Billing: Outpatient Three Day Window

DEPARTMENT: Governmental Operations Support / POLICY DESCRIPTION: BILLING - Outpatient Services and Medicare Three Day Window
PAGE:1 of 5 / REPLACES POLICY DATED: March 1, 1999; May 14, 1999
APPROVED: April 9, 2002 / RETIRED:
EFFECTIVE DATE: May 1, 2002 / REFERENCE NUMBER: GOS.BILL.001
SCOPE: All Company-affiliated facilities performing and/or billing outpatient and inpatient services. Specifically, the following departments:
Business Office Nursing
Admitting/Registration Ancillary Departments

Finance Health Information Management

Administration Utilization Review Management

Emergency Department Service Centers

PURPOSE: To establish guidelines for billing Medicare outpatient services provided prior to an inpatient admission in accordance with the Centers for Medicare and Medicaid Services (CMS) regulations.
POLICY:
Outpatient services provided by the admitting facility or a entity wholly-owned or operated by the admitting facility will be combined with the Medicare Part A admission under the following circumstances.
Hospitals paid under the Prospective Payment System (PPS) for acute care services:

All outpatient diagnostic services provided within three days prior to the inpatient admission must be combined to the inpatient admission.
Related therapeutic or non-diagnostic services provided within three days prior to the inpatient admission must be combined to the inpatient admission.

Hospitals or Distinct Part Units excluded from the PPS for acute care services:

All outpatient diagnostic services provided within one day prior to the inpatient admission must be combined to the inpatient admission.
Related therapeutic or non-diagnostic services provided within one day prior to the inpatient admission must be combined to the inpatient admission.

NOTE: Refer to the definition of related below. If your Fiscal Intermediary processes claims using a different definition of related, obtain their guidelines in writing. Specific documentation from the intermediary related to the variance must be obtained and provided to the Billing Help Line at 1-888-735-3669.
The following exceptions apply to this policy:
Home Health Agency (HHA): Services provided within the applicable “window” by an HHA wholly-owned or operated by the admitting facility do not need to be combined with the inpatient admission unless such services are diagnostic and payable under Medicare Part B. Diagnostic services payable under Medicare Part B that are rendered by an HHA wholly-owned or operated by the admitting facility must be combined with the inpatient admission.
Skilled Nursing Facility (SNF): Services provided within the applicable “window” by a SNF wholly-owned or operated by the admitting facility do not need to be combined with the inpatient admission unless such services are diagnostic and payable under Medicare Part B. Diagnostic services payable under Medicare Part B that are rendered by a SNF wholly-owned or operated by the admitting facility must be combined with the inpatient admission.
Hospice: Services provided within the applicable “window” by a Hospice wholly-owned or operated by the admitting facility do not need to be combined with the inpatient admission unless such services are diagnostic and payable under Medicare Part B. Diagnostic services payable under Medicare Part B that are rendered by a Hospice wholly-owned or operated by the admitting facility must be combined with the inpatient admission.
Ambulance transportation services: Ambulance transportation services provided within the applicable “window” by an entity wholly-owned or operated by the admitting facility do not need to be combined with the inpatient admission unless such services are rendered during an inpatient admission for the purpose of the patient receiving specialized services not available where the patient is an inpatient. When rendered during an inpatient admission, the cost of ambulance transportation services should be included in the ancillary cost center representing the specialized service provided.
Maintenance renal dialysis: Maintenance renal dialysis provided within the applicable “window” by an entity wholly-owned or operated by the admitting facility do not need to be combined with the inpatient admission.
Physician professional services: Professional services personally furnished by physicians do not need to be combined with the inpatient admission
Under no circumstances will outpatient services be provided in order to:

Avoid combining outpatient services with anticipated inpatient admissions at another facility.
Avoid combining the outpatient services with inpatient admissions by purposefully scheduling services for such reason prior to the applicable “window” as outlined in this policy.

DEFINITIONS:
Window: Three days prior to an inpatient admission for acute care PPS hospitals and one day prior to inpatient admission for hospitals or units exempt from acute care PPS.
Diagnostic Service: An examination or procedure to which the patient is subjected, or which is performed on materials derived from a hospital outpatient, to obtain information to aid in the assessment of a medical condition or the identification of a disease. Among these examinations and tests are diagnostic laboratory services such as hematology and chemistry, diagnostic X-rays, isotope studies, EKGs, pulmonary function studies, thyroid function tests, psychological tests and other tests given to determine the nature and severity of an ailment or injury. For this provision, diagnostic services are defined by the presence on the bill of the following revenue and/or HCPCS codes:

254 – Drugs incident to other diagnostic services;
255 - Drugs incident to radiology;
30X - Laboratory;
31X – Laboratory pathological;
32X – Radiology diagnostic;
341 - Nuclear medicine, diagnostic;
35X - CT scan;
40X - Other imaging services;
46X – Pulmonary function;
48X - Cardiology, with HCPCS codes 93015, 93307, 93308, 93320, 93501, 93503, 93505, 93510, 93526, 93541, 93542, 93543, 93544, 93545, 93561, or 93562;
53X – Osteopathic services;
61X - MRI;
62X - Medical/surgical supplies, incident to radiology or other diagnostic services;
73X – EKG/ECG;
74X - EEG; and
92X - Other diagnostic services.

Non-Diagnostic Services: Services and supplies furnished as an integral, although incidental, part of a physician's professional service in the course of diagnosis or treatment of an illness or injury.
Related: Services are related when there is an exact match to the fifth digit level of the ICD-9-CM diagnosis codes assigned to both the outpatient services and the inpatient stay.
Wholly-owned or Operated: Any entity for which the hospital itself is the sole owner or the sole operator. The hospital need not exercise administrative control over a facility in order to operate it. An operator implements facility policies, but does not necessarily make the policies. Operating a facility simply involves conducting the facility’s day-to-day activities, as opposed to “control,” which involves the power to direct the facility’s operations toward specific objectives.
Maintenance Renal Dialysis: Dialysis that is regularly furnished to an ESRD patient in a hospital-based, independent (non-hospital-based), or home setting.

4/2002

During the process of admitting a patient with Medicare Part A benefits, registration personnel must inquire if the patient has received outpatient services within the applicable “window” from an entity wholly-owned or operated by the admitting facility.
Business Office, Patient Account Services or Medicare Service Centers personnel must review the Three Day Window Report (CENS:CENS10 for Patient Accounting facilities or INPATIENT/OUTPATIENT EXCEPTION REPORT for B/AR facilities) on a daily basis to identify patients who have received outpatient services within the applicable “window” of an inpatient admission. Also, the Monthly COMP 3DAY01 report should be reviewed monthly. These reviews should be documented on the Three Day Window reports and maintained in accordance with the Record Retention policies.
Business Office, Patient Account Services or Medicare Service Centers personnel must establish a mechanism to identify services rendered by wholly-owned or operated entities which may not utilize the hospital main A/R system for billing (i.e., physician practices/clinics). If such services are noted which were provided by a wholly-owned or operated physician practice/clinic, the provider of service must be contacted and instructed to bill the technical components of the services to the admitting facility and write such services off their accounts receivable.
Outpatient services, which meet the criteria, as defined in the Policy section above must be combined with the inpatient admission. Business Office, Patient Account Services or Medicare Service Centers personnel must contact the facility Health Information Management department to determine the appropriate code sequencing for the inpatient account.
Services noted on recurring patient types that do not meet the criteria in the Policy section above do not need to be combined to the inpatient admission. However, Occurrence Span Code 74 and the overlapping “from - through” dates of service for the outpatient recurring account must be entered in Form Locator 36 of the UB-92 for the inpatient account.
If a Medicare Part A inpatient claim is denied or rejected due to overlapping outpatient services, and it is determined that the services submitted are subject to the Medicare payment window, Business Office, Patient Account Services or Medicare Service Centers personnel must perform the following steps:
Perform a “void/cancel of prior claim” routine as soon as possible. (Note: Refer to the UB-92 Manual, for instructions on performing a Void/Cancel of Prior Claim.)
Combine the applicable charges from the outpatient claim to the inpatient claim. Refer to Company policy HIM.GEN.001 for instructions regarding combining ICD-9-CM procedure and diagnosis codes.
Rebill inpatient claim once Medicare has taken back the outpatient void/cancel claim.
Hospital personnel (if the facility is not in a Service Center environment) or Service Center personnel must perform a review of remittance advice rejections relating to this policy at least quarterly and report the results to the facility Monitoring Oversight Group (see GOS.GEN.001 for Monitoring Oversight Group members).
A review of all business entities must be performed by the hospital and/or Service Center in conjunction with Legal Counsel to determine if such entities are “wholly-owned or operated.” This review must be performed on an annual basis or as new relationships are established.
Annual education must be provided on the contents of this policy to all billing staff, clerical employees, managers, supervisors, and personnel involved in preparing and submitting Medicare bills relating to outpatient services rendered in connection with inpatient admissions. Note: The Company offers a web based course, The Medicare Three Day Window, available through HealthStream University, which includes detailed information regarding the Medicare Three Day Window rule and meets the education requirement of this policy.

The Facility Ethics and Compliance Committee is responsible for implementation of this policy within the facility.
REFERENCES:
63 FR 6864 February 11, 1998, Medicare: Payment for Preadmission Services
42 CFR 412.2; 413.40
Medicare Hospital Manual (Sections 230.3, 230.4 and 415.6)
Medicare Intermediary Manual (Section 3672)
End Stage Renal Disease Manual (CMS Pub. 81), GlossaryOutpatient Services and Medicare Three Day Window Policy, HIM.GEN.001

4/2002

Wholly-owned or operated examples

The following includes examples of legal structures to which the Medicare payment window would and would not apply:

EXAMPLE 1:

Hospital A is owned by corporation B. Clinic/practice C is also owned by corporation B. Since hospital A does not own or operate clinic/practice C, outpatient services provided at clinic/practice C would not be combined with inpatient admissions at hospital A.

EXAMPLE 2:

Hospital A is the sole owner of a separate corporation, hospital B. Hospital A is also the sole owner of another separate corporation, clinic/practice C. Outpatient services provided within the applicable “window” at either hospital B or clinic/practice C would need to be combined if the patient were subsequently admitted at hospital A.

EXAMPLE 3:

Corporation A owns and operates three (3) hospitals. The three hospitals are not separately incorporated, but each has a separate provider number. None of the three hospitals operate any of the others. Outpatient services provided at any of the 3 facilities would not be combined if the patient were subsequently admitted at one of the other facilities.

EXAMPLE 4:

Corporation A is the sole owner of a separate corporation, hospital B. Corporation A is also the sole owner of a separate corporation, clinic/practice C. The management team of hospital B is responsible for the day-to-day affairs of the clinic/practice C. Outpatient services provided within the applicable “window” at clinic/practice C when the patient is subsequently admitted at hospital B, would need to be combined with the inpatient admission.

EXAMPLE 5:

Corporation A owns and operates three hospitals in one city. At one time, the three hospitals were separate corporations with their own provider numbers, but the three hospitals have now been merged into one corporation (corporation A) and have one provider number and the same management team. Outpatient services provided within the applicable “window” at any of the three hospitals must be combined with the inpatient admission when the patient is subsequently admitted at any of the three hospitals.

EXAMPLE 6:

Corporation A owns and operates two (2) hospitals. The two hospitals are not separately incorporated, but each has a separate provider number. Neither of the hospitals operates the other. Ordinarily, outpatient services provided at either of the 2 facilities would not be combined if the patient were subsequently admitted at the other facility. However, Hospital B must not deliberately direct outpatient services to Hospital C if the patient is scheduled to be an inpatient at Hospital B (or vice versa), either before or during the applicable “window”, in order to avoid combining related outpatient and inpatient visits.

4/2002

Attachment to GOS.BILL.001