Health Reform Connect

Place-of-Service (“POS”) codes allow CMS to pay for services based on where the physician performs the services.  CMS pays physicians more when they perform services in their offices than in outpatient or inpatient departments, because in the case of services provided in an outpatient or inpatient department, hospitals pick up the tab for overhead and recover it through facility fees.  CMS has revised its national policy on POS coding due to errors identified by the HHS Office of Inspector General (“OIG”).  In a new Medicare transmittal (2407), CMS states that POS codes must be assigned based on where the beneficiary received the face-to-face encounter with the physician, nonphysician practitioner (“NP”) or other supplier.  This allows the point of service to follow the patient as opposed to the doctor and bases the payment on where the patient receives the service, not where the physician performs the professional component.  CMS provides an exception for inpatient and outpatient services, because the facility payment is bundled into the inpatient and outpatient prospective payment systems even if a specific service is performed at another site as part of hospital treatment.  Therefore, for a service rendered to a patient who is an inpatient of a hospital (POS code 21) or an outpatient of a hospital (POS code 22) the facility rate is paid regardless of where the face-to-face encounter occurred.  Proper coding of POS is important as POS coding has been identified as a major cause of improper errors by OIG and recover audit contractors and is a target on the OIG 2012 Work Plan.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.