Hospitals Face Three-Day Payment Window Changes

Effect on the RAC program unclear
Although part of the spirit of the statutory change seems to have been a desire to protect hospitals from RAC scrutiny regarding nondiagnostic services inappropriately bundled into the inpatient stay, the actual letter of the law may fall short of that, Hoy says.

The statutory language states that claims may not be reopened "for purposes of treating, as unrelated to a patient's inpatient admission, services provided during the 3 days ... immediately preceding the date of the patient's inpatient admission."

However, Hoy points out that RACs thus far have focused on the Part A payment implications rather than the outpatient services themselves. The RACs' purpose with these claims hasn't been to treat the outpatient service as unrelated to the inpatient admission, it has been to point out incorrect inpatient coding and DRG assignment, resulting in higher payment to the hospital.

So hospitals looking for strong protection against the RACs related to application of the prior three-day rule will, again, require more information from CMS regarding how the new language will be implemented.

Difficult billing scenarios remain
Hospitals also face confusion in dealing with services provided prior to June 25 that they haven't yet billed to Medicare.

CMS indicates in its press release that it is prohibited from paying new claims for separately billed outpatient nondiagnostic services rendered prior to June 25, presumably only including those meeting the new definition of "other related services."

There may be a situation in which a hospital provided an outpatient nondiagnostic service that, under the previous three-day rule requirements, was clearly unrelated to a subsequent inpatient admission. Consider the example of a chemotherapy service for breast cancer provided June 1, followed the same day by an inpatient admission for exacerbation of congestive heart failure. Although the hospital could have billed the chemotherapy separately to Part B prior to June 25, CMS' press release seems to imply that if the hospital hasn't yet submitted a bill then it cannot receive the separate payment—and so must bundle the chemotherapy into the inpatient stay if billed after June 25.

"This seems to imply that the speed with which a hospital billed its outpatient services determines whether they are separately payable or not, in contradiction to long-standing timely filing rules," says Hoy.

Because the statute applies to services provided after June 25 and services already billed on a Part A claim, it seems that the prior regulatory definition should apply to any services provided prior to June 25 and not already billed, Hoy says. However, hospitals should bear in mind that it seems to be CMS' position that it cannot pay new claims for services provided prior to June 25 that meet the new definition of "other related services."