New CMS Policy on Payment Window in Physician Fee Schedule

The final rule for the Medicare Physician Fee Schedule for 2012 expands bundled payments for inpatient stays to include all services within three days of admission by a wholly owned or operated physician practice.

The new policy, effective July 1, 2012, has huge implications for hospital and physician reimbursements at a time when hospitals increasingly are buying physician practices.

Donald Michaels, senior vice president at Hayes Management Consultants, spoke with Health Data Management at HIMSS12 and gave a plain-language explanation of the change: "The rule says that if a patient is admitted to the hospital, then everything done to the patient in the 3 days prior to admission must be billed as part of the inpatient stay (which usually means a lower reimbursement). For example, if I go to the ED on Tuesday but am not admitted and then my condition gets worse and I get admitted to the hospital on Thursday, then the ED visit from Tuesday must be billed with my hospital stay. There are a similar set of circumstances if I go and see a hospital employed physician, then within three days I am admitted to the hospital.

Michaels says the change raises many issues. "In the first example, what happens if the ED claim was sent out on Wednesday?" he asks. "Will it be paid or will CMS know to wait before paying that bill to see if I am admitted into the hospital within three days? Will providers (EDs) be expected to hold bills for three days until they are sure that the person is not admitted into the hospital? In the second case, the hospital ED will need to develop a different work flow to make sure that they ask the patient if they had been seen by a hospital employed (or owned) physician practice. I'm not sure many hospitals will be able to do that effectively."