1. Schaum, Kathleen D. MS

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During the past 2 months, this author has received the same question from numerous physicians: "Can you help me understand why my Medicare contractor has asked for a repayment for the services that I performed in the hospital-owned outpatient wound care department?" In each case, I asked the physician which place-of-service (POS) code was submitted on the Centers for Medicare & Medicaid (CMS)-1500 Health Insurance Claim Form. In every case, the physician either did not know what a POS code is or did not know what had been submitted on the claim form. Once the physicians investigated the answer to my question, they unanimously answered that POS code 11 was submitted for every line item on the claim.


When the physicians were informed that the POS code should have been 22, they said that they had no idea that their billers had used the wrong code. Unfortunately, the claims were submitted on behalf of the physicians, and they are ultimately responsible for the submission of claims that correctly define the work they performed and for the documentation in the medical record to support the medical necessity for the work. This column will focus on the information about POS codes to help prevent other physicians from large repayments to Medicare. A good way to begin is by reviewing the CMS regulation and the Office of Inspector General's (OIG's) reports and work plan regarding POS codes.


In the 1998 Physician Fee Schedule Medicare Final Rule, CMS began paying physicians less for services performed in facilities (hospitals, skilled nursing facilities, hospital-owned outpatient departments, ambulatory surgical centers [ASCs], etc) than for services performed in nonfacilities (physician offices). This distinction between the nonfacility and facility POS accounts for the higher expenses that physicians incur in the nonfacility (office) setting. In the office, the physician must pay for clinical staff, wound care dressings, supplies, and equipment associated with the wound care services/procedures performed.


When the Medicare beneficiary receives wound care services by the physician in a facility (hospital-owned outpatient wound care department), that facility is paid by Medicare for the clinical staff, wound care dressings, drugs, supplies, and equipment needed to care for the patients. In that case, the physician must inform Medicare not to pay the higher nonfacility rate for that service.


Physicians are required by law to submit Medicare Part B claims electronically unless they are among the few that meet the Health Insurance Portability and Accountability Act exemption. In that case, those physicians submit the CMS-1500 Health Insurance claim form. Physicians must also include the name, address, and zip code of service locations, other than patients' homes, via either claim submission method. The regulation CMS 100-4, 26 10.5, provides the National POS Code Set. Physicians must select the best POS code that identifies the location where each service was performed and enter it in item 24B on the claim form. Table 1 provides a partial list of the POS codes that represent POSs where physicians are most likely to perform wound-related services.


When physicians provide wound care services in various locations, they should devise a system that will clearly inform their billers and coders exactly where they performed the service. For example,


* Some physicians have requested that the hospital-owned outpatient wound care department include the facility's name, address, and zip code on the charge capture form that the facility and the physician use to itemize the services provided. This provides the physicians' billers and coders with the exact address of the POS where the physician performed the work.


* Other physicians have different-colored charge capture forms for each POS where they work. This helps their billers and coders to use the correct POS code on their claim forms.


* Still, other physicians use 1 charge capture form for multiple sites of service. However, the form lists each possible site of service; they simply check off the site where the service was performed.



No matter what process the physicians use to identify the POS where they provided their wound care services, they should not use billing software that automatically enters the POS, unless the physician never performs work outside the office.


In addition to implementing a process for identifying the POS where each line item of service was performed, the physician must be sure that his coders and billers understand how to select the correct code and place it on the claim form. The POS code can result in an overpayment from Medicare. For example,


* The 2008 national average Resource-Based Relative Value Scale (RBRVS) nonfacility rate is $54.85 for 97597, sharp selective maintenance debridement, performed in the office(POS = 11). The 2008 national average RBRVS facility rate is $36.18 for the same procedure performed in the hospital-owned outpatient wound care department (POS= 22). If the physician performs 10 of these procedures per week (520 per year) in the outpatient department, but bills them with the office POS code, the physician has a very high risk of receiving a repayment request from Medicare.


The Medicare overpayment for just this 1 procedure was $9708.40. The overpayment could be quite large if all the evaluation and management services, applications of skin substitutes, surgical excisional debridements, and so forth, were coded with the wrong POS code.


The OIG began conducting audits of various Medicare contractors early in 2001. The objective of the audits was to determine the extent of Medicare Part B overpayments made to physicians for billings with incorrect POS codes. In one audit, more than 75% of the sampled physician services were performed in a facility, but were billed by the physicians using the "office" or other nonfacility POS codes. The OIG recommended that the Medicare contractors


* recover the identified overpayments;


* work with all the physicians to reassess their billings and refund estimated overpayments, which totaled in the millions of dollars;


* educate physicians about the importance of correctly reporting the POS and encourage physicians to implement internal control systems to prevent Medicare billings with incorrectly coded POS;


* instruct physicians to notify their billing representatives about the importance of correctly reporting POS codes; and


* educate contractors' customer service personnel regarding their instructions to physicians' representatives related to correct POS codes.



Medicare contractors have devoted significant effort to deliver a robust, proactive array of provider education and communication services to ensure that the providers they serve are given the information they need to meet these Medicare requirements. A variety of education and training methods are used to educate all providers regarding appropriate billing, including the use of correct POS codes. Some examples of the education and training that physicians and their billing and coding staff should take advantage of are the following:


* contractor newsletters that contain POS instructions, complete CMS-1500 claim form instructions, and listings of POS codes;


* billing instructions that are posted and periodically updated on the contractor's Web sites;


* provider outreach and education seminars and workshops that regularly cover POS billing requirements in depth;


* audio computer-based training modules that provide information for each field and item contained on the CMS-1500; and


* presentations made at medical association meetings and at Medicare contractor seminars.



Despite the OIG reports and the Medicare contractors' education efforts, physicians seem to be having a difficult time submitting the correct POS codes on their Medicare claims. In the OIG's Semiannual Report to Congress, October 1, 2006, to March 31, 2007, the OIG reported that a high percentage of physicians submitted the office POS codes, although they performed the services in another setting. This resulted in physician overpayments. Based on the sample results, the OIG estimated that 1 carrier overpaid physicians in 5 states $4.3 million for incorrectly coded services during the 2-year audit period.


The OIG Work Plan for fiscal year 2008 clearly contains POS errors by stating, "We will review physician coding of place of service on claims for services performed in ambulatory surgical centers (ASCs) and hospital outpatient departments. Federal regulations at 42 CFR 414.22(b)(5)(i)(B) provide for different levels of payments to physicians depending on where the services are performed. Medicare pays a physician a higher amount when a service is performed in a nonfacility setting, such as a physician's office, than it does when the service is performed in a hospital outpatient department or, with certain exceptions, in an ASC. We will determine whether physicians properly coded the places of service on claims for services provided in ASCs and hospital outpatient departments."


Therefore, physicians and other providers who are paid by the Medicare Physician Fee Schedule should immediately ensure that (1) a good process exists for the physician to inform the billers and coders exactly where the service was performed; (2) their billers and coders are submitting the correct POS code in item 24B of the claim form; (3) the name, address, and zip code of the POS (other than the patient's home) appear on the claim form; and (4)a self-audit is conducted to determine if Medicare overpayments were received.