Corporate Compliance

Note from Hugh

Medicare Weekly Update, August 12, 2008

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I recently participated in an HCPro audio conference on the so-called “three-day payment window” regulations. During the question-and-answer portion of the audio conference, a participant raised an issue that I think may present a significant compliance trap for some hospitals. The issue relates to services furnished by hospital-owned medical practices during the three-day period immediately prior to an inpatient admission. 

It is clear that diagnostic services and related therapeutic services furnished by a hospital-owned medical practice during the three-day window are subject to the three-day payment window (and therefore may not be separately billed as outpatient services) if the medical practice is treated as “provider-based” for Medicare purposes. 

Some hospitals, however, own medical practices that are not considered to be provider-based. At first blush, one might assume that services furnished by medical practices that are not provider-based would not be subject to the three-day payment window because such services are not treated as hospital outpatient services by Medicare. While that assumption seems to make sense, it is probably incorrect. Although not entirely clear, CMS appears to take the position that services furnished by a medical practice that is wholly owned or wholly operated by a hospital are subject to the three-day payment window even if the practice is “freestanding” (i.e., not provider-based). CMS addressed this issue in the 1998 amendments to the three-day window regulations. In a Federal Register article accompanying those amendments, CMS stated:

Policy: A hospital-owned or hospital operated physician clinic or practice is subject to the payment window provision. The technical portion of preadmission diagnostic services performed by the physician clinic or practice must be included in the inpatient bill and may not be billed separately. A physician’s professional service is not subject to the window.

                                                63 Federal Register 6866 (February 11, 1998)

If my reading of CMS comments is correct, a hospital may not bill separately for diagnostic services or related therapeutic services furnished during the three-day payment window by freestanding medical practices that are wholly owned or wholly operated by the hospital. Rather, the hospital must include those services on the inpatient claim.


 



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