CMS to Close Loophole After Audit Reveals Overpayments

Starting July 1, a new three-day payment window will cover all diagnostic services for Medicare beneficiaries admitted to wholly owned and/or operated hospital entities, including physician practices. That new regulation takes effect, in part, because the Office of the Inspector General determined that CMS may have overpaid such claims by as much as $6.4 million from 2008-09. Non-diagnostic services “that are clinically related to the inpatient admission, regardless of whether the reported inpatient and outpatient diagnosis codes are the same,” will also be covered under the policy, the law firm of McDermott, Will, & Emory writes. Preadmission services such as these will be paid at the facility rate for physicians, and according to their current billing practices for those services. “Wholly-owned” hospitals are defined as being entities owned by the hospitals themselves, exclusively; “wholly-operated” hospitals are those that are exclusively responsible for their own day-to-day business despite the presence of any other policymaking authorities. The July 1 deadline reflects a six-month extension from its original implementation date.