DEPARTMENT: Regulatory Compliance
Support
PAGE: 1 of 6
POLICY DESCRIPTION: Outpatient Services and
Medicare Three Day Window
REPLACES POLICY DATED: 3/1/99, 5/14/99,
5/1/02, 5/15/03, 7/1/03, 4/15/04, 6/30/04 (GOS.BILL.001),
3/6/06, 3/1/07 (REGS.BILL.001 & REGS.COD.015),
1/1/08; 7/1/09
EFFECTIVE DATE: January 15, 2011
REFERENCE NUMBER: REGS.GEN.009
APPROVED BY: Ethics and Compliance Policy Committee
SCOPE: All Company-affiliated entities performing and/or billing outpatient and/or inpatient
services. Specifically, the following departments:
Administration
Ancillary Departments
Case Management
Ethics & Compliance Officers
Finance
Nursing
Shared Services Centers
Utilization Review Management
Facility or Service Center Coding
Admitting/Registration
Emergency Departments
Facility Health Information Management
Legal Operations
Quality
Revenue Integrity
PURPOSE: To establish guidelines for processing, coding, and billing Medicare outpatient services
provided in accordance with the CMS regulations.
Background:
Effective for services provided on or after June 25, 2010, the Centers for Medicare and Medicaid
Services (CMS) regulations state that:
 All outpatient diagnostic services furnished within three days of a hospital admission must be
combined on the inpatient claim for hospitals paid under IPPS.
 All outpatient diagnostic services furnished within one day of an admission must be combined
with the inpatient claim for hospitals or distinct part units excluded from IPPS.
 All outpatient nondiagnostic services on the date of a patient’s inpatient admission are deemed
related to the admission, and must be billed on the inpatient claim.
 All outpatient nondiagnostic services, provided by the hospital within three calendar days of an
admission for hospitals paid under the IPPS or the first calendar day for non-IPPS hospitals are
deemed related to the admission, and must be billed on the inpatient claim, unless the hospital
attests to specific nondiagnostic services as being unrelated to the hospital claim.
POLICY: For services furnished on or after June 25, 2010, outpatient services provided by the
admitting facility or an entity wholly-owned or operated by the admitting facility will be combined
with the Medicare Part A admission under the following circumstances.
1. Hospitals paid under the Prospective Payment System (PPS) for acute care services:
All outpatient services provided within three days prior to the inpatient admission, including the
date of admission, must be combined with the inpatient admission. Outpatient services provided
12/2010
DEPARTMENT: Regulatory Compliance
Support
PAGE: 2 of 6
POLICY DESCRIPTION: Outpatient Services and
Medicare Three Day Window
REPLACES POLICY DATED: 3/1/99, 5/14/99,
5/1/02, 5/15/03, 7/1/03, 4/15/04, 6/30/04 (GOS.BILL.001),
3/6/06, 3/1/07 (REGS.BILL.001 & REGS.COD.015),
1/1/08; 7/1/09
EFFECTIVE DATE: January 15, 2011
REFERENCE NUMBER: REGS.GEN.009
APPROVED BY: Ethics and Compliance Policy Committee
prior to the three day payment window must be billed separately.
2. Hospitals or Distinct Part Units excluded from the PPS for acute care services:
All outpatient services provided within one day prior to the inpatient admission must be combined
with the inpatient admission. Outpatient services provided prior to the one day payment window
must be billed separately.
3. The following exceptions apply to this policy:
a. Home Health Agency (HHA), Skilled Nursing Facility (SNF) or Hospice:
Services provided within the applicable window by an HHA, SNF, or Hospice wholly-owned
or operated by the admitting facility do not need to be combined with the inpatient admission
unless such services are diagnostic and payable under Medicare Part B. Diagnostic services
payable under Medicare Part B that are rendered by an HHA, SNF, or Hospice wholly-owned
or operated by the admitting facility must be combined with the inpatient admission.
b. Ambulance transportation services: Ambulance transportation services provided within the
applicable window by an entity wholly-owned or operated by the admitting facility do not need
to be combined with the inpatient admission unless such services are rendered during an
inpatient admission for the purpose of the patient receiving specialized services not available
where the patient is an inpatient. When rendered during an inpatient admission, the cost of
ambulance transportation services should be included in the ancillary cost center representing
the specialized service provided.
c. Maintenance renal dialysis: Maintenance renal dialysis provided within the applicable
window by an entity wholly-owned or operated by the admitting facility does not need to be
combined with the inpatient admission.
d. Physician professional services: Professional services personally furnished by physicians do
not need to be combined with the inpatient admission.
e. Screening Mammograms: Screening mammograms are exempt from the applicable payment
window and should not be combined with the inpatient claim.
f. Critical Access Hospitals (CAH): Services provided by CAHs are not subject to the three day
or one day payment window.
4. Under no circumstances will outpatient services be provided in order to:
a. Avoid combining outpatient services with anticipated inpatient admissions at another
facility.
b. Avoid combining the outpatient services with inpatient admissions by purposefully
scheduling services for such reason prior to the applicable window as outlined in this
policy.
12/2010
DEPARTMENT: Regulatory Compliance
Support
PAGE: 3 of 6
POLICY DESCRIPTION: Outpatient Services and
Medicare Three Day Window
REPLACES POLICY DATED: 3/1/99, 5/14/99,
5/1/02, 5/15/03, 7/1/03, 4/15/04, 6/30/04 (GOS.BILL.001),
3/6/06, 3/1/07 (REGS.BILL.001 & REGS.COD.015),
1/1/08; 7/1/09
EFFECTIVE DATE: January 15, 2011
REFERENCE NUMBER: REGS.GEN.009
APPROVED BY: Ethics and Compliance Policy Committee
5. This policy applies whether Medicare Part A is the primary or secondary payer.
DEFINITIONS:
Wholly-owned or Operated: Any entity for which the hospital itself is the sole owner or the sole
operator. The hospital need not exercise administrative control over a facility in order to operate it.
An operator implements facility policies, but does not necessarily make the policies. Operating a
facility simply involves conducting the facility’s day-to-day activities, as opposed to control, which
involves the power to direct the facility’s operations toward specific objectives.
Window: Three calendar days prior to an inpatient admission for acute care PPS hospitals and one
day prior to inpatient admission for hospitals or units exempt from acute care PPS.
PROCEDURE:
The Shared Services Centers must develop a process that will accomplish the requirements below.
1. Identify services subject to policy:
a. Shared Services Center personnel must review the Payment Window Report (CENS:CENS10)
each business day to identify patients who have received outpatient services within the
applicable window of an inpatient admission and communicate impacted accounts with
HIM/Services Center coding personnel..
b. HIM/Services Center personnel must review both the appropriate inpatient and outpatient
accounts to provide the accurate ICD-9 CM code assignment, sequencing of codes, POA
Indicator, and MS-DRG recalculation following the procedures in “Code/combine applicable
services” below.
c. The Monthly Payment Window Report, COMP 3DAY01 report must be reviewed monthly by
Shared Services Center personnel to validate that the appropriate combination of accounts
from the Payment Window Report has occurred for billing. These reviews must be
documented on the Three Day Window reports or other electronic tools and maintained in
accordance with the Records Management policies.
d. Shared Services Center personnel must establish a mechanism to identify services rendered by
wholly-owned or operated entities that do not utilize the hospital main A/R system for billing
(i.e., physician practices/clinics).
1) If such services are noted that were provided by a wholly-owned or operated physician
practice/clinic, the provider of service must be contacted and instructed to bill the technical
components of the services that meet the criteria with the inpatient admission at the
12/2010
DEPARTMENT: Regulatory Compliance
Support
PAGE: 4 of 6
POLICY DESCRIPTION: Outpatient Services and
Medicare Three Day Window
REPLACES POLICY DATED: 3/1/99, 5/14/99,
5/1/02, 5/15/03, 7/1/03, 4/15/04, 6/30/04 (GOS.BILL.001),
3/6/06, 3/1/07 (REGS.BILL.001 & REGS.COD.015),
1/1/08; 7/1/09
EFFECTIVE DATE: January 15, 2011
REFERENCE NUMBER: REGS.GEN.009
APPROVED BY: Ethics and Compliance Policy Committee
admitting facility and write such services off their accounts receivable.
2) HIM/Services Center personnel must provide the accurate sequencing of codes and MSDRG recalculation following the procedures in “Code/combine applicable services” below.
A copy of the combined code changes (e.g., mock abstract) must be maintained in the
inpatient medical record.
2. Code/combine applicable services:
Applicable outpatient services which meet the criteria as defined in the Policy section above will
need to be combined with the inpatient admission for billing purposes. Prior to billing for
combined services, the following steps must be performed to appropriately process the medical
record and determine the appropriate code sequencing for the inpatient admission. Each account
remains as originally registered in Meditech.
a. Shared Services Center personnel must contact the Coding HIM/Services Center personnel for
the appropriate assignment, combination and sequencing of reportable codes and POA
Indicators.
b. Coding HIM/Services Center personnel must ensure the outpatient encounter is:
1) coded and abstracted under the outpatient account number for the facility providing the
outpatient service; and
2) filed per their outpatient record filing process.
c. Coding HIM/Services Center personnel must ensure the inpatient admission is:
1) coded and abstracted under the inpatient account number at the admitting hospital; and
2) filed per the facility’s inpatient record filing process.
d. Coding HIM/Services Center personnel must review the inpatient and outpatient records and:
1) Assign and combine the outpatient and inpatient ICD-9-CM diagnoses and procedure
codes and appropriately sequence with appropriate POA Indicators.
2) Recalculate the MS-DRG based on any coding changes and provide this information to
Shared Services Center personnel.
3) Maintain a copy of the combined code changes (e.g., mock abstract) in the inpatient
medical record along with the original coding summary for future reference.
4) A copy of the combined code changes (e.g., mock abstract) may be kept in the medical
record under the outpatient account along with maintaining the original coding summary
for future reference.
3. Bill combined services:
a. Information and data gathered during “Identify services subject to policy” and “Code/Combine
applicable services” must be compiled and input on the inpatient claim submitted to Medicare
Part A.
12/2010
DEPARTMENT: Regulatory Compliance
Support
PAGE: 5 of 6
POLICY DESCRIPTION: Outpatient Services and
Medicare Three Day Window
REPLACES POLICY DATED: 3/1/99, 5/14/99,
5/1/02, 5/15/03, 7/1/03, 4/15/04, 6/30/04 (GOS.BILL.001),
3/6/06, 3/1/07 (REGS.BILL.001 & REGS.COD.015),
1/1/08; 7/1/09
EFFECTIVE DATE: January 15, 2011
REFERENCE NUMBER: REGS.GEN.009
APPROVED BY: Ethics and Compliance Policy Committee
b. Services noted on recurring patient types that do not meet the criteria in the Policy section
above must not be combined to the inpatient admission. Occurrence Span Code 74 and the
overlapping “from - through” dates of service of the inpatient admission must be entered in
Form Locator 35 of the UB-04 for the outpatient recurring account.
c. If a Medicare Part A inpatient claim is denied or rejected due to overlapping outpatient
services, and it is determined that the services submitted are subject to the Medicare payment
window, Shared Services Center personnel must perform the following steps:
1) Perform a “void/cancel of prior claim” routine on the outpatient claim as soon as possible.
(Note: Refer to the UB-04 Manual for instructions on performing a Void/Cancel of Prior
Claim.)
2) Combine the applicable charges from the outpatient claim to the inpatient claim. Shared
Services Center personnel must contact the HIM/Services Center personnel to determine
the appropriate code sequencing for the inpatient account, following the steps outlined in
Section 2.
3) Resubmit the inpatient claim once Medicare has processed the outpatient void/cancel
claim.
4. Monitor:
a. Shared Services Center personnel (or Hospital personnel if the hospital is not in a Shared
Services Center) must perform a review of Common Working File errors or remittance advice
rejections relating to this policy at least quarterly and report the results to the facility
Monitoring Oversight Group (see REGS.GEN.001 for Monitoring Oversight Group members).
b. A review of all business entities must be performed by the hospital in conjunction with Legal
Counsel to determine if such entities are wholly-owned or operated. This review must be
performed on an annual basis or as new relationships are established and the results reported to
the Services Center.
c. Shared Services Center personnel must identify Medicare Administrative Contractor (MAC)
interpretations which vary from the interpretations in this policy. Specific documentation from
the MAC related to the variance(s) must be obtained and provided to Regulatory Compliance
Support (Regs). Documentation may be sent via email to the Regs Helpline.
5. Educate:
Annual education must be provided on the contents of this policy to all billing/coding staff,
clerical employees, managers, supervisors, and personnel involved in working daily or monthly
payment window reports or preparing and/or submitting Medicare bills relating to outpatient
services rendered in connection with inpatient admissions.
The Facility Ethics and Compliance Committee is responsible for implementation of this policy within
12/2010
DEPARTMENT: Regulatory Compliance
Support
PAGE: 6 of 6
POLICY DESCRIPTION: Outpatient Services and
Medicare Three Day Window
REPLACES POLICY DATED: 3/1/99, 5/14/99,
5/1/02, 5/15/03, 7/1/03, 4/15/04, 6/30/04 (GOS.BILL.001),
3/6/06, 3/1/07 (REGS.BILL.001 & REGS.COD.015),
1/1/08; 7/1/09
EFFECTIVE DATE: January 15, 2011
REFERENCE NUMBER: REGS.GEN.009
APPROVED BY: Ethics and Compliance Policy Committee
the facility.
REFERENCES:
63 FR 6864 February 11, 1998, Medicare: Payment for Preadmission Services
42 CFR 412.2; 413.40
Retired - Outpatient Services and Medicare Three Day Window Policy, REGS.COD.015
Retired - BILLING-Outpatient Services and Medicare Three Day Window Policy, REGS.BILL.001
Office of Inspector General (OIG) - "Follow-up Audit of Improper Medicare Payments to Hospitals
for Non-physician Outpatient Services Under the Inpatient Prospective Payment System," (A-0100-00506) July 31, 2001
Program Memorandum A-03-054
Program Memorandum A-03-013
Program Memorandum A-03-008
Medicare Claims Processing Manual (Pub 100-4), Chapter 3, Section 40.3
Medicare Benefit Policy Manual (Pub 100-2), Chapter 6, Sections 20.3 and 20.4
Medicare Benefit Policy Manual (Pub 100-2), Chapter 11, Section 10
Medicare Transmittal R714CP, October 21, 2005
Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010
12/2010