Clarifications to CMS’ Longstanding Three-day Rule

The Centers for Medicare & Medicaid Services’ (CMS’) three‐day rule, also known as the 72‐hour rule, has remained unchanged since its implementation in 1998. Despite its longevity, new questions have been raised regarding non‐diagnostic outpatient services and the three‐day rule. Specifically, hospitals are unclear whether non‐diagnostic services rendered during the three‐day payment window that are unrelated to a inpatient admission should be billed separately under Medicare Part B. In response to their concerns, CMS held a Hospital Open Door Forum on March 4. The forum provided clarifications to the three‐day rule and guidance pertaining to billing non‐diagnostic outpatient services.  This article will provide an overview of CMS’ three‐day rule and how to correctly bill for pre‐admission diagnostic and non‐diagnostic outpatient services.

What is the Three-day Rule?
If an admitting hospital (or an entity wholly‐owned, wholly‐operated, or under arrangement with the admitting hospital) furnishes diagnostic services three days prior to and including the date of a beneficiary’s inpatient admission, the services are considered inpatient services and are included in the inpatient payment, i.e. bundled.  However, if a hospital renders non‐diagnostic outpatient services three days prior to and including the date of a beneficiary’s inpatient admission and the non‐diagnostic outpatient services are unrelated to the inpatient admission, the hospital is permitted to separately bill Medicare Part B for the non‐diagnostic outpatient services, i.e. unbundled. Nonetheless, there is a caveat to the three‐day rule. More specifically, if the non‐diagnostic outpatient services are related to the inpatient admission, the services are considered inpatient services and cannot be billed separately under Medicare Part B. See Diagram 1.

It is important to note that while hospitals are permitted to bill unrelated non‐diagnostic outpatient services separately under Medicare Part B, they are not required to do so. When hospitals choose not to bill Part B for unrelated non‐diagnostic outpatient services this could result in revenue loss for the organization. While billing unrelated non‐diagnostic services is at the hospital’s discretion, hospitals must report related non‐diagnostic outpatient services on an inpatient claim.