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What is the three-day payment rule and does it affect my practice?

A new modifier (PD) must be added to a claim when a Medicare Part A or Part B patient is admitted to a hospital for a clinically related service within three days of a physician visit.  The admitting diagnosis does NOT have to be the same as the physician service diagnosis. The practice must add the PD modifier for ALL services and will therefore be paid at the lower facility rate.

(PD: diagnostic or related non-diagnostic item or service provided in a wholly owned or operated entity to a patient who is admitted as an inpatient within three days)
Definition acquired from the CMS website:

The three-day payment rule is required by July 1, 2012.

If your practice is wholly owned or operated by a hospital, then yes this rule applies.  Also, practices that have merged or formed alliances with hospitals are affected. The rule, however, does not affect privately owned physician practices or rural health clinics and federally qualified health centers (FQHCs).

Good documentation in the provider notes will be key to making sure they support any unrelated services. Notes may be required if an appeal is needed for claims paid at the lower facility rate that the practice believes are unrelated to the hospital admission. 

Additionally, Medicare claims will have to be held for three days to identify if the modifier needs to be added to the claim before it is filed. It is up to the hospital to report to the practice any patients admitted within 72 hours of a physician service and their reason for admission.


Media Contact:
Kelly Cannon
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