Hospital 3-day/1-day payment window

For diagnostic services and non-diagnostic services (related to the admission) rendered during the 3 days (hospitals subject to IPPS, inpatient prospective payment system) or 1 day (hospitals excluded from IPPS) prior to an inpatient hospital admission (even if the days cross the calendar year) are considered inpatient services and must be included on the inpatient hospital claim.

Hospitals Subject to IPPS:

• Acute Care Hospitals

Hospitals and Units Excluded from IPPS: 

• Psychiatric Hospitals and Units
• Inpatient rehabilitation facilities and units
• Long-term care hospitals 
• Children’s hospitals 
• Cancer hospitals

This rule applies to the admitting hospital, or an entity that is 'wholly owned or wholly operated' by the admitting hospital (or by another entity under arrangements with the admitting hospital). Hospitals are "wholly owned or operated" by the hospital if the hospital is the sole owner or operator. A hospital need not exercise administrative control over a facility in order to operate it. A hospital is the sole operator of the facility if the hospital has exclusive responsibility for implementing facility policies (i.e., conducting or overseeing the facility's routine operations), regardless of whether it also has the authority to make the policies.

The 3-day/1-day payment window has been in place since 1988.

Diagnostic Services

Diagnostic services, including non-patient laboratory tests, provided to a beneficiary by the admitting hospital, 3-days (or 1-day) prior to inpatient hospital admission, including the date of admission, are considered inpatient services and must be included on the inpatient hospital claim. For example, patient admitted on Wednesday, the outpatient services provided by the hospital on Sunday, Monday, Tuesday, or Wednesday are included on the inpatient claim. 

Revenue Codes Subject to This Provision:

Nondiagnostic Services

Nondiagnostic outpatient services related to a beneficiary’s hospital admission and provided by the admitting hospital, 3-days (or 1-day) prior to inpatient hospital admission, including the date of admission, are considered inpatient services and must be included on the inpatient hospital claim.

Related means the nondiagnostic outpatient service is clinically associated with the reason for the patient’s inpatient admission.

If the nondiagnostic outpatient services are not related to the inpatient admission, the hospital must report condition code 51 (attestation of unrelated outpatient non-diagnostic services) on the outpatient claim. 

Hospitals must maintain documentation in the medical record to support that outpatient nondiagnostic services are unrelated to the inpatient admission.

Exclusions

The 3-day (or 1-day) payment window policy does not apply to the following:

• Ambulance services
• Maintenance renal dialysis services
• When the admitting hospital is a critical access hospital (CAH), unless the CAH is wholly owned or operated by a non-CAH hospital
• Outpatient diagnostic services included in rural health clinic or federally qualified health center all-inclusive rate
• Outpatient diagnostic services furnished more than 3-days (or 1-day) prior to inpatient admission
• Skilled nursing facilities
• Home health agencies
• Hospices   

Claims Billing / Processing

The inpatient hospital claim (type of bill 11X), must include all diagnosis codes, procedure codes, and charges for preadmission outpatient diagnostic and nondiagnostic services that meet the above requirements. 

When combining the outpatient procedures on the inpatient claim, convert any procedure codes into ICD-10 procedure codes and use the appropriate 'from' date of the outpatient procedures. 

Be sure to code any condition the patient had at the time of the order to admit as an inpatient as present on admission regardless of whether the condition was present at the time the patient registered as a hospital outpatient. 

Only include outpatient diagnostic and admission-related nondiagnostic services that span the period of the payment window.

For outpatient nondiagnostic services not related to the inpatient admission, the outpatient claim must include condition code 51.

The Common Working File will reject:

• Outpatient diagnostic services when the line item date of service falls on the day of admission or 3-days/1-day prior to an inpatient hospital admission 
• Outpatient nondiagnostic services when: 
• Condition code 51 (attestation of unrelated outpatient non-diagnostic services”) is not included on the outpatient claim

• The line item date of service falls on the day of admission or any of the 3-days/1-day prior to an inpatient hospital admission

   

References

• CMS Publication 100-04, Claims Processing Manual, Chapter 3, §40.3
• CMS Publication 100-04, Claims Processing Manual, Chapter 4, §10.12
• Three-Day Payment Window
• MLN Matters® Special Edition Article, SE20024 - FAQs on the 3-Day Payment Window for Services Provided to Outpatients Who Later Are Admitted as Inpatients