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Inpatient Only Procedures and the 3-Day Rule

Published on 

Wednesday, March 25, 2015

 | Billing 

Life would be chaos without rules. Driving on the wrong side of the road, lack of education because what child would go to school if it wasn’t a rule, no money for government services without tax payments, and of course, how would we ever bill Medicare without all the regulations? But some rules are just bigger, badder, and uglier than others.

The April 2015 OPPS update allows the inclusion of an inpatient only procedure onto the inpatient claim if it is provided on an outpatient basis prior to an inpatient admission and qualifies under the three-day window rule. This is a significant change in the rules which previously did not allow payment for inpatient only procedures in this situation.

The new rule effective April 1, 2015 states that “inpatient only procedures that are provided to a patient in the outpatient setting on the date of the inpatient admission or during the 3 calendar days (or 1 calendar day for a non-subsection (d) hospital) preceding the date of the inpatient admission that would otherwise be deemed related to the admission, according to the policy for the payment window for outpatient services treated as inpatient services will be covered by CMS and are eligible to be bundled into the billing of the inpatient admission.”

The BIG question is – does this mean that if the physician failed to write an inpatient admission order prior to the IP only procedure, that it is now acceptable to write the inpatient order after the inpatient only procedure when the only reason for inpatient admission is based on the performance of the inpatient only procedure (that is, there is no expectation of a 2-midnight stay after the order)? The BAD news is that the Transmittal does not answer this question which leaves the new rule open to a lot of interpretation. This could get UGLY. I have emailed the pre-implementation CMS contacts for further guidance and will publish any clarification I receive.

This is a good time to review the three-day window rule. I break the three-day window rule into three parts to better remember and understand it. Under the three-day window rule, the following outpatient services must be combined onto the ensuing inpatient claim for IPPS hospitals:

  1. All services provided on the day of admission
  2. All diagnostic services provided within 3 calendar days* prior to admission
  3. All non-diagnostic services related to the reason for admission provided within 3 calendar days prior to admission

Note* - Non-IPPS hospitals (non-subsection (D) hospitals) combine services within 1 calendar day of admission.

But knowing the rule is only part of the challenge. The bigger challenge for hospitals is in implementing the rule.

  • Identify the affected claims – Claims that contain services provided within the payment window by the admitting hospital, or by an entity wholly owned or wholly operated by the admitting hospital (or by another entity under arrangements with the admitting hospital)
  • Determine if non-diagnostic services are related - the preadmission non-diagnostic services are considered related unless they are clinically distinct or independent from the reason for the beneficiary’s admission
  • Combine the charges
  • All charges from the day of admission
  • All charges for diagnostic services within 3 days of admission - diagnostic services are defined by the presence on the bill of the specific revenue and/or CPT codes listed in the Medicare Claims Processing Manual, Chapter 3, Section 40.3.B.
  • Charges for related non-diagnostic services within 3 days of admission
  • Re-code the “combined” claim – include any ICD diagnosis codes and procedure codes from the combined outpatient services (effective April 1, 2015, this will include procedure codes for inpatient only procedures provided during the outpatient time preceding the inpatient admission)
  • Bill unrelated non-diagnostic services provided during the payment window on a separate 13x type of bill – add condition code 51 to attest that these services are unrelated to the ensuing inpatient admission

There are a lot of other important details concerning the three-day window rule, such as exempt services, services provided in a physician’s office owned by the hospital, and how to code the present-on-admission (POA) indicators, just to name a few. For complete guidance on the three-day window rule, see the Medicare Claims Processing Manual, Chapter 3, Section 40.3.

As you can see the 3-day rule is not just remembering three little things. It is a really big, bad and ugly rule that unfortunately just seems to have gotten uglier.

Article Author: Debbie Rubio, BS MT (ASCP)
Debbie Rubio, BS MT (ASCP), was the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc. Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system. In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.