Health Information Management

Hospitals face three-day payment window changes

HIM-HIPAA Insider, July 6, 2010

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Hospitals clamoring for guidance from CMS about the three-day payment window must now grapple with legislative changes to the requirements that carry significant revenue implications and could potentially affect the national recovery audit contractor (RAC) program.

President Obama on June 25 signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, which contains a section to clarify the three-day payment window, or three-day rule. The three-day rule previously stipulated that hospitals must bill as part of an inpatient stay all diagnostic services provided within three days of admission, as well as all nondiagnostic services related to the inpatient admission. CMS had previously defined “related” to be an exact diagnosis code match between the inpatient admission and the outpatient therapeutic services. Hospitals had struggled to correctly apply the rule in their billing operations.
The statutory change adopts a new definition for “other services related to the admission” that must also be billed as part of the inpatient stay. Under the new definition, effective for services provided on or after June 25, hospitals should bill as part of the inpatient stay all nondiagnostic services provided on the day of admission as well as those in the three days prior to admission, unless they can demonstrate that the services are unrelated to the admission. CMS must now issue instructions specifying how hospitals can meet this requirement. Facilities should continue to bundle all diagnostic services provided during the three-day window prior to the inpatient stay.
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