Published March 19, 2012

RAC Issues and Surprising Announcement

RAC Issues and Surprising Announcement

During the Recovery Audit Contractors (“RAC”) demonstration project, hospitals received numerous requests for reviews of inpatient claims due to related documentation which did not support the medical necessity for the designation of an inpatient stay.  Subsequently, these claims were down-coded to outpatient status, resulting in an overpayment and, thus, refunds to Medicare.

Place of Service Errors

In the past few months, Medicare Part A/B Administrative Contractors (“MACs”) have sent demand letters and claim denials related to similar and related Place of Service (“POS”) issues that require hospitals and physician practices to review and revise processes to mitigate compliance risks.  MACs are recovering payments that were not supported by medical necessity for an inpatient stay on the hospital side or did not match the hospital claim on the physician practice side.  This mismatch in POS designation between the hospital and physician practice can result in claims being denied and denial code descriptions such as COB20, N32, and N432 on the Medicare Remittance Advice.

Proposed Fix

A physician should document if he or she is admitting the patient to observation, inpatient, or another outpatient status-level of care.  The physician’s documentation of status is often the designation selected by the hospital; however, hospital case management departments will typically review the designated status to further qualify the patient as inpatient or outpatient.  This additional review could result in a status change and, ultimately, the POS assignment.

A possible workflow change in the physician office may reduce the risk of denial related to POS errors.  By placing the hospital claims in pending status for two days to confirm the POS determination of the hospital, incorrect POS assignment may be avoided.

Clarification from CMS on POS Designation for Interpretations

The Centers for Medicare & Medicaid’s MLN Matters article offers clarification on POS assignment.  The POS in which the patient receives face-to-face service is the POS that should be billed. A change in POS instruction directs physician offices to use the POS where the technical component is provided for the interpretation of that service.  For example, if a patient received an MRI in the outpatient setting of a hospital and a physician interprets the MRI in his office, the claim should be billed with the POS code 22 for outpatient hospital.  Formerly, practices billed the office (11) as the POS when the interpretation was performed in the office.

Surprising Announcement

The RAC for Region C, Connolly Healthcare (Connolly), recently rescinded portions of an automated review concept (C001392011) related to POS errors for physician claims for service performed in hospital inpatient setting.  Connolly had denied line items billed by the Part B provider with an incorrect POS code.  Providers should verify whether similar review concept changes have occurred in their RAC region.

For more information or if you would like to request a speaker on this topic, contact one of our executives listed below at PYA, (800) 270-9629.

 

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