Q&A: Applying the three-day payment window

Q: Are services provided at physician offices owned by our hospital subject to the three-day payment window?

A: An inpatient admission begins with the start of inpatient care pursuant to an inpatient order from a qualified practitioner. At face value, that would suggest that any services provided before the inpatient admission should be considered an outpatient service and would therefore be paid separately. Although those services are outpatient services, they do not generate any additional payment because of the three-day payment window, which states that “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 non-diagnostic services that are furnished to the beneficiary during the three-day (or one-day) payment window."

There are some nuances to this rule. First, it specifically refers to entities owned or wholly operated by a hospital. Thus, the rule does not apply to entities that are owned by a health system, even if the health system owns both the entity and the hospital (unless the hospital itself operates the entity). Second, as the number of physician practices owned by hospitals increase, the facility fee charged when a patient visits a physician in the payment window may be subject to this rule (CMS, June 14, 2014). This would mean that if a patient who is scheduled for inpatient colon surgery on a Friday undergoes an imaging study on Wednesday, then the charge for the imaging would be placed on the inpatient claim even if the imaging study was unrelated to the surgery. On the other hand, if the patient was seen on Wednesday by their ophthalmologist whose practice was owned by the hospital for a scheduled check of their glaucoma, which is unrelated to the reason for admission, the facility fees associated with that visit would not be subject to the three-day rule. Note that this rule specifies three calendar days, not 72 hours.

For more information, see the Hospital Guide to Contemporary Utilization Review, Second Edition.