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Medical Coding News Archives

CMS Expands Three-Day Payment Window

January 19, 2012:

Nichole VanHorn, Clinical/Technical Editor

Effective January 1, 2012, the three-day payment window for outpatient services provided within 72 hours of an inpatient admission applies to both diagnostic and nondiagnostic services. The Centers for Medicare and Medicaid Services (CMS) is allowing entities a six-month grace period to coordinate their billing and claims processing procedures to ensure full compliance for claims received on or after July 1, 2012.

Under this new policy CMS will pay a reduced rate for physicians’ services that are clinically related to an inpatient admission, occur within 72 hours of the admission, and are furnished by a physician practice wholly owned or wholly operated by a hospital. “Wholly owned” means the hospital is the sole owner of the practice, whereas “wholly operated” means 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."

A new HCPCS Level II modifier PD should be appended to Part B claims to identify preadmission services that are subject to the three-day payment window policy. This modifier will be required for preadmission diagnostic and admission-related nondiagnostic services, reported with HCPCS/CPT codes, which are subject to the three-day payment window policy. The rule applies whether the inpatient and outpatient diagnosis codes are the same or different.

PD: Diagnostic or related nondiagnostic item or service provided in a wholly owned or wholly operated entity to a patient who is admitted as an inpatient within 3 days (1 day for non-IPPS hospitals)

Appending modifier PD to a claim will result in payment only for the professional component (PC) for CPT/HCPCS codes with a TC/PC split and to payment for services without a PC/TC split at the facility rate when they are provided in the three-day (or, for non-IPPS hospitals, one-day) payment window. The facility rate will be paid for codes without a TC/PC split to avoid duplicate payment for the technical resources required to provide the services.


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