to subsequent review.


Hospitals have spent a tremendous amount of time, money and effort to establish their own internal edit systems to identify these claims. As stated above, they may continue to bill Medicare separately for services provided before the June 25, 2010, effective date—as long as:

· They are unrelated to an inpatient stay;

· The claim meets all applicable filing deadlines; and

· The hospital has supporting documentation that the service is truly unrelated to an inpatient stay.


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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