Act Now to Clean-Up Medicare Enrollment Records to Avoid Denied Claims After July 1

April 26, 2019

Starting July 1, 2019, CMS will reject Medicare claims for services performed at a hospital’s off-campus provider-based department if the department’s address listed on the claim is not a perfect match to the department’s address reported in the hospital’s CMS-855A Medicare enrollment form.  Claims will also be denied if hospitals with multiple service locations fail to report on the claim the correct location where services were provided.  Medicare administrative contractors (MACs) are being instructed to activate these systematic validation edits to enforce the requirements in the Medicare Claims Processing Manual, Chapter 1, Section 170, which describes Payment Bases for Institutional Claims. The implementation of these edits was supposed to take place in April but was postponed to July to give hospital’s more time to comply with the edit rules.  This change could have a significant negative financial impact on hospitals that are not prepared.  Medicare claim validation edits will enforce the requirements for the following three elements:

  • Hospital’s off-campus, provider-based department’s address listed on claims must be an exact match to the department’s address reported in the hospital’s Medicare enrollment record.
  • Hospitals must correctly report on claims the physical locations where services were performed.
  • Hospitals must correctly report the PO or PN modifiers on each claim line.

According to national data tests performed by CMS, few hospitals are prepared!  The tests show numerous discrepancies between practice location addresses listed in claims and the addresses submitted by hospitals on the Form CMS-855A and/or entered into the Provider Enrollment, Chain and Ownership System (PECOS).  It is important to note that the address match must be exact for Medicare to pay the claim.  Even spelling variations will result in a denied claim.  For example, if a hospital uses the word “Road” when reporting an address in its Medicare enrollment record but uses the abbreviation “Rd” or “Rd.” on a claim, the claim will be denied.  Considering the numerous abbreviations used in addresses (e.g., Suite versus Ste.; Street versus St.; Avenue versus Ave.; etc.), this edit could result in a high number of denials.   

The second requirement pertains to hospitals with multiple off-campus provider-based service locations and requires accurate claims reporting of the physical locations where services are performed.  CMS published an extensive table of “Billing Examples” in MLN Matters SE18002 detailing the specific requirements for reporting locations on hospital claims. 

The third requirement is correctly reporting the PO or PN modifiers on claims.  This 2-digit modifier triggers the appropriate payment rate for excepted services (PO) and non-excepted services (PN).  Claims will be denied if the modifiers do not correspond with the addresses as enrolled. 

CMS will instruct the MACs to turn on these edits in July 2019 and return claims to providers if these requirements are not met.  For further details on these edits see MLN Matters SE18003, SE18023 and SE19007.

Action for Providers

All hospitals with off-campus provider-based departments should take these steps to prepare:

  • Confirm all hospital practice locations are reported in the hospital’s Medicare enrollment record (e.g., PECOS).  If any locations are missing, the hospital should take immediate steps to add the practice location by submitting an updated CMS-855A or by reporting the address in PECOS.
  • Use the DDE practice location screen.  CMS added a practice location address screen in April 2019 in the direct data entry (DDE) system as a tool to help hospitals prepare for this change.  Those who use DDE can check the new practice location screen to see what is on file with PECOS for their various practice locations.  Hospitals can access this screen by going into the Inquiry Menu MAP1702 in DDE and selecting “1D.”
  • Update billing systems with “exact match” practice location addresses.  Hospitals should correct the off-campus provider department location addresses within their billing systems to match exactly with the addresses reported in PECOS for the off-campus provider-based departments. 
  • Be familiar with MLN Matters SE18002.  Review the table of “Billing Examples” published by CMS to understand claim submission requirements for hospitals with multiple service locations.

If you have any questions or need assistance with these CMS edits, please contact Hancock Daniel’s Licensure, Certification, and Enrollment team.

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel & Johnson PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel  & Johnson PC be liable for any direct, indirect, or consequential damages resulting from the use of this material.

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