Inpatient Facility Coding & Compliance Alert

Apply “PO” to all items or services covered by OPPS in 2016.

Are you having a difficult time deciding on when and how to apply the “PO” modifier (Services, procedures and/or surgeries performed at off-campus provider-based outpatient departments) for the outpatient services of your hospital? Get the low down on the new modifier that you would need to append to most off-campus outpatient hospital supplies and services in 2016.

“CMS is starting to gather data for determining the relative costs of off-campus provider-based operations,” informs Duane C. Abbey, PhD, president of Abbey and Abbey Consultants, Inc., in Ames, IA. To begin with, if an item or service is being provided by an applicable provider and is being paid through the OPPS (Outpatient Prospective Payment System), then the PO modifier should be applied.

Remember: The PO modifier only applies to services paid under the OPPS. Accordingly, therapy services that are billed under the PFS and have an OPPS status indicator of “A” do not require the PO modifier. The status indicator identifies whether the services described by the HCPCS code is paid under the OPPS, and whether the payment is to be made separately or packaged. Note that the Medicare Claims Processing Manual Chapter 4 20.6.11 was updated in July 2015 to read: “This modifier is to be reported with every HCPCS code for all outpatient hospital items and services furnished in an off-campus provider-based department and hospital.”

Presently, Sec. 603 (Treatment of Off-Campus Outpatient Departments of a Provider) of the Bipartisan Budget Act of 2015 does not impact the PO modifier requirements. Please note that this legislation will be implemented through notice and comment rulemaking in 2016.

Drugs or laboratory services: In order for the PO modifier to be applied for drugs or laboratory services, we need to know whether the item or service is being paid through the OPPS. For instance, a drug with an OPPS status indicator of “K” or a laboratory test that is packaged into an OPPS service should have the PO modifier applied. The Medicare status indicator K is for non pass through drugs, biological agent and radiopharmaceutical agents, and is paid an APC (ambulatory Payment classification) based fee. If a service is not paid through the OPPS, such as a laboratory test paid separately through the Clinical Laboratory Fee Schedule, it should not have the PO modifier applied.

For laboratory services, billing personnel will need to determine if the given test(s) will be packaged for the given claim. This is not a straightforward process. See the “Q4” status indicator that indicates when a laboratory test might be packaged. To see which tests are conditionally packaged, go to Addendum B and the using the Excel format, sort the CPT^®/HCPCS codes by status indicator. Billing personnel will then need to check to see if the given laboratory test(s) are packaged for the particular claim and then attach the PO modifier as appropriate. Note that the packaging of the laboratory tests is at the claim level not necessarily by date-of-service.

“Properly reporting the PO modifier for laboratory tests will be a challenge” states Abbey. “Billing personnel will need to fully understand the “Q4” status indicator and how it is used by the APC Grouper.” Q4 status indicator refers to conditionally packed laboratory tests, and is paid under OPPS.

What’s more, a single hospital outpatient claim (Type of Bill 13X) could have HCPCS codes with the PO modifier and HCPCS without the PO modifier (e.g., a patient is treated at an off-campus PBD and the on-campus hospital on the same day).

The services provided at off-campus dialysis facilities are billed under the ESRD PPS and, therefore, do not require the PO modifier.

The PO modifier does not apply to:

• Off-campus provider based departments (PBDs) of Critical Access Hospitals (CAHs) because CAHs are not paid through the OPPS
• Services provided through Medicare Advantage
• Services physically provided at remote hospital locations of the applicable main hospital or on the campus of a remote location of the applicable main hospital
• Items or services provided in either Type A or Type B Emergency Departments
• Any facility that does not meet the definition of provider-based.

Abbey cautions, “Hospitals will need to carefully examine any unusual situations such as an off-campus ED or a provider-based urgent-care clinic that might be deemed as a dedicated emergency department.” For unusual situations, be certain to contact your MAC for further guidance concerning the use or non-use of the PO modifier.

Abbey notes, “The big question is just how CMS is going to use the data that is collected in order to determine costs for off-campus provider-based operations.”

Heads up: The PO modifier is processed after all modifiers that affect payment have been applied. It is required for applicable claims based on date-of-service beginning January 1, 2016.