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CMS Implements 3-day Payment Window Policy for Wholly Owned or Wholly Operated Physician Practices

Recently, the Centers for Medicare and Medicaid Services (CMS) released Change Request 7502 relating to the 3-day payment window policy. For services on or after January 1, 2012, the 3-day payment window will apply when a patient is seen in a physician practice that is wholly owned or wholly operated by a hospital and is admitted as an inpatient within 3-days (or, in the case of non-IPPS hospitals, one day). The window will apply to diagnostic and nondiagnostic services that are clinically related to the reason for the patient’s inpatient admission, regardless of whether the inpatient diagnosis is the same as the outpatient diagnosis.

For claims with dates of service on or after January 1, 2012, a new modifier PD is available and must be appended to the entity’s preadmission diagnostic services, as well as nondiagnostic services related to the admission. When a related inpatient admission has occurred, the wholly owned or wholly operated entity will need to manage their billing processes to ensure that they bill for their physician services appropriately. The hospital is responsible for notifying the wholly owned or wholly operated entity that a patient has been admitted as an inpatient when the entity provided services to the patient within the 3-day window.

When the modifier is present on claims for services, CMS shall pay:

  • Only the Professional Component (PC) for CPT/HCPCS codes with a Technical Component (TC)/PC split that are provided in the 3-calendar day (or, 1-calendar day for non-IPPS) payment window, and
  • The facility rate for codes without a TC/PC split.

In order to ensure proper compliance with the 3-day payment window policy, entities and their hospitals should begin to coordinate their billing practices and claims processing procedures. If you have any compliance questions relating to the 3-day payment window policy, or any other compliance questions, please contact a Wachler & Associates attorney at 248-544-0888.

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