Medicare
once again reminded physicians and their billing agents to ensure that they are
reporting the correct place of service on physician claims, particularly on
claims for outpatient physician services payable under Part B. Such services
include a wide variety of medical and surgical procedures, office visits, and
consultations, which may be performed in facilities, including hospitals and
provider-based departments and clinics, as well as in non-facility locations,
such as freestanding clinics and urgent care centers.
Because there is a site-of-service payment differential for
these services, it is essential to determine and report on the claim whether
they were furnished in a facility or non-facility setting.
Physicians are paid for services furnished to Medicare
beneficiaries under a specific payment methodology referred to as the Medicare
physician fee schedule (MPFS). Payments under this methodology have three
components, which are designed to cover physician costs in each of these three
categories: practice expense, physician work, and malpractice insurance.
The practice expense portion of the MPFS payment is designed to
cover the physician's overhead expenses, which are generally higher if he or
she performs that service in a freestanding clinic, rather than in a facility
setting, such as a hospital outpatient department or a provider-based clinic.
Therefore, the practice expense portion of the applicable MPFS payment is
higher when the site of service identified on a particular claim reflects a
non-facility, rather than a facility setting to cover the higher overhead costs
incurred.
If however, a physician, or his or her billing agent,
incorrectly codes a non-facility site of service when that service actually was
performed in a facility setting, then the physician would receive more
reimbursement than he or she is entitled to, resulting in an overpayment. Such
overpayments increase the claims error rate and subject the physician to
overpayment determinations under the RAC and other Medicare correct payment
programs.
In a recent audit, the Office of Inspector General (OIG)
found that many physicians were incorrectly coding for the site of service,
resulting in significant overpayments. The OIG warned that it is critical for
physicians and their billing agents, to code the site of service correctly, and thus,
avoid such overpayments in the future. Hospitals, which often act as billing
agents for employed or contracted physicians are encouraged to review their
existing physician billing practices to assure that they are accurately
identifying and reporting appropriate site-of-service codes on all physician
claims.