Pathology/Lab Coding Alert

When the Office of Inspector General (OIG) estimated a $2.4 million overpayment in two years due to place-ofservice (POS) coding errors, the agency took notice -- and so should you.

To make sure you-re not getting paid too much -- or too little -- for your services, you must list the proper POS code on your CMS-1500 claim forms (or electronic equivalent).

-POS can change your reimbursement,- says Pamela Biffle, CPC, CCS-P, ACS-DE, a PMCC instructor and director of operations/senior instructor for CRN Institute in Salt Lake City.

Medicare pays a different rate for some services based on where the physician performs the procedure -- at a -facility,- such as a hospital or -non-facility,- such as a physician office. The non-facility rate is often higher due to greater practice expense relative value units (RVUs) -- that is, higher physician overhead for the office than the hospital.

Say -no- to fraud: Reporting the wrong POS could mean overbilling -- and opening yourself up to charges of fraud. On the flip side, the wrong POS could mean loss of rightful pay.

Fight claim returns: If you turn in a claim with an invalid or missing POS, you can expect to get it back. CMS says to return such claims as -unprocessable,- and you-ll have to re-file.

Don't miss out: -There are some services that are only reimbursed when performed in certain POS,- Biffle says.

CMS maintains the two-digit POS code set with 44 assigned codes ranging from 01 to 99. Each code corresponds to either the facility or non-facility payment rate for services paid on the Medicare physician fee schedule.

Look at the following table to get familiar with some common POS codes you should know. The final column indicates whether Medicare pays the facility or nonfacility rate for each place.

Whenever you file a CMS-1500 claim form or electronic equivalent, you-ll have to indicate the place of service. Line 24 B of the paper claim requires you to indicate the POS code.

Pathologists do this: For Medicare Part B claims, you will file CMS-1500. The POS code will determine if you-re paid at the facility or non-facility rate for the procedure on the claim.

Independent labs do this: If you-re an independent lab billing for tests paid on the clinical laboratory fee schedule (CLFS) for non-hospital patients, you should also file CMS-1500. You-re required to supply the POS code, although the CLFS payment rate doesn't vary for facility and non-facility locations.

CMS says you should use POS -to indicate the setting in which a service was provided.- For most physician services that involve physician and patient in the same place, that CMS directive makes sense. But the instruction becomes ambiguous when the service involves a specimen taken at one location but processed at another -- a common condition for lab and pathology procedures.

Here's what CMS says about unraveling that -service vs. specimen- puzzle in the Medicare Claims Processing Manual (100-04 chapter 26 found on the Internet at www.cms.hhs.gov/manuals/downloads/clm104c26.pdf):

For lab services billed by a physician: If the physician performs a lab test in his/her own physician office lab (POL), CMS instructs you to report POS 11 (office). If the physician performs a lab test in another physician's POL, you should use POS 99 (other). The physician or other practice member must personally perform or supervise the test to qualify as a POL test. Pathologists generally don't perform or supervise tests in a POL, so this instruction impacts other physician specialties more than it affects pathologists.

The Medicare manual goes on to say that if a physician bills for a test that an independent lab performs, you should use POS 81 (independent laboratory).

Avoid confusion: -The problem with this statement is that it's been illegal since 1984 for office-based physicians to bill for lab tests they don't personally perform or supervise,- says Dennis Padget, MBA, CPA, FHFMA,president of DLPadget Enterprises Inc. in Simpsonville,Ky. and publisher of Pathology Service Coding Handbook. -In other words, the instruction is obsolete. The current rule requires the independent lab that performs a test on a specimen referred from a physician office to bill Medicare for the test.-

For services billed by independent labs: Here's where you encounter the -site of service- vs. -site of specimen-collection- conflict -- and the Medicare resolution. CMS states that independent labs should report POS based on -the place where the sample was taken.-

Do this: When a patient goes to an independent lab for specimen collection, such as a blood draw, use POS 81. But for a sample collected at a hospital, you must choose the appropriate POS such as 21 (hospital inpatient) or 22 (hospital outpatient). If the lab receives a sample collected at a physician office, you should report POS 11.

Warning: -Here's another instance where the manual provides an irrelevant instruction, at least for most hospital patients,- Padget warns. Federal law requires that the referring hospital bill for lab tests (payable on the CLFS) performed by a reference lab for a hospital inpatient or outpatient (at a hospital covered by the inpatient or outpatient prospective payment systems). Thus, the independent lab in that instance must bill the referring hospital for the test, he explains.

Although CMS does not definitively address the issue of AP services billed by pathologists, the general consensus is to follow the independent lab instruction and report POS based on where the specimen originated.

-As best we know, CMS's intent is to identify the POS as the patient location at the time the service was initiated -- generally where the tissue biopsy or other pathology sample was taken, not where the specimen was processed or the pathologic examination performed.-Padget says.