August 23, 2012

Under the Hood of the Three-Day (One-Day) Payment Window

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The three-Day (one-Day) payment window consists of a complex set of billing rules that often are misunderstood by case managers and hospital billers alike.

Since failure to adhere to the requirement to include pre-admission outpatient services on an inpatient bill can result in lost revenue as well as compliance risk, it is important to understand when a hospital can bill for these Part B services. Of course, when a hospital bills Part A for the inpatient stay, it is paid according to the DRG, which is driven by principal diagnosis and major procedures; it receives no additional compensation for bundled pre-admission outpatient services. The hospital can bill for them in limited circumstances defined by the three-day (one-day) payment window.

Even the name is confusing: why is it a three-day (one-day) window?

First the three-day window: when a patient receives outpatient services at a hospital or a facility wholly owned or wholly operated by a hospital paid under the Inpatient Prospective Payment System (IPPS) on the day of an inpatient admission, or during the three calendar days prior to admission, the technical component of all of these outpatient services is rolled into the billing for the inpatient stay – with a few exceptions. If the hospital certifies that a non-diagnostic service (that is, a therapeutic service) was provided for a reason clinically unrelated to the reason for admission, it may bill Medicare for the service under Part B rather than include it in the inpatient bill as long as the service was provided during the three days prior to admission. However, all non-therapeutic services provided on the day of admission automatically are considered “clinically related” and must be included on the inpatient bill. Otherwise, the hospital is responsible for making the determination of whether services were clinically related. The hospital may bill Medicare for the professional component of services when the technical component is bundled into the inpatient stay by using appropriate modifiers. In addition, ambulance and maintenance renal dialysis are never subject to the three-day payment window.

Note two important details: first, for a service to be eligible for bundling under the three-day window, the facility must be wholly (100 percent) owned or operated by the hospital as defined in 42 CFR §412.2. If, for example, the facility is partially owned by physicians, or if both are owned by a third party, the hospital would not be required to bundle the charges and the facility would be permitted to bill Medicare as if the admission had not taken place. Second, the time frame for inclusion in the inpatient bill is three calendar days preceding the admission, not 72 hours (as is often erroneously assumed, and perhaps inappropriately applied).

Now for the explanation of the one-day window: outpatient services that would meet the requirement of the three-day window for an IPPS hospital only are bundled if those services are provided on the day of admission or one calendar day before admission at non-IPPS hospitals (i.e. psychiatric hospitals and units, inpatient rehabilitation hospitals and units, long-term care hospitals, children’s hospitals and cancer hospitals). The one-day rule allows these hospitals to bill for outpatient services provided prior to the day before admission.

Critical-access hospitals (CAHs) are exempt from the payment window; they may bill Medicare for all pre-admission outpatient services they or their wholly owned or wholly operated outpatient facilities provide. However, when an IPPS hospital owns a CAH, any outpatient services the CAH provides prior to the admission would be included in the IPPS hospital’s inpatient billing, according to the three-day payment window. The CAH, under these circumstances, would not be able to bill for the technical component of the bundled services and the IPPS hospital would include the services on its inpatient bill.

About the Author

Steven J. Meyerson, MD, is a Vice President of Accretive Physician Advisory Services®. He is Board Certified in Internal Medicine and Geriatrics. He has recently been the medical director of care management and a compliance leader of a large multi hospital system in Florida. He has distinguished himself by creating innovative service lines and managing education for Accretive PAS®.

Contact the Author

SMeyerson@accretivehealth.com

To comment on this article please go to editor@racmonitor.com

Resource

A PDF file explaining the revised three-day rule can be downloaded at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Three_Day_Payment_Window.html

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Steven J. Meyerson, MD, CHCQM-PHYADV

Steven Meyerson, MD, CHCQM-PHYADV, is the founder of Steven Meyerson Consulting. Dr. Meyerson is a nationally recognized expert and consultant in the physician advisor role, case management, and hospital Medicare compliance. He is board certified in internal medicine and geriatrics and serves on the board of the American College of Physician Advisors (ACPA). He edits and writes for the ACPA online blog.