RACs reviewing POS coding for physician services in an outpatient setting

Recovery audit contractors are looking at scenarios in which a physician furnishes services in an outpatient setting of a hospital to ensure that claims are being billed with the appropriate code. Here's how to make sure you're submitting accurate claims.


Q: We have an office that is part of a hospital. We perform surgical procedures in the office and have been receiving denials for some of our claims. How do we bill these services and get paid appropriately for our work?


A: When a physician furnishes services in an outpatient setting of a hospital, including a provider-based department of a hospital, payment is made under the Medicare Physician Fee Schedule at the facility rate. In these instances, the claim should be billed with place of service (POS) 22 (hospital outpatient), instead of POS 11 (physician office).

Recovery audit contractors (RACs) are looking at these types of scenarios to ensure that claims are being billed with the appropriate POS code, because they have found that doctors are incorrectly reporting office POS code of 11 when services are provided in an outpatient hospital setting, resulting in overpayments to the physicians.

Through data analysis (automated review) by the RACs, an outpatient claim is identified reporting the same surgical Current Procedural Terminology (CPT) code for the same patient and same date of service as a professional claim with a reported POS 11. To account for the increased expense that doctors incur by performing services in their offices, Medicare Part B reimburses physicians at a higher rate for surgical procedures performed in their offices.

When doctors perform these services in facility settings (for instance, outpatient facilities), Medicare reimburses the overhead expenses to the facility and the physician receives a lower reimbursement rate. An improper payment exists when physicians bill these services with an incorrect POS based on the setting in which the services were rendered.

Those CPT codes in the integumentary system (10000 series) have been found to have the greatest number of improper payments, but RACs are reviewing all surgical CPT codes (10000-60000).

Review your billing practices, paying special attention to POS coding, and ensure that your billing staff is using the correct POS code on professional claims to specify the entity where services were rendered.


The answer to this question was provided by Renee Stantz, a billing and coding consultant for VEI Consulting Services, Indianapolis, Indiana. Send your primary care-related coding questions to medec@advanstar.com.

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