8 Three-Day Rule Tips for Hospitals

With the release of the 2011 IPPS final rule on July 30 comes a number of changes that providers will need to have a handle on in regard to the three-day payment window.

The three-day rule states that all diagnostic services provided three calendar days before the calendar day on which the patient is admitted, are bundled and paid as part of the inpatient stay. Non-diagnostic services on the day of and for three days before an admission will now also be considered part of the admission.

Operationally, hospitals have had problems following the three-day payment window rule for years. Hospitals that are scrambling to adapt while trying understand the ramifications of the rule should consider the following list of tips and pitfalls to avoid:

1. Immediately determine what processes your facility follows in regard to the three-day payment window. How is your facility processing claims, and was it different, or did it deviate from what CMS has in the Claims Processing Manual, Chapter 3, §40.3 manual? If your facility did not strictly follow the Claims Processing Manual, you should look at some test claims. The test should be to see how a claim would have been reimbursed if performed according to the manual and how was it actually reimbursed. Your facility will need to look at both versions to see if in fact they would have had DRG assignments that would have been up-coded or down-coded, or otherwise changed, according to William L. Malm, ND, RN, healthcare consultant for Craneware.

2. Do not drastically change your methodology. Don't go back and try to change something you've already done because you can't reopen a claim, according to Malm. In addition, do not take the approach of waiting to see what the final CMS guidelines will be and continue using the regulation from before June 25th. "If something is completely unrelated, then you should continue to bill as unrelated," he says.

3. Avoid deeming services unrelated unless a "reasonably prudent" person could come to the same conclusion, Malm continued. "For example, you have an ambulatory surgery visit on Monday for a cataract repair. On Wednesday, you are admitted for a motor vehicle accident with multiple traumas. The 'form and function' here are clearly unrelated, and a 'reasonably prudent person' would be able to make this determination."

4. Lean on CMS guidance. If you are receiving advice that is not consistent with Medicare Claims Processing Manual and Benefits Policy Manual regulations, you more than likely are having an issue. "Consulting the rule and law itself is the prudent course of action for providers," says Malm.

5. Keep in mind that nothing has changed for diagnostic services provided before an inpatient admission, according to Kimberly Anderwood Hoy, JD, CPC, director of Medicare and Compliance for HCPro, Inc. "However, non-diagnostic services on the day of admission and for three days before an admission will now be considered part of the admission," she says. "For services in the three days before admission, but not the same day, hospitals can demonstrate they are unrelated and continue to bill separately to Part B."

6. Understand that the new rule may require a look at the clinical situation of the patient, according to Hoy. "Depending on the final discussion of the standard of 'unrelated,' outpatient services may need to be reviewed by a person with a clinical background prior to being billed separately, rather than being done by a coder or compared by the billing system of matching diagnoses."

7. Adjust billing practice for services provided since June 25, 2010. This should be done to ensure non-diagnostic services on the day of the admission are not billed separately, according to Hoy. "In addition, hospitals should develop a process to review services in the three days before for clinical-relatedness and documentation of services that are unrelated to support separate billing."

8. Voice your opinion. "As always, I encourage everyone to comment (by September 28, 2010) to CMS with any questions and concerns they have," says Hoy. The address and instructions are at the beginning of the 2011 final rule.