CMS Pub. 100-04, ch. 12, § 90.7

and Wholly Operated Entities (including Physician Practices and

Clinics): 3-Day Payment Window

(Rev. 2373, Issued: 12-21-11, Effective: 01-01-12, Implementation: 01-03-12)

In accordance with section 102(a)(1) of the PACMBPRA, for outpatient services

furnished on or after June 25, 2010, the technical portion of all nondiagnostic services,

other than ambulance and maintenance renal dialysis services, provided by the hospital

(or an entity wholly owned or wholly operated by the hospital) on the date of a

beneficiary’s inpatient admission are deemed related to the admission and thus, must be

included on the bill for the inpatient stay. Also, the technical portion of outpatient

nondiagnostic services, other than ambulance and maintenance renal dialysis services,

provided by the hospital (or an entity wholly owned or wholly operated by the hospital)

on the first, second, and the third calendar days (1 calendar day for a nonsubsection (d)

hospital) immediately preceding the date of admission are deemed related to the

admission and, therefore, must be billed with the inpatient stay, unless the nondiagnostic

services are unrelated to the inpatient hospital claim (that is, the preadmission

nondiagnostic services are clinically distinct or independent from the reason for the

beneficiary’s inpatient admission). In such cases, the unrelated outpatient hospital

nondiagnostic services are covered by Medicare Part B, and the hospital or wholly owned

or wholly operated physician practice shall include the technical portion of the services in

their billing. PACMBPRA did not change the requirement that the technical portion of all

diagnostic services provided by the hospital (or entity wholly owned or wholly operated

by the hospital) occurring on the date of an inpatient admission, or during the 3 calendar

days (or 1 calendar day) immediately preceding the date of an inpatient admission must

be billed with the inpatient admission.

Implementation of the 3-day Payment Window Policy in Wholly Owned or

Operated Entities

Wholly owned or wholly operated entities are subject to the 3-day (or 1-day) payment

window policy when they furnish preadmission diagnostic services to a patient, who is

later admitted as an inpatient on the same day or within the preceding 3 calendar days

(preceding1 calendar day), or when they furnish preadmission nondiagnostic services to a

patient, who is later admitted as an inpatient on the same day or within the preceding 3

calendar days (preceding 1 calendar day) for related medical care. Only unrelated

nondiagnostic preadmission services are not subject to the payment window policy,

where unrelated preadmission nondiagnostic services are clinically distinct or

independent from the reason for the beneficiary's inpatient admission and are furnished

on the 1st, 2nd, or 3rd calendar day immediately preceding the date of the inpatient

admission. (Note: nondiagnostic services furnished by a wholly owned or wholly

operated physician practice on the date of a beneficiary’s inpatient admission to the

hospital are always deemed to be related to the admission and their technical portion must

be included on the bill for the inpatient admission.) When an entity that is wholly owned

or wholly operated by a hospital furnishes a service subject to the 3-day window policy,

Medicare will pay the professional component of services with payment rates that include

a professional and technical split and at the facility rate for services that do not have a

professional and technical split. Once the entity has received confirmation of a

beneficiary’s inpatient admission from the admitting hospital, they shall, for services

furnished during the three-day window, append a CMS payment modifier to all claim

lines for diagnostic services and for those nondiagnostic services that have been

identified as related to the inpatient stay. Physician nondiagnostic services that are

unrelated to the hospital admission are not subject to the payment window and shall be

billed without the payment modifier.

Definition of Wholly Owned or Wholly Operated Entities

Wholly owned or wholly operated entities are defined in 42 CFR §412.2; "An entity is

wholly owned by the hospital if the hospital is the sole owner of the entity.” And, “an

entity is wholly operated by a hospital if the hospital has exclusive responsibility for

conducting and overseeing the entity’s routine operations, regardless of whether the

hospital also has policymaking authority over the entity."