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Facility or Nonfacility? The Wrong POS Can Lead to Costly Overpayments

  • by Cindy Gallee, JD, RHIA, CHC
  • May 15, 2015, 15:28 PM

Outpatient-Sign-Payers-Should-Review-POSPayers should have a focus on whether they are receiving the appropriate place of service codes on physician claims. In a recent study of physician claims from 2010 through 2012, the Office of Inspector General (OIG) found that incorrect “nonfacility” place of service appeared on physician claims that should have been coded as “facility” place of service.   These claims were for services that physicians performed in facility settings such as ambulatory surgery centers (ASCs) or hospital outpatient departments, but the claims were billed as if the service were performed in a nonfacility such as the physician’s office. These errors resulted in potential overpayments of $33.4 million.Overpayment occurs in these situations because Medicare and other payers pay physicians a higher rate for services and procedures performed in a nonfacility to compensate the physician for the overhead costs of performing the service in the office setting. The practice expense portion of the Medicare facility and nonfacility relative value units in the Medicare Fee Schedule are determined by the place of service that appears on the claim.

Examples of incorrectly-paid claims from the OIG report are:

Procedure POS- Performed POS - Billed Amount Paid Correct Payment Overpayment
Microwave Therapy ASC Office $2,240 $522 $1,718
Angioplasty Hospital Outpatient Office $10,664 $613 $10,051

The OIG report can be found at:    

The OIG discovered the overpayments in a data mining process that can be done by payers as well whereby physician claims for procedures were matched with ASC and outpatient claims for the same patients with the same procedures on the same date. Further investigation revealed that for many claims, the patients in fact had the procedures performed in the facility setting. In the conclusion of the study, OIG recommends that Medicare contractors establish postpayment reviews through coordinated data matches of nonfacility-coded physician services and facility claims to identify and recover place-of-service overpayments.

This OIG report underscores the need for payers to conduct real-time analysis of claims across claim types to detect inconsistencies where a claim from the physician and a claim from the facility for the same patient and for the same procedure are reported with different places of service.

What resources are available to payers in order to access real-time analysis of claims? Context4 Healthcare, a leader in claim compliance, developed the FirstPass™ claim editing solution with built-in edits to help payers identify potential inappropriate Place of Service (POS) submitted on physician bills. With thousands of rules and millions of edit combinations updated weekly, FirstPass™ is SaaS-based with real-time web services so payers are always up-to-date with industry compliance and reimbursement standards.

In addition, payers who utilize FirstPass™ can add real-time access to Context's UCR fee data derived from billions of provider charges and updated twice per year. Real-time access to FirstPass™ and  DecisionPoint™ Health Payment System (UCR fee data) will go a long way toward achieving claim compliance and real-time analysis of claims.

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