CMS reminds organizations of three-day payment window policy billing rules

CMS recently published FAQs and other resources to help organizations correctly bill for services that are subject to the three-day payment window policy. MLN Matters SE20024, released December 3, was published in response to a May 2020 Office of Inspector General (OIG) report that found Medicare made millions in overpayments for services subject to the policy that were incorrectly billed.

The three-day payment window policy applies to certain hospital outpatient services provided within three days preceding an inpatient admission. The technical component of outpatient diagnostic services and related nondiagnostic services furnished to a Medicare beneficiary during that time must be bundled with the claim for the inpatient services. This includes any nondiagnostic services that are clinically related to the reason for inpatient admission regardless of whether the inpatient and outpatient diagnoses are the same. Diagnostic procedures include EKGs, thyroid function tests, psychological tests, x-rays, and other tests used to determine the nature and severity of an ailment or injury.

The FAQs cover, among other topics, the following:

• Determining whether an entity is subject to the policy
• Exceptions to the policy
• Use of condition code 51 (attestation of unrelated outpatient nondiagnostic services)
• Use of modifier -PD (diagnostic or related nondiagnostic item or service provided in a wholly owned or operated entity to a patient who is admitted as an inpatient within 3 days)

SE20024 also includes links to more information about the three-day payment window policy.

Organizations should review SE20024 as well as the OIG’s May 2020 report. The OIG found that the incorrect payments were due to errors in the Common Working File edits. CMS agreed with the OIG’s recommendations in the report, including those to collect a portion of the overpayments, direct organizations to refund deductible and coinsurance amounts that were incorrectly collected, and educate organizations on correctly billing services subject to the policy.