New POS Rules Get Sticky for 21 and 22 E/M Services

Although it may mean denials, stay compliant when reporting inpatient transports to outpatient settings.

Michael D. Miscoe, Esq., CPC, CASCC, CUC, CCPC, CPCO, CHCC

Be sure your place-of-service (POS) code matches the setting where the patient received the service (for face-to-face services), or the setting where the technical portion of the service was delivered (for non-face-to-face services, such as diagnostic test result interpretation). Although this may sound easy in theory, new Medicare guidance can make POS assignment tricky.

Evaluation and Management – CEMC

In recent transmittal 2563, change request (CR) 7631, the Centers for Medicare & Medicaid Services (CMS) clarified guidance for assigning POS codes on Medicare claims. That guidance has posed new questions that should be addressed regarding these claims.

One of those questions came to light through Cynthia Stewart, CPC, CPC-H, CPMA, CPC-I, CCS-P, when she used the following coding scenario to point out discrepancies when reporting in compliance to the new POS reporting rules:

“An inpatient is transported to an outpatient provider office for an evaluation and management (E/M) service and a procedure. The patient is still a registered inpatient and will return to the hospital at the conclusion of the visit. Should the outpatient provider report his or her E/M service using the outpatient E/M codes (99201-99215) or can they use the subsequent inpatient E/M codes? Applying the new POS code reporting rule, where an outpatient E/M service is reported with POS 21 or 22, the service will be denied.”

Here is the relevant language from transmittal 2563, effective Oct. 11, 2012:

“In general, the POS code reflects the actual place where the beneficiary receives the face-to-face service and determines whether the facility or nonfacility payment rate is paid. However, 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 with the beneficiary occurred.”

And here is the specific provider instruction added to the Medicare Claims Processing Manual:

Special Considerations for Services Furnished to Registered Inpatients

“When a physician/practitioner furnishes services to a registered inpatient, payment is made under the PFS at the facility rate. To that end, a physician/practitioner/supplier furnishing services to a patient who is a registered inpatient, shall, at a minimum, report the inpatient hospital POS code 21 irrespective of the setting where the patient actually receives the face-to-face encounter. In other words, reporting the inpatient hospital POS code 21 is a minimum requirement for purposes of triggering the facility payment under the PFS when services are provided to a registered inpatient. If the physician/practitioner is aware of the exact setting the beneficiary is a registered inpatient, the appropriate inpatient POS code may be reported consistent with the code list annotated in this section (instead of POS 21). For example, a physician/practitioner may use POS 31, for a patient in a SNF receiving inpatient skilled nursing care, POS 51, for a patient registered in a Psychiatric Inpatient Facility, and POS 61 for patients registered in a Comprehensive Inpatient Rehabilitation Facility.”

According to this provision, I see the issue where a physician performing an E/M service in an office setting for a patient who is currently a registered inpatient at a facility (and transported to the office location) would be required to report POS 21 for any physician service or procedure performed.

The problem this instruction potentially creates is that while there is a facility payment rate for an outpatient E/M service, some carriers may not process a payment for an outpatient E/M service (e.g., 99201-99215) when billed with POS 21 consistent with this rule. Where payment is denied, the provider is forced to appeal and validate that reporting is accurate under the above rule, consistent with the following revised instructions to the Medicare administrative carrier (MAC):

10.6 – Carrier Instructions for Place of Service (POS) Codes

(Rev.2563, Issued: Oct.11, 2012, Effective: April 1, 2013)

For purposes of payment under the Medicare Physician Fee Schedule (MPFS), the POS code is generally used to reflect the actual setting where the beneficiary receives the face-to-face service. For example, if the physician’s face-to-face encounter with a patient occurs in the office, the correct POS code on the claim, in general, reflects the 2-digit POS code 11 for office. In these instances, the 2-digit POS code (Item 24B on the claim Form CMS-1500) will match the address and ZIP entered in the service location (Item 32 on the 1500 Form) – the physical/geographical location of the physician. However, there are two exceptions to this general rule – these are for a service rendered to a patient who is a registered inpatient or an outpatient of a hospital. In these cases, the correct POS code — regardless of where the face-to-face service occurs — is that of the appropriate inpatient POS code (at a minimum POS code 21) or that of the appropriate outpatient hospital POS code (at a minimum POS code 22) as discussed in section 10.5 of this chapter. So, if in the above example, the patient seen in the physician’s office is actually an inpatient of the hospital, POS code 21, for inpatient hospital, is correct. In this example, the POS code reflects a different setting than the address and ZIP code of the practice location (the physician’s office).*

* Medicare Claims Processing Manual, Internet Only Manual (IOM), pub 100-4, chapter 26, section 10.6 (emphasis added).

Although it is time consuming to appeal such denials, I have to assume that Medicare administrative contractors will eventually fix their payment systems to comply with this instruction, which is not yet updated in the processing manual on the CMS IOM website.

The other option would be for the physician to go to the hospital to do the E/M and procedure work. Then, and only then, could the physician bill the inpatient code—because only in that case is an “inpatient” E/M service provided.

A word of caution: Nothing in the above instruction suggests or implies that it would be reasonable to interpret the change as instructing a provider to report an inpatient E/M code for an E/M service performed in an outpatient setting. It merely instructs the provider to use POS code 21 (or a more specific code, where the exact facility status is known) when the outpatient E/M service or other procedure is performed on a patient that is a current registered inpatient at a hospital. Note that the location of the service in block 32 would be the physician’s office and ZIP code.

I suspect carriers will reprogram their claims processing systems soon to deal with this payment problem, where it exists. Attempting to avoid the denial by reporting an inpatient E/M service that was not performed, especially where that code results in the physician obtaining additional reimbursement, is not recommended. Even if paid, the provider would have to disclose and refund the overpayment within 60 days, consistent with the reverse false claims provision of the False Claims Act and the draft implementing regulations.


Michael D. Miscoe, Esq., CPC, CASCC, CUC, CCPC, CPCO, CHCC, has a Bachelor of Science degree from the U.S. Military Academy, a Juris Doctorate degree from Concord Law School, is president of Practice Masters, Inc., and founding partner of Miscoe Health Law, LLC. He is a past member of AAPC’s National Advisory Board and a current member of the Legal Advisory Board. He is admitted to the Bar in California and to practice law before the U.S. District Courts in the Southern District of California and the Western District of Pennsylvania. He has nearly 20 years of experience in health care coding and over 15 years as a coding and compliance expert testifying in civil and criminal cases. He is a national speaker and has been published in numerous national publications.

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One Response to “New POS Rules Get Sticky for 21 and 22 E/M Services”

  1. Maria Guerrero says:

    Please show me how a physician’s office visit to a registered inpatient, especially a SNF pt, is to be billed on a HCFA. I understand the POS rule change, but our office is still very confused as to how to put this on the claim.
    Thank you.

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