Question of the Week


Our hospital employs physicians in a separate entity that is wholly owned by the Hospital.  Do we have to comply with Medicare’s 3 Day Window Rule?  And, if so, how?


Yes.  Medicare’s 3 Day Window rule applies to all diagnostic technical claims, and all non-diagnostic technical claims that are related to an admission, and are performed on the day of admission or at any time within 3 calendar days prior to the admission by the admitting hospital or by an entity that is wholly owned or operated by the admitting hospital.

In its November 28, 2011 Physician Fee Schedule rules, CMS stated that the recent change to the definition of when a non-therapeutic claim will be presumed “related” to the inpatient admission will increase the number of Part B claims that will be subject to the 3 Day Window.

This change went into effect on June 25, 2010.  A hospital may overcome this presumption if it is able to show that the pre-admission non-diagnostic service was clinically distinct or independent from the reason for the beneficiary’s admission using CMS Condition Code 51 “Attestation of Unrelated Outpatient Non-Diagnostic Service.”

CMS also emphasized that while this rule excludes professional services, it applies to the technical component of services provided in a physician practice or other entity that is operated directly by the admitting hospital; that is a provider-based service of the admitting hospital; or is provided by a separate entity that is wholly owned or wholly operated by the admitting hospital.  CMS has developed a new modifier (PD) to be used by the wholly owned or wholly operated entity for services rendered on or after January 1, 2012.

Wholly owned means the admitting hospital is the sole owner.  Wholly operated means that the admitting hospital has exclusive responsibility for conducting and overseeing the entity’s operations.

Please note that exceptions to the rule do exist.  The 3 Day Window rule does not apply to Ambulance Services, Maintenance Renal Dialysis or Part A Services furnished by an SNF, HHA, Hospice and Critical Access Hospital.  Furthermore, in its November 28, 2011 Physician Fee Schedule rules, CMS stated that while they would be considered to be “entities” under the rule, due to the manner in which they are currently being reimbursed, the 3 Day Window Rule cannot be practically applied to a Rural Health Clinic or a Federally Qualified Health Clinic.