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Industry Insights

Place of Service – How Will it Affect you?

Even with all the hoopla regarding the sun setting of the TC Grandfather Clause many groups and billers have put the updates to the place of service (POS) guidelines on the backburner – especially since CMS delayed the effective date until 10/1/12. But you must know that they have not forgotten, and you will be responsible for billing properly come the next due date.

What is the place of service update to the CMS guidelines? It’s a good thing you asked because as a hospital-based practitioner, you may think you are not affected by this change.   The fact of the matter is that you are! The place of service helps to drive how a claim is paid – whether it is paid from the DRG system (for inpatient claims), the APC system (for outpatient claims), or the MPFS (Medicare Physician Fee Schedule for non-facility claims).  The ruling says that a claim must include the corresponding Place of Service code for the setting where the beneficiary received the face-to-face encounter with the physician, non-physician practitioner, or other supplier. If the patient is registered at the hospital for services, the place of service code would be either 21 – Inpatient or 22 – Outpatient.  If the patient had a mole removed at his dermatologist’s office and the dermatologist sent the specimen to the hospital for processing and interpretation, the place of service code is 11 – Office. If the patient is having a cyst removed at the surgery center down the street from the hospital as an outpatient, the place of service code is 24 – Ambulatory Surgery Center.

In a 2009 audit done by the OIG, they found that 83 out of 100 claims were improperly paid by CMS because a non-facility place of service code was used for services that were performed in a hospital setting or in ambulatory surgery centers (ASCs). They determined that this cost CMS $9.5 million. Some of the errors were blamed on weak internal processes at the physician level and others were attributed to insufficient post-payment reviews at the Medicare contractor level. Although it is unclear how CMS plans to recoup incorrectly processed claims, it’s clear that they will find a way. Whether this will be through more RAC audits, partial claims payment, or outright denial of claims remains to be seen.

There are several resources where documentation can be found to provide detailed guidelines, place of service codes, and how and when to use these codes. CMS Manual System Transmittal 2469 is one such document. This resource should be utilized by those that are unsure whether or not they are ready for the changes that are on the horizon.  Also, MLN Matters Number SE1226 provides a brief overview of the guideline change and cites several links to in-depth data on the subject. Google it! I urge you to be prepared.

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