Medicare Compliance & Reimbursement

Get expert guidance on avoiding denials.

Keeping up with all the different ways to deal with place of service (POS), site of care, and how they relate to level of care can be challenging. For this reason, Holly Ridge, BSN, RN, CPC, CPMA, manager of medical necessity and authorization denials at Duke University Health System in Durham, North Carolina, offered her expert guidance in her HEALTHCON 2024 presentation, “The Place of Service Conundrum.”

If you have been struggling with scenarios that revolve around POS and site of care and are also trying to sort through a few subsequent denials, read on for expert insight on these challenging coding issues

Understand the Differences Between POS, Site of Care, and Level of Care

POS refers to the two-digit code used to indicate where the practitioner performed the service, such as the doctor’s office, patient’s home, or the hospital.

POS codes are maintained by the Centers for Medicare & Medicaid Services (CMS) and are generally applicable to the HCFA 1500 for professional claims. Enter the two digits in the “Place of Service” column.

Note: Hospital claims are a little different. For these, the equivalent is the column called “Type of Bill” on the UB04 form. You’ll enter four digits into box 4:

• First digit – 0 (CMS ignores this)
• Second digit – Type of facility, such as hospital or home health
• Third digit – Type of care, such as inpatient or outpatient
• Fourth digit – frequency such as admit – discharge, interim, replacement

Site of care: This term typically refers to the broader healthcare setting or system where a patient receives care. It can include various places of service within it. For example, a site of care might be a comprehensive cancer center that includes a hospital, outpatient clinic, and a pharmacy.

The policies surrounding site of care are created by payers, and there have been an increasing number of restrictions over the last decade. While site of care policies are intended to direct patients to more cost-effective locations for care, they often create challenges for patients as well as payers.

Understand How POS and Site of Care Fit with Level of Care

What can get tricky is that these three concepts — POS, site of care, and level of care — are interrelated.

Level of care: This term refers to the intensity or complexity of the required medical service. It can range from preventive care to more complex or specialized care.

The level of care a patient needs often determines the site of care, and in turn, the place of service. For example, a patient requiring a high level of care might go to a hospital for treatment (POS) that is part of a larger healthcare system (site of care). Because they’re all interconnected, payers often require specific circumstances for each, and it can get complicated quickly. Denials are therefore common.

Example: Let’s say a patient is seen in the emergency department by their gastroenterologist with complaints of persistent heartburn and acid reflux. The gastroenterologist suspects a case of gastroesophageal reflux disease (GERD) and decides to perform an upper endoscopy to confirm the diagnosis. The procedure is typically performed in an ambulatory outpatient setting, but due to the patient’s anxiety and request, the patient is admitted, and the procedure is performed the following morning. The procedure goes smoothly, and the patient is discharged the same day without any complications.

An upper endoscopy is typically performed safely in an ambulatory outpatient setting. This will likely spark a denial, and Medicare will state that the level of care did not appropriately match the site of service.

Dissect the Decision to Admit a Patient to a Hospital

Generally, payers follow three processes of thought when considering whether a patient needs to be treated in a hospital setting. Therefore, Ridge suggests taking these into serious consideration when considering treatment options for your patients. It may just help you avoid a denial.

Medical necessity/utilization review: You probably already know that medical necessity asks the question, “Is the treatment reasonable, necessary, and/or appropriate?” The treatment or procedure must be essential for the diagnosis or treatment of a disease, condition, illness, or injury. Utilization review is a payer’s opportunity to review the request for treatment to confirm that the plan provides coverage and see if the recommended treatment is appropriate.

Two-midnight rule: This is a Medicare policy that guides classification and reimbursement of hospital stays. Specifically, it states that inpatient admission is appropriate if the physician expects a patient’s treatment will require a hospital stay that crosses two midnights. This also means that Medicare typically considers anything less than two midnights appropriate as an outpatient stay.

Inpatient-only (IPO) CPT^® list: This is a list of procedures that Medicare designated as only appropriate in an inpatient setting. This includes procedures that need at least 24 hours of postoperative recovery time or procedures that otherwise significantly affect the physical condition of the patient. This means that you can run into reimbursement issues if the procedure and the site of care don’t match.

Deny the Denial By Getting Ahead of It

If you think you may run into a site of care issue with the payer, appeal before the care is rendered. “It’s easier to fight the site of care issue before the service is rendered and the denial becomes authorization related,” said Ridge. “A lot of payers consider authorization denials as administrative denials, and they are very, very difficult to appeal,” she continued.

Many of the policies and guidelines are flexible, as long as thorough documentation is provided. For example, if there is sufficient evidence to support that the patient is pregnant or has a bleeding disorder, history of anesthesia reactions, or some kind of behavioral or cognitive health issues that could affect treatment or compliance (such as the anxiety in the upper endoscopy scenario mentioned earlier), you’ll likely be able to fight a potential site of care issue before you bill for the service.

If there isn’t sufficient evidence, the best course of action may be to downgrade. Note that many payers require you to downgrade prior to discharge.

Note: Infusions are one of the largest targets of site of care policies, but surgery services are also targets.