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Three-Day Payment Window

Background

Under the three-day payment window, no separate Medicare Part B payment is available for the technical portion of any outpatient diagnostic services and nondiagnostic services related to the admission provided on the date of or during the three days prior to the admission (or during the one day prior for psychiatric, inpatient rehabilitation, long-term care, children's and cancer hospitals ) if they are performed in an entity that is wholly owned or operated by the hospital. As currently defined, an entity or practice is wholly owned by a hospital if a hospital is the sole owner of the entity. An entity or practice 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. A process exists to allow a hospital to attest that certain nondiagnostic services are unrelated to the hospital admission and can therefore be billed separately under Medicare Part B, although this process is not available for services that occur on the date of admission. Prior to the 2012 final physician fee schedule, this policy did not affect payment for physician services.

Expanded policy as of July 1, 2012

A 2012 final physician fee schedule provision specifies that, beginning July 1, 2012, the Centers for Medicare & Medicaid Services (CMS) will pay for physician services subject to the three-day payment window using the facility (vs. non-facility) rate for nondiagnostic physician services and for the physician component of diagnostic services. If an entity (including a group practice) that is wholly owned or operated by a hospital treats a patient who becomes an inpatient within the three-day (or one-day) period, the entity must submit its charges with a “PD” modifier to alert CMS to pay for the physician services at the lower facility rate. This modifier became available for use beginning Jan. 1, but is not required until July 1. MGMA has opposed this expansion. MGMA to CMS: rescind three-day payment window expansion

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