Knowledge Base Article

A Medicare patient presents to your hospital’s Emergency Department late one evening and immediately requires emergency surgery.  The procedure performed in the operating room is on Medicare’s inpatient-only list.  Due to the focus on the medical care and treatment of the patient, an order to admit the patient as an inpatient is not obtained until the next morning.  Can the inpatient-only procedure be reported on the inpatient claim according to the policy for the payment window for outpatient services treated as inpatient services?

This question was recently posed to Medical Management Plus by one of our clients.  I was sure I remembered that Medicare changed an older instruction and now allows the billing of an inpatient-only procedure on the inpatient claim under the 3-day payment window rule.  To confirm this, I read the relevant sections in Chapter 4 of the Medicare Claims Processing Manual, which are Section 10.2 about the payment window and Section 180.7 about inpatient-only services.  Neither section states that combining an inpatient-only procedure performed on an outpatient basis into the succeeding inpatient admission for payment is allowed.  But I am sure I remembered that - have I lost my mind?

I started back-tracking through old transmittals.  I noticed Section 180.7 was last updated January 1, 2016, but a review of that transmittal (Transmittal 3425, CR9486) shows the update was related to the comprehensive payment when a patient has an inpatient-only procedure performed and then expires or is transferred prior to an inpatient order being written. After further searching, I finally located Transmittal 3238, CR 9097.  This transmittal states:

“Effective April 1, 2015, inpatient only procedures that are provided to a patient in the outpatient setting on the date of the inpatient admission or during the 3 calendar days (or 1 calendar day for a non-subsection (d) hospital) preceding the date of the inpatient admission that would otherwise be deemed related to the admission, according to our policy for the payment window for outpatient services treated as inpatient services will be covered by CMS and are eligible to be bundled into the billing of the inpatient admission.” (emphasis added)

This is definitely what I was looking for, but the danger in relying on prior transmittals is they may no longer be effective.  That is why I always confirm any transmittal guidance against the actual manuals.  And remember, I did not find this verbiage in the manuals.  I noticed in the updated manual instructions accompanying this transmittal that there is no “red text” (updated instructions) for these two manual sections other than the ‘update’ dates.  As Alice in Wonderland would say, my investigation was getting “curiouser and curiouser.”  If nothing was added or changed for these manual sections, was something removed?  Exactly what was updated? My search continued.

I finally found (thanks to some old email correspondence) Transmittal 2234, CR 7443 from way back in 2011. It is the July 2011 OPPS Update transmittal and it includes the following revisions.  Added to both manual sections noted above is the statement – “inpatient only procedures that are provided to a patient in the outpatient setting on the date of the patient’s inpatient admission or during the 3 calendar days (or 1 calendar day for a non-subsection (d) hospital) preceding the date of the inpatient admission that would otherwise be deemed related to the admission are not paid for by CMS and must be submitted on a no-pay claim (Type of Bill (TOB) 110).”  Now the April 2015 update made sense!  Nothing was added or changed, but the above statement was removed from both manual sections.  And since it is still absent from the manual instructions, its removal stands.

So I wasn’t crazy after all – at least not about this issue.  It is acceptable to report an inpatient-only procedure performed on an outpatient basis on the ensuing inpatient admission (within the 3 day payment window) and Medicare will cover this related procedure.  In fact, I think the scenario I described above is the perfect example of when this bundling is appropriate.  I do not think CMS changed this policy simply to allow hospitals to obtain a late inpatient admission order when they failed to do so in a timely manner.  I think this rule change was intended to allow appropriate payment in the case of emergencies or when the outpatient surgical procedure intended must be changed to one that is on the inpatient-only list during the surgery.

I am glad CMS made this change, but I wish they had ‘included’ rather than ‘excluded’ instructions in the manual updates.  Then I would not have gone looking for something that was not there.