Pathology/Lab Coding Alert

Understand “off-campus” clinics.

You should currently be using one new and one updated place of service (POS) code to bill Medicare for your pathology and laboratory outpatient services, as of Jan. 1.

Crucial: Centers for Medicare and Medicaid Services (CMS) made the POS code change to avoid overpaying for services provided at off-campus hospital-based or provider-based clinics. Let us walk you through CMS’s logic for the change, and more importantly, how you should use the updated POS code set when billing Medicare for your services.

The official new and revised POS definitions are as follows:

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

Focus on Medicare Instruction

According to Change Request (CR) 9231 to the Medicare Claims Processing Manual, CMS wants you to use POS 19 for claims at off-campus hospital-based or provider-based clinics.

Here’s why: “Congress passed H.R. 1314, the Bipartisan Budget Act of 2015, [in which] Section 603 addresses a reduction in payment for ‘new’ off campus provider-based clinics,” explains Duane C. Abbey, PhD, president of Abbey and Abbey Consultants Inc., in Ames, Iowa.

Problem: Some physicians had been billing a non-facility POS code such as 11 (Medical office) for off-campus clinics instead of using outpatient POS 22, which was defined as “outpatient hospital” before the recent revision to add the qualifier, “on-campus.”

Remember: the Medicare Physician Fee Schedule (MPFS) values services at a “facility” rate for hospital inpatients and outpatients and skilled nursing facility (SNF) patients, and a “non-facility” rate for settings such as physician offices and independent labs. The non-facility rate typically pays more, to compensate you for overhead costs that you don’t have to pay when the physician performs the service in a facility (because the facility covers those costs). CMS and the OIG have expressed concern that claims mischaracterizing POS as non-facility result in significant overpayment for physician Medicare services.

For instance: You’ll see a difference in the facility and non-facility rate for the following two pathology services (2016 MPFS National amount, conversion factor CF 35.8043):

• 85097 — Bone marrow, smear interpretation facility rate $50.84, non-facility rate $90.94
• 88325 — Consultation, comprehensive, with review of records and specimens, with report on referred material facility rate $138.20, non-facility rate $174.72

Understand ‘Off-Campus’ to Master POS Coding

In order to report POS 19 and 22, you’ll need to get a grip on the official definition of off-campus.

The basics: According to CMS, a campus is the physical area immediately adjacent to the provider’s main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office, to be part of the provider’s campus.

“As of Jan. 1, you should use the current POS code 22 exclusively for services rendered in outpatient settings on the campus of the main hospital, such as outpatient clinics,” says Michael Granovsky, MD, FACEP, CPC, president of LogixHealth, a national coding and billing company based in Bedford, Mass.

Key: CMS states that POS code 19 will follow the same payment policies as the current POS code 22, including the three-day rule. That rule states that services provided to patients at wholly-owned physician practices that occur within three days of a hospital admission are considered bundled into the payment for the admission, notes Granovsky.

Note the Lab/Pathology Angle

Prior to CR 9231, CMS gave basic instruction in CR 7631 that you should select the POS based on where the patient received the “face-to-face” service. That instruction doesn’t really apply to pathologists and clinical labs, which typically deal with patient specimens, not face-to-face services.

However, taken with the following statement in CR 7631, it appears that pathologists (hospital based or private practice) and independent labs should select the POS based on the patient’s location at the time the specimen is taken:

“If an independent lab bills, the place where the sample was taken is shown. An independent laboratory taking a sample in its laboratory shows ‘81’ [Independent laboratory] as place of service. If an independent laboratory bills for a test on a sample drawn on an inpatient or outpatient of a hospital, it uses the code for the inpatient [POS 21, Inpatient hospital] or outpatient hospital [POS code 19/22], respectively.”

Bottom line: If you’re billing for a hospital-based pathologist, a pathology group practice, or an independent lab, for pathology, cytopathology, or clinical lab services, you should assign the POS based on the patient setting when the specimen was obtained (such as physician office, inpatient hospital, or SNF), not where the pathologist or lab personnel performs the test. You should assign POS 81 only if the patient comes to the lab location to give the specimen, such as a blood draw.

Caveat: These rules may not apply to archived specimens.