Palmetto Provides Clarification on 72 hour rule

CHA has sought guidance from the Medicare Administrative Contractor, Palmetto GBA, on the Medicare three-day payment window provision (72 hour rule) of the inpatient prospective payment system.

Palmetto has responded with an article posted on their website at The article clarifies that an outpatient diagnostic service provided to a patient by an entity that is wholly owned or wholly operated by the admitting hospital, within three days of a patient’s hospital admission are deemed to be inpatient services and included in the inpatient payment.

For non-diagnostic services they are related to the inpatient admission only when there is an exact match between the principal diagnosis code assigned for both the preadmission services and the inpatient stay. Hospitals may submit a separate outpatient claim for services only if they are not related to the admission.

Hospitals are encouraged to carefully read the article to ensure alignment with the Centers for Medicare and Medicaid Services’ expectations for this provision. Contact: Anne McLeod at (916) 552-7536 or