Clarifying new place of service rules

Q: For years, we have billed our physician’s lab interpretations with the place of service (POS) of 11, office, even when a hospital or an outside lab performs the test. We’ve never received a denial when we bill this way, but we heard this situation could be changing. Is this correct, and if so, can you tell us how it will change?

A: The Centers to Medicare and Medicaid Services (CMS) clarified the POS rules in the recent recent MLN Matters number MM7631. They became effective April 1.

The Office of Inspector General (OIG) found that during 2002 through 2007, physicians and other suppliers frequently reported incorrect POS codes when they furnished services, specifically when the services were billed with the technical component (modifier TC) and professional component (modifier 26). This occurrence was particularly problematic when the POS for the technical component was furnished in an ambulatory surgical center (ASC) or hospital and the professional component was billed with POS 11 because the physician performed the interpretation in an office.

CMS determines whether a Medicare physician fee schedule (MPFS) facility or non-facility payment rate is appropriate for a specific setting when a POS code is developed. The POS code determines the reimbursement rate for each service and is based on where the patient received face-to-face services. The CMS professional component MPFS reimbursement for laboratory services is higher when billed as performed at a non-facility (for instance, a physician office) as opposed to at a facility (for instance, a hospital, POS 22, or an ASC, POS 24).

CMS, therefore, has clarified that, in situations when a physician is interpreting a diagnostic test from a site other than where the patient received the technical component of the test, the physician should assign the same POS code as the technical component of the service.

The following example was given in theMLN Matters article:

A beneficiary receives a magnetic resonance imaging (MRI) scan at an outpatient hospital near his or her home. The hospital submits a claim that would correspond to the technical component of the MRI. The physician furnishes the professional component of the beneficiary’s MRI from his or her office location. POS code 22 will be used on the physician’s claim for the professional component, to indicate that the beneficiary received the face-to-face portion of the MRI, the technical component, at the outpatient hospital.

Two exceptions

The face-to-face rule has two exceptions:

• When a patient receives care as a hospital inpatient or outpatient (POS 21 and 22, respectively), regardless of where he or she receives the face-to-face services, placing POS 21 or 22 on the claim triggers the facility payment under the MPFS.

• If the physician maintains separate office space in the hospital or on the hospital campus, and that physician office space is not considered a provider-based department of the hospital as defined in section 413.65 of Title 42 of the Code of Federal Regulations, then the physician should use POS 11 (office).

ASC (POS 24)

When a provider is rendering services in a Medicare-participating ASC, POS 24 should be used. According to the MLN Matters article, providers are not to use POS 11 for ASC-based services unless the physician has an office at the same physical location of the ASC that meets all requirements, including meeting the “distinct entity” criteria defined in the ASC State Operations Manual, which preclude the ASC and an adjacent physician office from being open at the same time-and provided that the physician service actually was performed in the office suite portion of the facility. For full details regarding this information, see www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_l_ambulatory.pdf on the CMS Web site.

The author is a billing and coding consultant for VEI Consulting Services, Indianapolis, Indiana.