CMS Examines Impact of 3-Day Payment Window Policy on Wholly Owned or Wholly Operated Physician Practices

Prior to the passing of section 102(a)(1) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (“PACMBPRA”), the 3-day payment window policy for nondiagnostic services provided prior to admission was rarely applied to wholly owned or operated physician practices. However, the enactment of section 102(a)(1) widened the range of nondiagnostic services subject to the 3-day payment window policy. In the recent Proposed Physician Fee Schedule for calendar year (“CY”) 2012, the Centers for Medicare & Medicaid Services (“CMS”) examines the impact of this change on wholly owned or operated physician practices and provides further guidance on the topic.

Although CMS believes “that most hospital owned entities providing physician services will be considered part of the hospital and operating as hospital outpatient departments,” some wholly owned or operated physician offices and clinics may exist which will be subject to the 3-day payment window policy. CMS proposes that in any circumstance where the payment window “applies to nondiagnostic services related to an inpatient admission furnished in a wholly owned or wholly operated physician practice” Medicare should “make payment under the physician fee schedule for the physicians’ services that are subject to the 3-day payment window at the facility rate.” Further, “[o]n or after January 1, 2012, [CMS proposes] that when a physician furnishes services to a beneficiary in a hospital’s wholly owned or wholly operated physician practice and the beneficiary is admitted as an inpatient within 3 days (or, in the case of non-IPPS hospitals, 1 day), the payment window will apply to all diagnostic services furnished and to any nondiagnostic services that are clinically related to the reason for the patient’s inpatient admission regardless of whether the reported inpatient and outpatient ICD-9-CM diagnosis codes are the same.” CMS notes that the profession component (“PC”) of a service will remain unchanged by the payment policy.

For professional assistance navigating the ever-evolving healthcare landscape or more information regarding the Proposed Physician Fee Schedule for CY 2012, please contact Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510 or (212) 734-0128, or visit the HLP website.