3-DAY payment window policy - detailed review


 Bundling of Payments for Services Provided in Wholly Owned and Wholly Operated Entities (including Physician Practices and Clinics): 3-Day Payment Window


In accordance with section 102(a)(1) of the PACMBPRA, for outpatient services furnished on or after June 25, 2010, the technical portion of all nondiagnostic services, other than ambulance and maintenance renal dialysis services, provided by the hospital (or an entity wholly owned or wholly operated by the hospital) on the date of a beneficiary’s inpatient admission are deemed related to the admission and thus, must be included on the bill for the inpatient stay. Also, the technical portion of outpatient nondiagnostic services, other than ambulance and maintenance renal dialysis services, provided by the hospital (or an entity wholly owned or wholly operated by the hospital) on the first, second, and the third calendar days (1 calendar day for a nonsubsection (d) hospital) immediately preceding the date of admission are deemed related to the admission and, therefore, must be billed with the inpatient stay, unless the nondiagnostic services are unrelated to the inpatient hospital claim (that is, the preadmission nondiagnostic services are clinically distinct or independent from the reason for the beneficiary’s inpatient admission). In such cases, the unrelated outpatient hospital nondiagnostic services are covered by Medicare Part B, and the hospital or wholly owned or wholly operated physician practice shall include the technical portion of the services in their billing. PACMBPRA did not change the requirement that the technical portion of all diagnostic services provided by the hospital (or entity wholly owned or wholly operated by the hospital) occurring on the date of an inpatient admission, or during the 3 calendar days (or 1 calendar day) immediately preceding the date of an inpatient admission must be billed with the inpatient admission.



Implementation of the 3-day Payment Window Policy in Wholly Owned or Operated Entities

Wholly owned or wholly operated entities are subject to the 3-day (or 1-day) payment window policy when they furnish preadmission diagnostic services to a patient, who is later admitted as an inpatient on the same day or within the preceding 3 calendar days (preceding1 calendar day), or when they furnish preadmission nondiagnostic services to a patient, who is later admitted as an inpatient on the same day or within the preceding 3 calendar days (preceding 1 calendar day) for related medical care. Only unrelated nondiagnostic preadmission services are not subject to the payment window policy, where unrelated preadmission nondiagnostic services are clinically distinct or independent from the reason for the beneficiary's inpatient admission and are furnished on the 1st, 2nd, or 3rd calendar day immediately preceding the date of the inpatient admission. (Note: nondiagnostic services furnished by a wholly owned or wholly operated physician practice on the date of a beneficiary’s inpatient admission to the hospital are always deemed to be related to the admission and their technical portion must be included on the bill for the inpatient admission.) When an entity that is wholly owned or wholly operated by a hospital furnishes a service subject to the 3-day window policy, Medicare will pay the professional component of services with payment rates that include a professional and technical split and at the facility rate for services that do not have a professional and technical split. Once the entity has received confirmation of a beneficiary’s inpatient admission from the admitting hospital, they shall, for services furnished during the three-day window, append a CMS payment modifier to all claim lines for diagnostic services and for those nondiagnostic services that have been identified as related to the inpatient stay. Physician nondiagnostic services that are unrelated to the hospital admission are not subject to the payment window and shall be billed without the payment modifier.




Definition of Wholly Owned or Wholly Operated Entities


Wholly owned or wholly operated entities are defined in 42 CFR §412.2; "An entity is wholly owned by the hospital if the hospital is the sole owner of the entity.” And, “an entity is wholly operated by a hospital if the hospital has exclusive responsibility for conducting and overseeing the entity’s routine operations, regardless of whether the hospital also has policymaking authority over the entity."


Payment Methodology: 3-Day Payment Window in Wholly Owned or Wholly Operated Entities (including Physician Practices and Clinics)


CMS has established HCPCS payment modifier PD (Diagnostic or related nondiagnostic item or service provided in a wholly owned or operated physician office to a patient who is admitted as an inpatient within 3 days), and requires that the modifier be appended to the physician preadmission diagnostic and admission-related nondiagnostic services, reported with HCPCS/CPT codes, which are subject to the 3-day payment window policy. The wholly owned or wholly operated physician’s office will need to manage their billing processes to ensure that they bill for their physician services appropriately when a related inpatient admission has occurred. The hospital is responsible for notifying the practice of an inpatient admissions for a patient who received services in a wholly owned or wholly operated physician office within the 3-day (or, when appropriate,1-day) payment window prior to the inpatient stay. The modifier is effective for claims with dates of service on or after January 1, 2012. Wholly owned or wholly operated per their readiness to do so. Entities have the discretion to apply these policies for claims with dates of service on and after January 1, 2012, but shall comply with these polices no later than July 1. 2012.


When the modifier is present on claims for service CMS shall pay

• only the Professional Component (PC) for CPT/HCPCS codes with a Technical Component (TC)/PC split that are provided in the 3-day (or, in the case of non-IPPS hospitals, 1-day) payment window, and

• The facility rate for codes without a TC/PC split.


Global Surgical Services and the 3-day Payment Window Policy

We note that the time frames associated with 10 and 90 day global surgical packages could overlap with the 3-day (or 1-day) payment window policy. The 3-day payment window makes no change in billing surgical services according to global surgical rules, and pre- and post-operative services continue to be included in the payment for the surgery. However, there may be times when the surgery itself is subject to the three-day window policy, as would occur if the surgery were performed within the three-day window. For example, a patient could have a minor surgery in a wholly owned or wholly operated physician office and then, due to a complication, be admitted to the hospital as an inpatient. In such cases the modifier shall be appended to the appropriate surgical HCPCS/CPT code.

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