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May
11

Three-day rule clarification issued in IPPS proposed rule

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Editor’s note: This article is the first in a series of three IPPS-related updates.

On April 19, CMS released the inpatient prospective payment system proposed rule for 2012, which contained a vast assortment of inpatient proposals and clarifications for finance and accounting departments, coders and billers, and quality departments among others. This series of articles will cover three of the most significant clarifications, beginning with CMS’ three-day payment window rule.

The three-day rule, which was significantly amended in 2010, defines certain preadmission services as inpatient operating costs, meaning they are bundled and billed as part of the inpatient claim and payment is made as part of the applicable DRG payment for the case. While it sounds clear, the rule was widely misunderstood by providers leading to last year’s clarifying amendments.

The most recent clarification in the IPPS proposed rule deals with guidance given by CMS in an October 2010 hospital open door forum conference call. During the call, a listener questioned whether different taxpayer identification numbers will have any bearing on whether a physician practice group is wholly owned, and if the three-day payment window applies.

A CMS representative responded that the rule only applies to the technical component services in provider based facilities, but not to freestanding (non-provider based) physician offices wholly owned or operated by a hospital. However this information contradicted prior guidance given in a 1998 clarification of the payment window published in the Federal Register.

In the January hospital open door forum, CMS seemed to have corrected this apparent error, indicating the payment window applied generally to technical services at any physician office wholly owned or operated by a hospital. CMS further clarified their interpretation in the IPPS proposed rule for 2012, stating that the Federal Register is the correct interpretation of the statute, specifically applying the rule to non-provider-based hospital-owned practices. The IPPS proposed rule states:

In response to ongoing requests to clarify the applicability of the payment window policy to preadmission nondiagnostic services provided in hospital-owned or hospital-operated physicians’ offices or clinics, we are clarifying in this proposed rule that the three-day (or, where applicable, one-day) payment window policy applies to both preadmission diagnostic and nondiagnostic services furnished to a patient at physician’s practices that are wholly-owned or wholly-operated by the admitting hospital.

Though this policy update helps to clarify this aspect of the rule, there are a still a number of issues that need to be addressed, according to Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc.

“CMS has not yet addressed the issue of how to separate the charges for the technical portion from the professional [portion] for inclusion on the inpatient claim,” she says. “In the interim, I would suggest that providers download the physician fee schedule Excel file and figure a percentage based on the difference between the facility and non-facility rate for the code.”

Hoy continues, “Additionally CMS did not indicate how practices should bill for the professional only portion of E/M services, which are not subject to the professional component modifier -26, to ensure they receive proper payment for only the professional portion of the service.”

In provider-based locations, this payment adjustment is made based on the location of the service in a hospital outpatient department, but these services would not accurately be reported with that site of service because they occur in a freestanding physician office.

In August, CMS plans to release further clarifying instructions in the physician fee schedule proposed rule. Until then—while providers are waiting for this guidance—Hoy suggests keeping an eye on the issue.

“I would recommend that these cases are tracked internally until the physician fee schedule rule is issued to ensure that hospitals have the information for billing or rebilling the physician portion, as appropriate, under the new guidance in that rule.”

Comments

  1. Cheryl Hannant says:

    I realize that this discussion is mainly for hospitals and doctors. However, I would like to know if anyone is addressing the issue nursing facilities have when a person is kept in the ER for 3 days and then discharged. This could also be where a person is in ER less than 3 days, admitted to the hospital less than 3 days, and discharged.

    The nursing facilities believes the resident had a 3 day stay and bills Medicare A only to find out the resident doesn’t qualify.

    Is this issue being discussed at all? I would like a response but do not wish this to be published.

  2. Stephanie Rice, RHIT, CCS says:

    I’m trying to get clarification regarding the language of “documented in the beneficiary’s medical record”. Would account notes in the financial system be compliant? We are having our Denials Management Nurse Reviewers look at accounts to see if they are related. If not, the Nurse Reviewer is documenting in the account notes portion of our system their rationale. These nurses only review accounts after the patient has gone home and therefore, do not document in the electronic medical record. They do not have access to do so. Please advise if making not of their rationale in the patient’s account (of the financial system) will suffice to meet the requirement. Thank you.

  3. Kimberly Hoy says:

    At this point CMS has said very little about the documentation required in the medical record to demonstrate that the service is unrelated. The documentation CMS will be looking for is not just the documentation of the nurse reviewer, but rather that the actual medical records the nurse reviewers looked at support the decision. Therefore, the nurse reviewers determination documentation may be more like a road map for a reviewer at the MAC than the actual documentation required.

    With that in mind you may wish to put your nurse reviewer’s documentation in a portion of the record you know will be submitted if the record is selected for ADR by your MAC. Sometimes the medical records staff only pull from the defined medical record and not from financial notes. If that’s the case and you put them in your financial notes which may not be a part of the defined medical record, they will not be sent and the MAC reviewer won’t have the benefit of seeing this “road map” of why you considered the case unrelated.

    There are a couple of ways to address this. Some facilities have an administrative section in this medical record for things like this or case management determination, etc. Other facilities may exclude these items from the medical record, but have a policy for the medical records staff to submit them anyway when responding to a payment review such as an ADR, when they are pertinent to such a review.

    As you can see this will be a very facility specific procedure, that will depend on the extent to which EHR is implemented, how your medical record is defined and managed, etc. I encourage you to get the billing and medical records department involved to ensure everyone is on the same page in order to get the right information to the MAC if there is a review.