LEEDer Group Inc.
8508 North West 66th St.
Miami, Florida 33166 USA

Phone: 305.436.5030
Fax: 305.436.0086
E-mail Address: info {at] LEEDerGroup [dot] com

2011-03 Correctly Coding Place of Service by Physicians

The Importance of Correctly Coding the Place of Service by Physicians and Their Billing Agents

MLN Matters® Number: SE1104
Related Change Request (CR) #: N/A
Related CR Release Date: N/A
Effective Date: N/A
Related CR Transmittal #: N/A
Implementation Date: N/A

  • Provider Types Affected
    This article is for physicians and their billing agents who submit claims to Medicare Carriers or Medicare Administrative Contractors (A/B MACs) for services provided to Medicare beneficiaries.
  • Provider Action Needed: Impact to You
    Incorrectly coding the place of service code on your claims could result in overpayments that will need to be recovered.
  • What You Need to Know
    The Centers for Medicare & Medicaid Services (CMS) reminds physicians and their billing agents of the importance of correctly coding the place of service and the need for appropriate controls to prevent billing Medicare with incorrect place of service codes.
  • What You Need to Do
    It is extremely important that you correctly code the place of service on Part B claims. Using non-facility place-of-service codes for services that are actually performed in hospital outpatient departments or Ambulatory Surgical Centers (ASCs) often results in overpayments. You must insure you have adequate controls in your (or your billing agent’s) billing routines to identify potential place-of-service coding errors.
  • Background
    Medicare Part B Payments for Physician Services
    Medicare Part B pays for services that physicians provide to Medicare beneficiaries. Physician services include medical and surgical procedures, office visits, and medical consultations. These services may be provided in facility settings, such as hospital outpatient departments and freestanding Ambulatory Surgical Centers (ASCs), or in non-facility locations, such as physician offices, urgent care centers, and independent clinics. Physicians are paid for services according to the Medicare physician fee schedule. This schedule is based on a payment system that includes three major categories of costs required to provide physician services: practice expense, physician work, and malpractice insurance.
  • Medicare Reimbursement for Practice Expense
    Practice expense reflects the overhead costs involved in providing a service. To account for the increased practice expense that physicians generally incur by performing services in their offices and other non-facility locations, Medicare reimburses physicians at a higher rate for certain services performed in these locations rather than in a hospital outpatient department or an ASC. Physicians are required to identify the place of service on the health insurance claim forms that they submit to Medicare contractors. The correct place-of-service code ensures that Medicare does not incorrectly reimburse the physician for the overhead portion of the service when the service is performed in a facility setting. Medicare claim form instructions specifically state that each provider or practitioner is responsible for becoming familiar with Medicare coverage and billing requirements. Some physician offices submit their own claims to Medicare; other offices hire billing agents to submit their claims. Physicians are responsible for any Medicare claims submitted by billing agents.
  • Audit Finding of the Office of the Inspector General (OIG)
    The OIG conducted an audit to determine whether physicians correctly coded non-facility places of service on selected Part B claims submitted to and paid by Medicare contractors. That report, titled REVIEW OF PLACE-OF-SERVICE CODING FOR PHYSICIAN SERVICES PROCESSED BY MEDICARE PART B CARRIERS DURING CALENDAR YEAR 2007 is available to the public at CLICK HERE on the OIG website. Basically, the OIG found that, in many instances, physicians are incorrectly coding the place-of-service code. Specifically, in a very large portion of the claims audited, physicians used non-facility place-of-service codes on their claims for services that were actually performed in hospital outpatient departments or ASCs. This led to overpayments by Medicare on these claims. Medicare does recover these overpayments so it is critical to code correctly and avoid overpayments.

If you have any questions, please contact the Palmetto GBA Provider Contact Center at their toll-free number, (866) 332-7025 (Ohio & West Virginia) or (888) 828-2092 (South Carolina Part B).

This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents. CPT only copyright 2010 American Medical Association.

last updated on 03/14/2011