DEPARTMENT: Governmental Operations
Support
PAGE: 1 of 5
EFFECTIVE DATE: April 15, 2004
POLICY DESCRIPTION: BILLING - Outpatient
Services and Medicare Three Day Window
REPLACES POLICY DATED: 3/1/1999;
5/14/1999; 5/1/2002; 5/15/2003; 7/1/2003
REFERENCE NUMBER: GOS.BILL.001
SCOPE: All Company-affiliated facilities performing and/or billing outpatient and inpatient services.
Specifically, the following departments:
Business Office
Nursing
Admitting/Registration
Ancillary Departments
Finance
Health Information Management
Administration
Utilization Review Management
Emergency Department
Service Centers
PURPOSE: To establish guidelines for billing Medicare outpatient services provided prior to an
inpatient admission in accordance with the Centers for Medicare and Medicaid Services (CMS)
regulations.
POLICY: 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.
 Hospitals paid under the Prospective Payment System (PPS) for acute care services:
o All outpatient diagnostic services and all outpatient therapeutic/non-diagnostic services
rendered on the day of admission or during an inpatient stay must be combined with the
inpatient admission.
o All outpatient diagnostic services provided within three days prior to the inpatient
admission must be combined with the inpatient admission. Any services, items and/or
supplies that are integral to the performance of a diagnostic procedure will also need to be
combined with the inpatient admission.
o All related therapeutic or related non-diagnostic services provided within three days prior
to the inpatient admission must be combined with the inpatient admission.
 Hospitals or Distinct Part Units excluded from the PPS for acute care services:
o All outpatient diagnostic services and all outpatient therapeutic/non-diagnostic services
rendered on the day of admission or during an inpatient stay must be combined with the
inpatient admission.
o All outpatient diagnostic services provided within one day prior to the inpatient admission
must be combined with the inpatient admission. Any services, items and/or supplies that
are integral to the performance of a diagnostic procedure will also need to be combined
with the inpatient admission.
o All related therapeutic or related non-diagnostic services provided within one day prior to
the inpatient admission must be combined with the inpatient admission.
The following exceptions apply to this policy:
 Home Health Agency (HHA): Services provided within the applicable “window” by an HHA
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
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DEPARTMENT: Governmental Operations
Support
PAGE: 2 of 5
EFFECTIVE DATE: April 15, 2004
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POLICY DESCRIPTION: BILLING - Outpatient
Services and Medicare Three Day Window
REPLACES POLICY DATED: 3/1/1999;
5/14/1999; 5/1/2002; 5/15/2003; 7/1/2003
REFERENCE NUMBER: GOS.BILL.001
services payable under Medicare Part B that are rendered by an HHA wholly-owned or operated by
the admitting facility must be combined with the inpatient admission.
Skilled Nursing Facility (SNF): Services provided within the applicable “window” by a SNF
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 a SNF wholly-owned or operated by
the admitting facility must be combined with the inpatient admission.
Hospice: Services provided within the applicable “window” by a 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 a Hospice wholly-owned or operated by the admitting
facility must be combined with the inpatient admission.
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.
Maintenance renal dialysis: Maintenance renal dialysis 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.
Physician professional services: Professional services personally furnished by physicians do not
need to be combined with the inpatient admission.
Screening Mammograms: Screening mammograms are exempt from the applicable payment
window and should not be combined with the inpatient claim.
Under no circumstances will outpatient services be provided in order to:
 Avoid combining outpatient services with anticipated inpatient admissions at another
facility.
 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.
DEFINITIONS:
Window: Three 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.
Diagnostic Service: An examination or procedure to which the patient is subjected, or which is
performed on materials derived from a hospital outpatient, to obtain information to aid in the
4/2004
DEPARTMENT: Governmental Operations
Support
PAGE: 3 of 5
EFFECTIVE DATE: April 15, 2004
POLICY DESCRIPTION: BILLING - Outpatient
Services and Medicare Three Day Window
REPLACES POLICY DATED: 3/1/1999;
5/14/1999; 5/1/2002; 5/15/2003; 7/1/2003
REFERENCE NUMBER: GOS.BILL.001
assessment of a medical condition or the identification of a disease. Among these examinations and
tests are diagnostic laboratory services such as hematology and chemistry, diagnostic X-rays, isotope
studies, EKGs, pulmonary function studies, thyroid function tests, psychological tests and other tests
given to determine the nature and severity of an ailment or injury. For this provision, the following
revenue and/or HCPCS codes are always considered diagnostic:
 254 – Drugs incident to other diagnostic services;
 255 - Drugs incident to radiology;
 30X - Laboratory;
 31X – Laboratory pathological;
 32X – Radiology diagnostic;
 341 - Nuclear medicine, diagnostic;
 35X - CT scan;
 40X - Other imaging services (except revenue code 403 – Screening mammogram);
 46X – Pulmonary function;
 48X - Cardiology, with CPT codes (includes but are not limited to): 93015, 93307, 93308,
93320, 93501, 93503, 93505, 93510, 93526, 93541, 93542, 93543, 93544, 93545, 93561,
or 93562;
 53X – Osteopathic services;
 61X - MRI;
 62X - Medical/surgical supplies, incident to radiology or other diagnostic services;
 73X – EKG/ECG;
 74X - EEG; and
 92X - Other diagnostic services.
Note: Any services, items and/or supplies that are integral to the performance of a diagnostic
procedure also need to be combined with the inpatient admission. For example, pharmacy
items and injections provided in conjunction with a diagnostic radiology procedure subject to
the three day window, must also be combined with the inpatient account.
Non-Diagnostic Services: Services and supplies furnished as an integral, although incidental, part of
a physician's professional service in the course of diagnosis or treatment of an illness or injury.
Related: Services are related when there is an exact match (for all digits) between the ICD-9-CM
principal diagnosis code assigned for both the outpatient services and the inpatient stay.
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
4/2004
DEPARTMENT: Governmental Operations
Support
PAGE: 4 of 5
EFFECTIVE DATE: April 15, 2004
POLICY DESCRIPTION: BILLING - Outpatient
Services and Medicare Three Day Window
REPLACES POLICY DATED: 3/1/1999;
5/14/1999; 5/1/2002; 5/15/2003; 7/1/2003
REFERENCE NUMBER: GOS.BILL.001
involves the power to direct the facility’s operations toward specific objectives.
Maintenance Renal Dialysis: Dialysis that is regularly furnished to an ESRD patient in a hospitalbased, independent (non-hospital-based), or home setting.
PROCEDURE:
1. During the process of admitting a patient with Medicare Part A benefits, registration personnel
must inquire if the patient has received outpatient services within the applicable “window” from an
entity wholly-owned or operated by the admitting facility.
2. Business Office or Service Center personnel must review the Payment Window Report
(CENS:CENS10 for Patient Accounting facilities or INPATIENT/OUTPATIENT EXCEPTION
REPORT for B/AR facilities) on a daily basis to identify patients who have received outpatient
services within the applicable “window” of an inpatient admission. Also, the Monthly Payment
Window Report, COMP 3DAY01 report should be reviewed monthly. These reviews should be
documented on the Three Day Window reports and maintained in accordance with the Record
Retention policies.
3. Business Office or Service Center personnel must establish a mechanism to identify services
rendered by wholly-owned or operated entities which may not utilize the hospital main A/R system
for billing (i.e., physician practices/clinics). If such services are noted which 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 to the admitting facility and write such
services off their accounts receivable.
4. Outpatient services, which meet the criteria, as defined in the Policy section above must be
combined with the inpatient admission. Business Office or Service Center personnel must contact
the facility Health Information Management department to determine the appropriate code
sequencing for the inpatient account.
5. Services noted on recurring patient types that do not meet the criteria in the Policy section above
do not need to be combined to the inpatient admission. However, Occurrence Span Code 74 and
the overlapping “from - through” dates of service must be entered in Form Locator 36 of the UB92 for the outpatient recurring account.
6. 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,
Business Office or Service Center personnel must perform the following steps:
a. Perform a “void/cancel of prior claim” routine as soon as possible. (Note: Refer to the
UB-92 Manual, for instructions on performing a Void/Cancel of Prior Claim.)
b. Combine the applicable charges from the outpatient claim to the inpatient claim. Refer to
Company policy HIM.GEN.001 for instructions regarding combining ICD-9-CM procedure
and diagnosis codes.
c. Rebill inpatient claim once Medicare has taken back the outpatient void/cancel claim.
4/2004
DEPARTMENT: Governmental Operations
Support
PAGE: 5 of 5
EFFECTIVE DATE: April 15, 2004
POLICY DESCRIPTION: BILLING - Outpatient
Services and Medicare Three Day Window
REPLACES POLICY DATED: 3/1/1999;
5/14/1999; 5/1/2002; 5/15/2003; 7/1/2003
REFERENCE NUMBER: GOS.BILL.001
7. Hospital personnel (if the facility is not in a Service Center environment) or Service Center
personnel must perform a review of remittance advice rejections relating to this policy at least
quarterly and report the results to the facility Monitoring Oversight Group (see GOS.GEN.001 for
Monitoring Oversight Group members).
8. A review of all business entities must be performed by the hospital and/or Service Center 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.
9. Annual education must be provided on the contents of this policy to all billing staff, clerical
employees, managers, supervisors, and personnel involved in working daily or monthly payment
window reports or preparing and submitting Medicare bills relating to outpatient services rendered
in connection with inpatient admissions. Note: The Company offers a web based course, The
Medicare Three Day Window, available through HealthStream University, which includes detailed
information regarding the Medicare Three Day Window rule and meets the education requirement
of this policy.
10. Service Center/Business Office personnel must identify intermediary interpretations which vary
from the interpretations in this policy. Specific documentation from the intermediary related to the
variance(s) must be obtained and provided to the Billing Help Line, 888-735-3669.
The Facility Ethics and Compliance Committee is responsible for implementation of this policy within
the facility.
REFERENCES:
63 FR 6864 February 11, 1998, Medicare: Payment for Preadmission Services
42 CFR 412.2; 413.40
Outpatient Services and Medicare Three Day Window Policy, HIM.GEN.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-01-0000506) 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
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Wholly-owned or operated examples
The following includes examples of legal structures to which the Medicare payment window would and
would not apply:
EXAMPLE 1:
Corporation B
Hospital A
Clinic/Practice C
Hospital A is owned by corporation B. Clinic/practice C is also owned by corporation B. Since hospital
A does not own or operate clinic/practice C, outpatient services provided at clinic/practice C would not
be combined with inpatient admissions at hospital A.
EXAMPLE 2:
Hospital A
Hospital B
Clinic/Practice C
Hospital A is the sole owner of a separate corporation, hospital B. Hospital A is also the sole owner of
another separate corporation, clinic/practice C. Outpatient services provided within the applicable
“window” at either hospital B or clinic/practice C would need to be combined if the patient were
subsequently admitted at hospital A.
EXAMPLE 3:
Corporation A
Hospital 1
Hospital 2
Hospital 3
Corporation A owns and operates three (3) hospitals. The three hospitals are not separately incorporated,
but each has a separate provider number. None of the three hospitals operate any of the others.
Outpatient services provided at any of the 3 facilities would not be combined if the patient were
subsequently admitted at one of the other facilities.
Attachment to GOS.BILL.001
Wholly-owned or operated examples
EXAMPLE 4:
Corporation A
Hospital
B
Clinic/Practice
C
Corporation A is the sole owner of a separate corporation, hospital B. Corporation A is also the sole
owner of a separate corporation, clinic/practice C. The management team of hospital B is responsible
for the day-to-day affairs of the clinic/practice C. Outpatient services provided within the applicable
“window” at clinic/practice C when the patient is subsequently admitted at hospital B, would need to be
combined with the inpatient admission.
EXAMPLE 5:
Corporation A
Hospital B
Hospital C
Hospital D
Corporation A owns and operates three hospitals in one city. At one time, the three hospitals were
separate corporations with their own provider numbers, but the three hospitals have now been merged
into one corporation (corporation A) and have one provider number and the same management team.
Outpatient services provided within the applicable “window” at any of the three hospitals must be
combined with the inpatient admission when the patient is subsequently admitted at any of the three
hospitals.
EXAMPLE 6:
Corporation A
Hospital B
Hospital C
Corporation A owns and operates two (2) hospitals. The two hospitals are not separately incorporated,
but each has a separate provider number. Neither of the hospitals operates the other. Ordinarily,
outpatient services provided at either of the 2 facilities would not be combined if the patient were
subsequently admitted at the other facility. However, Hospital B must not deliberately direct outpatient
services to Hospital C if the patient is scheduled to be an inpatient at Hospital B (or vice versa), either
before or during the applicable “window”, in order to avoid combining related outpatient and inpatient
visits.
Attachment to GOS.BILL.001