Revenue Cycle

CMS issues guidance on place of service coding instructions

Medicare Update for CAHs, March 7, 2012

On February 3, CMS issued a transmittal that revises and clarifies the national policy for place of service (POS) code assignment. Specifically, it provides instructions regarding the assignment of POS for all services paid under the Medicare physician fee schedule and for certain services provided by independent labs.

CMS issued this guidance as a result of consistent findings in annual and/or biennial reports from CY2002 through 2007 from the OIG, that physicians and other suppliers frequently report the POS in which they furnish services incorrectly, according to the transmittal. In fact, the OIG’s 2007 report found that doctors received $13.8 million in overpayments for wrong place of service coding. In its summary, the OIG report says that physicians are required to identify the place of service on the health insurance claim forms that they submit to Medicare contractors, but for 90 of the 100 services in its sample, physicians used nonfacility POS codes on their claims for services that were actually performed in hospital outpatient departments or ambulatory surgical centers. 

This transmittal should come as no surprise, as CMS has previously highlighted the importance of correctly coding the place of service by physicians and their billing agents. In addition, three of the four recovery auditors (all except for Region D, HealthDataInsights) list place of service coding as a CMS-approved issue.

With transmittal R2407CP , CMS establishes that for all services paid under the MPFS that the POS code to be used by the physician and other supplier shall be assigned as the same setting in which the beneficiary received the face-to-face service.

There are two exceptions to the face-to-face rule in which the physician always used the POS code where the beneficiary is receiving care as a hospital inpatient or an outpatient of a hospital, regardless of where the beneficiary encounters the face-to-face service. These exceptions are when the beneficiary is an inpatient of a hospital (POS code 21), or an outpatient of a hospital (POS code 22), irrespective of where the face-to-face encounter occurred per the instructions in chapter 26 of the Medicare Claims Processing Manual.

Many CAHs employ their physicians and are responsible for the professional fee coding and billing as well as the facility side of the business. In addition, CAHs face staffing limitations and budget constraints for coding training, so it is not unusual for a CAH coder to assign codes on both sides of the fence, says Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.

“Coders are not always trained on the reimbursement impact of the data they report, such as what the POS does to the professional fee payment,” she says. “There are different coding and billing rules between facility and professional fees, so coders need to be aware of the risks of overpayment or underpayment on either side.”

CAHs reporting their professional fees on their UB04 claim form under Method II billing will not be affected, however, if any of the professional fees are billed on the 1500 claim form, coders and billers need to sit up and take notice of the OIG audits and CMS transmittals, says Mackaman.

“CAHs are subject to any and all audits – MAC/FI, CERT, RAC, OIG - as an overpayment is an overpayment no matter what the methodology is of your reimbursement (i.e. cost based vs. prospective payment).”

Lastly, MLN Matters article MM7631 lists out the settings where physicians’ services are paid at the facility rate, as well as the settings in which physicians’ services are paid at non-facility rates. It also expounds on additional clarifications and special considerations provisions for other settings as well. These lists can be found here.

Most Popular