Business Briefs: Qualified Healthcare Professionals: Prepare for New & Revised POS Codes

Information regarding coding, coverage, and payment is provided as a service to our readers. Every effort has been made to ensure the accuracy of the information. However, HMP Communications and the author do not represent, guarantee, or warranty that the coding, coverage, and payment information is error-free and/or that payment will be received. The ultimate responsibility for verifying coding, coverage, and payment information accuracy lies with the reader.

Qualified healthcare professionals (QHPs) including physicians, nurse practitioners, podiatrists, physician assistants, and clinical nurse specialists who work in wound care hospital outpatient departments (HOPDs) frequently call this author in a panic when audited and facing large repayments because their billers or billing company did not report the correct place-of-service (POS) code on Medicare/Medicaid claim forms.

The rate that a QHP service is paid is determined by the POS code used to identify the setting in which the beneficiary received the face-to-face encounter with the QHP.

In general, the POS code reflects the actual place where the beneficiary receives the face-to-face service and determines whether the facility or non-facility payment rate is paid. EXCEPTION: For services rendered to a registered inpatient or outpatient of a hospital (regardless of where the face-to-face service occurs) the appropriate inpatient POS code (at a minimum POS code 21) or the appropriate outpatient POS code (at a minimum POS code 19 or 22) must be used. If the patient is seen in the QHP’s office and is actually an inpatient of the hospital, POS code 21, for inpatient hospital, is correct.

In some instances, the audited QHPs did not have a process for informing their billers where they performed their work throughout each day. Some billers did not have visibility to the fact that the QHPs left their offices. They assumed the QHPs performed the work in the office and used the “office” POS code on their claims.

Other billers did not realize QHPs typically receive a higher Medicare/Medicaid payment for work performed in the office versus work performed in a facility such as an HOPD. These billers did not think it mattered which code they reported. In actuality, claims submitted with a POS code that is different than where the QHP performed the work may be considered “false claims.”

Many of the QHPs who called this author “had never heard of” POS codes and did not know where to find these codes. To ensure everyone reading this article is informed, let’s review some basics:

• POS codes: These two-digit codes are placed on QHP claims to indicate the setting in which a service was provided. The Centers for Medicare & Medicaid Services (CMS) maintains POS codes used throughout the healthcare industry.
• The POS code set is required for use in the implementation guide adopted as the national standard for electronic transmission of professional healthcare claims under the provisions of the Health Insurance Portability and Accountability Act (HIPAA) of 1996. HIPAA directed the U.S. Department of Health and Human Services to adopt national standards for electronic transactions. These standard transactions require all health plans and providers to use standard code sets to populate data elements in each transaction. The Transaction and Code Set Rule adopted the ASC X12N-837 Health Care Claim: Professional, volumes 1 and 2, version 4010, as the standard for electronic submission of professional claims. This standard names the POS code set currently maintained by CMS as the code set to be used for describing sites of service in such claims. POS information is often needed to determine the acceptability of direct billing of Medicare, Medicaid, and private insurance services provided by a given provider.
• Chapter 26, Section 10.5 of the Medicare Claims Processing Manual (www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c26.pdf) includes instructions and special considerations for the application of certain POS codes under Medicare. See the Table on page 32 for a partial list of the POS codes and the Medicare payment rate (facility or non-facility) designation of each code.
• CMS also maintains a database of POS codes for professional claims online at www.cms.gov/medicare/coding/place-of-service-codes/place_of_service_code_set.html. The database was last updated on Aug.6, 2015. QHPs should review this list carefully because the places of service are very specific. EXAMPLE: A QHP who provides chronic wound care may work 4 hours in his/her office (POS 11), then work 4 hours in the wound care HOPD (POS 22), and before going home may stop at the skilled nursing facility (POS 31) to provide care for a few patients. The QHP should establish a process to inform his/her billers about the location where care was provided to each specific patient.

QHPs must verify the exact type of facility in which he/she performs work. For example, many QHPs think they work in a wound care HOPD when, in fact, the wound clinic is registered with Medicare/Medicaid as a physician office. Do not be fooled by the name of a facility. Instead, ask the chief financial officer of the facility exactly how the facility is registered with Medicare/Medicaid. NOTE: On Aug. 6, 2015, Chapter 26 of the Medicare Claims Processing Manual was updated with new and revised POS codes that will become effective Jan. 1, 2016.

• New POS code 19 Off-Campus Outpatient Hospital: A portion of an off-campus hospital provider-based department that provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization.  
• Revised POS code 22 from Outpatient Hospital to On-Campus Outpatient Hospital: A portion of a hospital’s main campus that provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization. 

Because these new POS codes are required effective Jan. 1, 2016, QHPs should begin now to verify whether they are working in an off-campus or an on-campus outpatient hospital. In addition, QHPs should ensure their billing staffs are aware of these POS code changes.

NOTE: This change was not a “surprise” because CMS discussed the need to differentiate between on-campus and off-campus provider-based hospital departments in the calendar year 2015 Physician Fee Schedule (PFS) final rule with comment period published Nov. 13, 2014, (79 FR 67572). This POS code update requires Medicare Administrative Contractors (MACs) and durable medical equipment MACs to adjudicate claims with the new and revised POS codes and to develop policies (as needed) to edit and adjudicate claims that contain the new/revised POS codes. Following is some additional information that QHPs should know related to POS codes 19 and 22:

• Payments for services provided to outpatients who are later admitted as inpatients within 3 days (or, in the case of non-inpatient prospective payment system hospitals, 1 day) are bundled when the patient is seen in a wholly owned or wholly operated physician practice. The 3-day payment window applies to diagnostic and nondiagnostic services that are clinically related to the reason for the patient’s inpatient admission, regardless of whether the inpatient and outpatient diagnoses are the same. The 3-day payment rule will also apply to services billed with POS code 19.
• Claims for covered services rendered in an off-campus outpatient hospital setting (or in an on-campus outpatient hospital setting, if payable by Medicare) will be paid at the facility rate. The payment policies that currently apply to POS 22 will continue to apply to this POS and will now also apply to POS 19, unless otherwise stated.
• Reporting outpatient hospital POS code 19 or 22 is a minimum requirement to trigger the facility payment amount under the PFS when services are provided to a registered outpatient. If the QHP is aware of the exact setting where the beneficiary is a registered hospital outpatient, the appropriate outpatient facility POS code (instead of POS 19 or 22) may be reported consistent with the code list in Chapter 26 of the Medicare Claims Processing Manual. For example, QHPs may use POS code 23 for services furnished to a patient registered in the emergency room or POS 24 for a patient registered in an ambulatory surgical center.
• QHPs shall use POS code 11 (office) when services are performed in a separately maintained physician office space in the hospital or when on the hospital campus and that physician office space is not considered a provider-based department as defined by Code of Federal Regulations (CFR) 42 CFR 413.65. Use of POS code 11 (office) in the hospital outpatient department or on a hospital campus is subject to the physician self-referral provisions set forth by 42 CFR 411.353-411.357.