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IPPS Proposed Changes Clarify Three-Day Rule

James Carroll, for HealthLeaders Media, May 16, 2011

CMS further clarified its interpretation in the IPPS proposed rule for 2012, stating that the Federal Register containsthe 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 non-diagnostic 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 non-diagnostic services furnished to a patient at physicians' 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.

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