Prepare Now for Modifier PD

By Barbara J. Cobuzzi, MBA, CPC, CPC-H, CPC-P, CPC-I, CHCC, CENTC

CMS is expanding the “three-day payment window” for outpatient services provided within 72 hours of an inpatient admission. As of July 1, 2012 the payment window will apply to both diagnostic and non-diagnostic services.

Medicare will pay a reduced fee for physicians’ services that are clinically related to an inpatient admission, occur within 72 hours of the admission, and are furnished by a physician practice wholly owned or wholly operated by a hospital. The rule applies whether the inpatient and outpatient diagnoses codes are the same or different.

There are two minor exceptions to the three-day window payment rule:

  1. The three-day payment window for non-diagnostic services does not apply to either rural health care (RHC) or federally qualified health care centers (FQHC). These organizations must follow the 72-hour rule for diagnostic services, however, if they are owned or controlled by a hospital.
  2. When the decision for surgery is made within the 72 hours prior to the surgery (i.e., when modifier 57 Decision for surgery is properly applied to an E/M service code), the physician services do receive payment based on non-facility fees.

New HCPCS Level II modifier PD Diagnostic or related non-diagnostic item or service provided in a wholly owned or wholly operated entity to a patient who is admitted as an inpatient within 3 days, or 1 day should be appended to identify claims for related services provided within 72 hours of an inpatient admission. The modifier may be used beginning Jan. 1, and CMS recommends that practices “begin to append the modifier to claims subject to the 3-day payment window at that time.”

Claims provided by any physician practice owned or controlled by a hospital will have to be held for at least three days prior to submission: The practice does not want to submit a claim without modifier PD, and then discover that the patient was admitted within 72 hours. The hospital is responsible to notify the practice of related inpatient admissions.

If non-diagnostic services are not clinically related to an inpatient admission within 72 hours, the hospital or wholly owned or wholly operated physician practice should document the reason those services are not clinically related. In such a case, the practice should receive full payment.

For more information, see the November 28, 2011 Federal Register.


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5 Responses to “Prepare Now for Modifier PD”

  1. Brandi Tadlock says:

    Does anyone have any idea how CMS expects providers to implement this new rule? We’re wholly owned by a hospital, but we don’t utilize the same billing system – this sounds like it will be a logistical nightmare in coordinating. Are we supposed to just hold all of our charges for 3 days, to wait and see if anyone happens to get admitted, or what?

  2. Carla Johnson says:

    I have 9 different practices and are owned by a hospital too. My question is, what if one of our patients is admitted to another hospital besides the one we are owned by. Does this policy apply to that situation? If it does, how will we get paid by the hospital that we aren’t owned by?

    Please email me so we can talk and share policies.

  3. Lance Smith says:

    Brandi and Carla:

    I have just been asked about this rule by our COO of the practices. We are an integrated delivery system with 3 hospitals and 25 practices and was asked if we fall under the three day rule. I am interested in communicating with the two of you about policies, etc as well.

    Thank you.

  4. Pat Whitecotton says:

    I have the same questions mentioned above. I am interested in finding out how others are tracking this so far and how is it working out. Please include me in communications on this issue. I have 10 practices that travel to multibple hospital including the one we are owned by.

  5. Susan Maxwell says:

    Is there a “list” of procedure codes that do not require the PD modifier, even though they may follow in the 3-day window?

    Please email me any info you may have

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