Otolaryngology Coding Alert

As part of its proposed revisions to the 2003 Physician Fee Schedule, CMS has recommended a number of changes to the "place-of-service indicators" (e.g., 11 for the office, 22 for outpatient hospital).

Several place-of-service indicators are now in use for which there is no site-of-service (facility versus nonfacility) designation. The CMS proposal would assign a site-of-service designation to these indicators, as well as revise several existing site-of-service designations.

Under the resource-based practice expense methodology, CMS distinguishes practice expense relative value units (RVUs) for nonfacility and facility settings. According to CMS publication 1204-P, "This distinction is needed because of the higher resource costs to the physician in the non-facility setting when the practitioner typically bears the cost of the resources associated with the service. In addition, the distinction ensures that we do not make a duplicate payment for any of the practice expenses incurred in performing a service for a Medicare beneficiary." When the beneficiary is a facility patient, Medicare reimburses the facility for the clinical staff, supplies and equipment while the practitioner receives a generally lower facility practice expense rate. Therefore, changes to the site of service will directly affect physician reimbursement.

For 2003, CMS has recommended that the following be considered facility settings:

06 Indian health service provider-based facility

08 tribal 638 provider-based facility

26 military treatment facility (currently designated as a non-facility)

41 ambulance, land; and 42 ambulance, air or water (currently non-facility)

52 psychiatric facility partial hospitalization (currently non-facility)

56 psychiatric residential treatment facility (currently non-facility).

CMS has designated the following nonfacility settings:

04 homeless shelter

05 Indian health service freestanding facility

07 tribal 638 freestanding facility

15 mobile unit

20 urgent care facility.

All other place-of-service indicators not specifically mentioned are designated nonfacility site-of-service locations. For the complete text of CMS 1204-P and a list of current place-of-service indicators, visit the CMS Web site at www.cms.gov/physicians/pfs/default.asp.