Written by Amber Taufen, MA, MGMA-ACMPE assistant editor
Starting July 1, the Centers for Medicare & Medicaid Services (CMS) will require some practices to abide by an expanded version of the current “three-day payment window” — so what does that mean for you? The short answer: It depends. If your practice is owned or operated by a hospital, new rules will apply. Read through our FAQs for more information:
What is the three-day payment rule?
Currently, when a patient receives services at an entity (including a group practice) that is wholly owned or operated by a hospital and is subsequently admitted to that hospital for an inpatient stay, payment for the technical portions of all related diagnostic and nondiagnostic services performed on that patient in the three days prior to admission is bundled into the payment for the inpatient stay. The new aspect of the policy, which was finalized in the 2012 Medicare Physician Fee Schedule, will affect payment for physician services provided during that same 3-day period. Rather than paying the physician at the non-facility rate, CMS will pay the physician at the lower, facility rate.
This means that if a patient is admitted to the hospital, all physician services provided to the patient by the wholly owned or operated practice in the three days prior to admission must include a new modifier code, a “PD” modifier, to signify that the practice should be paid at the facility rate. For example, if a patient comes to your hospital-owned practice for treatment of chest cold symptoms on Tuesday and is admitted to the hospital for pneumonia on Thursday, the Tuesday visit must be billed with the new PD modifier.
How does this change reimbursement?
Hospital-owned practices providing services that fall within the boundaries of this new rule will be paid at the lower, facility rate for their work.
What type of practices does the rule affect?
- Practices that are wholly owned or operated by a hospital
- This rule does not affect rural health clinics or federally qualified health centers
- Independent physician practices that are not owned or operated by a hospital are not required to report the modifier (or to accept the decrease in reimbursement).
When do I need to start using the new HCPCS modifier?
CMS recommends that practices submit claims with the new Healthcare Common Procedure Coding System (HCPCS) modifier now in preparation for the July 1 effective date.
How does the hospital know if a patient visited my practice?
It is the hospital’s responsibility to notify the practice of all patients admitted within 72 hours of a physician service, including the reason for the admission. Hospitals will have to screen patients upon admission for services provided within the past three days, and hospitals will also have to check to see if the provider is hospital-owned. Keep in mind, however, that the modifier must be included on the practice’s bills. As a result, the practice bears the risk of any errors or oversights.
Practices and their affiliated hospitals will need to coordinate their billing practices so that claims are held until the affiliated hospital verifies that a patient was, or was not, admitted within three days.
What does my staff need to know?
Affected practices should make sure that office notes on patients support any reasons for unrelated services. Notes might be required to appeal claims paid at the facility rate that are unrelated to the hospital admission, so good documentation will help you make your case. Explain this to your physicians and clinical and front office staffs.
Billing staff should also be looking for payments received at the facility rate that should have been paid at the non-facility rate, or vice-versa, so the practice can take action.
Advocacy efforts of the MGMA Government Affairs department helped secure a six-month delay in implementation and last week, MGMA reiterated its opposition to this new policy, asking CMS to rescind it. Read more about the three-day payment window and the Association’s stance on the new expansion.
For a closer look at what the policy could mean for your organization, read “How does the three-day payment rule affect your practice?” in the May/June issue of MGMA Connexion magazine.