Alabama Trends

We have many customers in Alabama and have gained an extensive amount of knowledge of healthcare regulations in the state. This expertise has enabled us to become an active member of the Alabama Revenue Integrity Committee (RIC), helping to clarify healthcare policy in Alabama. We often provide materials, help facilitate discussions and provide educational opportunities for other committee members.

We provide Alabama Trend articles based on current topics, that affect Alabama healthcare providers. This information is meant for educational purposes only. For more information about the topics presented, please call us at 205-941-1105 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Alabama Trends – September 2010

The healthcare industry is always changing. Here are some the recent changes that will affect hospitals and others in healthcare in Alabama.

MMP, Inc. Presents “Pain Points”

The New Three-Day Payment Window Rules Takes a Team Effort

Hospital Departments Challenged with Managing the New Rules:

• Business Office (Billers)
• Health Information Management (Coders and Release of Information)
• Compliance

Background:

With the new Access to Care Act and CMS’s interim final rule regarding the three-day payment window, some of the confusion is beginning to clear.  However, all the recent discussion likely means CMS and their contractors will be paying more attention to correct application of the three-day payment window rules.  In fact the interim final rule states “separately billed outpatient preadmission services may be subject to subsequent CMS review.”

Hospitals have dealt with the 3-day rule (also erroneously known as the 72 hour rule) since 1991, but as has become apparent in the last few months, hospitals have not always followed the exact wording of the rule.  With the new guidance and the increased scrutiny, hospitals need to review their processes to ensure they are correctly applying the three-day payment window regulations. 

Challenge: Is your hospital aware of the changes, do you understand them, and have you discussed this within your institution?

The first step is to identify all outpatient claims that occur within three calendar days prior to an inpatient admission.  (Note: the 3-day rule applies to IPPS hospitals; non-IPPS hospitals follow a 1-day rule and CAHs are not subject to any payment window)  Hospitals already likely have such an edit in place in their billing system that halts both the outpatient and inpatient claims.

The next step is to determine which charges, procedure codes, and diagnosis codes need to be combined from the outpatient claim to the inpatient claim. 

All services provided on the day of admission and all diagnostic services provided within three days of admission must be combined to the inpatient claim.  By following the chart below from the Medicare Claims Processing Manual, Chapter 3, Section 40.3 that defines diagnostic services by revenue code, billers can move the charges for same day and diagnostic services to the inpatient claim.  

       
Non-diagnostic (therapeutic) services provided within three days of an inpatient admission must be combined if they are clinically related.  The interim rule states “an outpatient service is related to the admission if it is clinically associated with the reason for a patient’s inpatient admission.”  The previous definition of related being an exact match of the principal diagnosis codes no longer applies.  It is not known if CMS will provide further guidance on the definition of related in the future.  Whether they do or not, it will still be necessary for someone at the hospital to review both the outpatient and inpatient records and determine if therapeutic services on the outpatient claim are related or not related to the inpatient admission.  Hospitals must determine 1) who this “someone” will be, 2) how to address ambiguous situations and 3) the best means of communication between this person(s) and the business office.   The information must be communicated to the business office for correct transfer of charges or to support a separate outpatient claim.

Once charges have been accurately combined, a review by a coder is necessary to accurately combine and sequence diagnosis and procedure codes to the inpatient claim.  Per the interim rule, “hospitals must include on a Medicare claim for a beneficiary’s inpatient stay the diagnoses, procedures, and charges for all outpatient preadmission diagnostic services and all outpatient preadmission nondiagnostic services that meet the requirements of …the Act…”  Again, this information must be clearly communicated to the business office  to be accurately reflected on the final claim.

When all appropriate charges have been moved to the inpatient claim and the appropriate diagnosis and procedure codes added and correctly sequenced, the inpatient claim can be submitted to Medicare for claims processing.  If there are unrelated therapeutic services that occurred prior to admission, a separate outpatient claim may be submitted.  Medicare will be developing a process for the hospital to attest that the services are unrelated to the inpatient admission (such as the B4 condition code for same day readmits).  This “attestation” code will have to be placed on the outpatient claim by “someone” prior to claims submission once it is defined by CMS.  Hospitals must also maintain documentation in the patient’s medical record to support their claim that the outpatient nondiagnostic services are unrelated to the inpatient admission.

It is also important for release of information staff to remember that if a Medicare contractor requests medical records for review of an inpatient claim that contains combined outpatient services, both the inpatient and outpatient medical records must be submitted to support the claim.  Hospitals will need to decide whether the outpatient and inpatient medical records should be combined into one medical record or maintained separately.

It is important that hospitals implement an effective process for managing the three-day payment window in order to be compliant with Medicare regulations.  Internal oversight of the process to ensure compliance (such as compliance audits) is recommended.  Just one more challenge for hospitals in today’s healthcare environment!

Cahaba GBA’s announcement of Implementation of New Statutory Provision Pertaining to Medicare 3-Day Payment Window – Outpatient Services Treated as Inpatient can be viewed at this link:
https://www.cahabagba.com/part_a/whats_new/20100811_jsm10382.htm

Copies of the Three-Day Window Interim Final Rule and information on the Access to Care Act provision regarding the 3-Day rule are available in the Resource Library section of the MMP, Inc. website for our retainer clients.

See Flow Chart below.

• Download the January 2010 Alabama Trends Article: New Changes within Healthcare
• Download the September 2010 Alabama Trends Article:  Pain Points 3 Day Window