ED Coding and Reimbursement Alert

Be aware of ED services provided within three days of admission to a hospital with your same owner

Although the concept of non-payment for select services within 72 hours of admission to the same facility that houses your ED may be familiar, CMS has released additional guidance in how to report those services.

Background: On Dec. 21, CMS rescinded Transmittal 2297, dated Sept. 2, 2011, and replaced it with Transmittal 2373. The new transmittal finalizes CMS payment modifier PD (Diagnostic or related non-diagnostic item or service provided in a wholly owned or wholly operated entity to a patient who is admitted as an inpatient within 3 days), with a compliance date of July 1, 2012, says Ed Gaines, JD, CCP, Chief Compliance Officer for Medical Management Professionals in Greensboro, NC.

On June 25, 2010, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PACMBPRA) (Pub. L. 111-192) was enacted. Section 102 of this Act entitled, "Clarification of 3-Day Payment Window," clarified when certain non-diagnostic services furnished to Medicare beneficiaries in the three days (preceding an inpatient admission should be considered "operating costs of inpatient hospital services" and therefore included in the hospital's payment under the Hospital Inpatient Prospective Payment System (IPPS). This policy is generally known as the "three day payment window" or sometimes as the 72-hour rule, says Gaines.

The technical component of any ED services must appear on the inpatient claim if delivered within the three day window of an admission

Under the three day payment window, a hospital (or an entity that is wholly owned or wholly operated by the hospital) must include on the inpatient claim for a Medicare beneficiary's inpatient stay, the technical portion of all outpatient diagnostic services and admission-related non-diagnostic services provided during the payment window. The statute makes no changes to the existing policy regarding billing of diagnostic services, Gaines adds.

Get The Skinny on Wholly Owned or Wholly Operated Entities

Wholly owned or wholly operated entities are defined in 42 CFR §412.2; "An entity is wholly owned by the hospital if the hospital is the sole owner of the entity." And, "an entity is wholly operated by a hospital if the hospital has exclusive responsibility for conducting and overseeing the entity's routine operations, regardless of whether the hospital also has policymaking authority over the entity.  

The ownership entity is a legal question that ED groups and hospitals should consult experienced health care counsel.  The group could be a "Captive LLC" with the hospital and be considered "wholly operated" but depending on the specifics of the hospital/group relationship several more loose arrangements might also qualify, Gaines explains.

The Technical Portion of the Diagnostic Service is the Focus of the Change

In accordance with section 102(a)(1) of the PACMBPRA, for outpatient services furnished on or after June 25, 2010, the technical portion of all non-diagnostic services, other than ambulance and maintenance renal dialysis services, provided by the hospital (or an entity wholly owned or wholly operated by the hospital) on the date of a beneficiary's inpatient admission are considered to be related to that admission and should be included in the bill for the inpatient stay. When this scenario occurs, Medicare will pay for the professional component of services with payment rates that include a professional and technical split and at the facility rate for services that do not have a professional and technical split, Gaines adds.

Use PD Modifier Pre Admission Work During the Three Day Window

According to Transmittal 2373, CMS established the new PD modifier, and requires that it be appended to services that are subject to the three day payment window policy. The wholly owned or operated entity will need to manage their billing processes to ensure that they bill for their services appropriately when a related inpatient admission has occurred. The hospital is responsible for notifying the physician entity of any inpatient admission who received services in that same wholly owned or operated entity within the prior three day window, says Gaines.

If you know your patient was subsequently admitted during the three day window, append the PD modifier to all calm lines that can be identified to the inpatient stay. Physician non-diagnostic services that are unrelated to the hospital admission are not subject to the payment window and shall be billed without the payment modifier. However, if the ED group or billing company is providing facility coding services to the hospital, they should consider consulting with their Medicare A/B MAC to understand their interpretation.  For ED groups who code or have a third party code for their professional services, the Transmittal states that physician non-diagnostic services that are unrelated to the admission are covered under Part B.  "Unrelated" means non-diagnostic services that are clinically distinct or independent from the inpatient admission.  There is much in this Transmittal that could be subject to varied interpretations, so clarification with the appropriate MAC is essential, warns Gaines.

Watch for Future PD Modifier Updates

It is unclear whether CMS is really intending to apply this packaging concept to those facilities operating as offices from charging for the technical component (TC) which has a site of service differential when using POS 11 (outpatient office), and then the patient is later admitted.

For example, if a patient is referred to a physician's office for an x-ray and joint injection -- and normally the office would bill for the TC and professional component (PC) and receive higher reimbursement for the TC using a on facility based clinic POS 11 versus a facility based hospital POS.  Let's say the patient develops complications because of the injection and has to be admitted the next day.  One argument is that the rule is really intending to capture this scenario, and the physician's office would be required to use the PD modifier and not bill for the TC as that would be reimbursed under the rule to the hospital.

A subsequent question is what impact, if any, does this three-day window have on the emergency physicians when they are billing POS 23, emergency department? Since the ED physicians are not billing the TC component, no additional packaging should occur. CMS is expected to release a FAQ set on Transmittal 2373 shortly, which may clear up some of these questions, Gaines adds.