Common Working File (CWF) Informational Unsolicited Response (IUR) or Reject for Place of Service Billed by Physician Office and either Ambulatory Surgical Center or Inpatient Hospital
The Medicare physician fee schedule includes two payment amounts depending on whether a service is performed in a facility setting, such as an outpatient hospital department or ambulatory surgical center, or in a non-facility setting, such as a physician’s office. The payments to physicians are higher when the services are performed in non-facility settings. The higher payments are designed to compensate physicians for the additional costs incurred to provide the service at an office location as opposed to a facility location.
The Office of Inspector General identified incorrect place of service billing by physicians as a payment error in an audit report (see A-01-11-00508). This report stated, “Physicians are required to identify the place of service on the health insurance claim forms that they submit to Medicare contractors. The correct place-of-service code ensures that Medicare does not reimburse a physician incorrectly for the overhead portion of the payment if the service was performed in a facility setting.” This report also states that several Medicare contractors overpaid physicians who did not correctly identify the place of service on their claims.
To ensure proper payment, CWF will create an IUR for all claims where the dates of service, the beneficiary information, and procedure, are all the same and billed with a physician place of service code 11 – office, and a facility code for inpatient hospital – 21, and ambulatory surgical center (ASC) – 24, that is posted due to an update from CMS. An IUR is a message from CWF to a MAC, carrier or fiscal intermediary, as applicable, to review claims for accuracy.
The issue listed below has been identified by the recovery auditors as significant improper payments and requires the development of an edit to correct these improper payments. The edit for this issue will include claims that have physician place of service code and either ambulatory surgical center (ASC) code or inpatient hospital code. This edit will act as a tool to protect the Medicare Trust Fund by preventing improper billing practices.
1) An audit in October 2004 by the Office of the Inspector General (OIG) identified place of service billing by physicians as a payment error. This report stated, “Medicare overpaid physicians due to incorrect place of service coding. Seventy-nine of 100 sampled physician services, selected from a population of services identified as having a high potential for error, were performed in a facility but were billed by the physicians using the “office” place of service code. As a result of the incorrect coding, Medicare paid the physicians a higher amount for these services.” Because these claims cannot be denied prior to payment, CMS is implementing an IUR for all claim types to recover these payments.
CWF will create an Informational Unsolicited Response (IUR) for all claims where the dates of service, the beneficiary information, and procedure, are all the same and billed with a physician place of service code 11 – office, and a facility code for inpatient hospital – 21, and ambulatory surgical center (ASC) – 24, that is posted due to an update from CMS.