Inpatient Facility Coding & Compliance Alert

Question: A 50-year -old patient is seen as an outpatient in the ED of a cancer hospital and given observation and diagnostic services before being admitted as an inpatient the next day. How will the outpatient services be billed along with the inpatient services?

Wisconsin Subscriber 

Answer: The billing of inpatient hospital services should incorporate few outpatient services rendered prior to admission as an inpatient. Under Medicare’s “3-day (or 1-day) payment window” policy,

“A hospital (or an entity that is wholly owned or wholly operated by the hospital) must include on the claim for a beneficiary’s inpatient stay, the diagnoses, procedures, and charges for all outpatient diagnostic services and admission-related outpatient nondiagnostic services that are furnished to the beneficiary during the 3-day (or 1-day) payment window.” 

The services consist of diagnostic services (for example, clinical diagnostic laboratory tests) or further services associated with the admission rendered by the hospital (or by an entity that is wholly owned or wholly operated by the hospital) to the beneficiary during the 3 days prior to the date of the patient’s admission to a “subsection (d) hospital” which is subject to the IPPS. For a “non-subsection (d) hospital”  (that is, a hospital not paid under the IPPS such as psychiatric hospitals and units, inpatient rehabilitation hospitals and units, long-term care hospitals, children’s hospitals, and cancer hospitals), the payment window is 1 day prior to the date of the patient’s admission.

Under the 3-day (or 1-day) payment window policy, all outpatient diagnostic services furnished to a Medicare beneficiary by a hospital must be incorporated on the Part A bill for the patient’s inpatient stay. However, outpatient nondiagnostic services rendered during the payment window should be included on the bill for the patient’s inpatient stay merely when the services are directly associated with the patient’s admission.

The payment window policy is available at 

o 42 CFR 412.2(c)(5) for subsection (d) hospitals,
o 413.40(c)(2) for non-subsection (d) hospitals, and
o 412.540 for long term care hospitals,
o The detailed policy guidelines are given in the Medicare Claims Processing Manual (Pub. 100-4), Chapter 3, section 40.3, “Outpatient Services Treated as Inpatient Services.”