Knowledge Base Article

On November 8, 2012, CMS released MLN Matters Article SE1232 with a series of frequently asked questions and answers about the 3-day payment window. However, these are the same FAQs that CMS published in June of this year. information in the August 15, 2012 Wed@One – search the client section of our www.mmplusinc.com ) using the word “window” to review this article). Also, CMS finally updated the manual instructions for the 3-day payment window in August of this year in Transmittal R2539CP concerning the 2013 IPPS changes. So, even though this information is not exactly new, the 3-day payment window regulations are so complex that another review of the more difficult aspects of this rule never hurts.

Since it is a 3-day rule (not 72 hours), I like to break the rule down into three separate components so I can better understand it.

1. All services on the day of inpatient admission must be bundled into the inpatient claim.
2. All diagnostic services within the payment window (3 days for IPPS hospitals), must be bundled into the inpatient claim, whether related or not.
3. A service is “diagnostic” if it is an examination or procedure to which you subject the patient, or which you perform on materials derived from a hospital outpatient, to obtain information to aid in your assessment of a medical condition or to identify a disease.
4. For this provision, diagnostic services are defined by the presence on the bill of the particular revenue and/or CPT codes specified in the Medicare Claims Processing Manual, Chapter 3, Section 40.3.
5. All non-diagnostic services within the payment window that are related to the reason for inpatient admission must be bundled into the inpatient claim.
6. It is the responsibility of the hospital to determine if non-diagnostic services are clinically related to the inpatient admission. Hospitals should carefully consider how and who to best accomplish this determination and communicate that to billing.
7. Non-diagnostic services within the payment window that are not related may be submitted on a separate outpatient claim. Hospitals attest that these services are unrelated by adding condition code 51 on the outpatient claim.

Other, more challenging, aspects of the 3-day payment window regulations include:

• The 3-day rule does not apply if there is no Part A coverage for the inpatient admission. This means that if an inpatient admission does not meet inpatient criteria and is billed as a no-pay inpatient claim or is denied as not medically necessary, the 3-day rule does not apply. Outpatient services prior to such inpatient admissions can be billed separately on an outpatient claim.
• Services furnished more than 3 days preceding the date of the inpatient admission are not part of the payment window, even when furnished during a single, continuous outpatient encounter. Services prior to the 3 calendar days should not be bundled into the inpatient claim, but should be billed separately on an outpatient claim.
• The 3-day payment window applies to physicians’ practices and other entities that are wholly-owned or operated by the hospital where the patient is admitted. Guidance on combining these services can be found in the Medicare Claims Processing Manual, Publication 100-04, Chapter 12, Sections 90.7 and 90.7.1.
• Hospitals must include on a Medicare claim for a beneficiary’s inpatient stay the diagnoses, procedures, and charges for all services bundled under the 3-day payment window rule. This will require the coordination of billing and coding to combine charges, include and appropriately sequence diagnosis codes for the combined outpatient/inpatient services, and convert combined outpatient procedures to ICD-9-CM procedure codes for the inpatient claim.

And one final very scary thought on the 3-day payment window – in this year’s Office of Inspector General’s (OIG) Work Plan , the OIG states they will “analyze claims data to determine how much CMS could save if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into the diagnosis related group (DRG) payment. OIG work has also concluded that CMS could realize significant savings if the DRG window was expanded from 3 days to 14 days.”