Claim Denials Ahead for Some Hospital Outpatient Providers

3 Steps to Avoid Costly Billing Mistakes

April 30, 2019

The Centers for Medicare & Medicaid Services (CMS) recently announced that it would soon deny claims based on a series of validation edits to Medicare enrollment systems. These validation edits will apply to hospital outpatient prospective payment system (OPPS) providers that operate multiple service locations and will be fully implemented in July 2019. Effectively, the edits will require that each location address set forth on claims submitted by providers be an exact match to the corresponding address listed in the Provider Enrollment, Chain and Ownership System (PECOS) profile.

As discussed in an Aug. 28, 2018, McGuireWoods legal alert, these changes stem from the Bipartisan Budget Act of 2015 and resulting CMS “site-neutral” payment policies. Specifically, non-excepted services provided at an off-campus provider-based department (PBD) of a hospital are paid under the Medicare physician fee schedule (MPFS) rates — not the OPPS rates — based on a “relativity adjuster” to the OPPS rate. To determine the applicable payment method, Medicare systems use the service facility information, including address, on an institution claim.

Under the new validation edits, claims submitted by off-campus PBDs that contain even slight discrepancies in service facility location will be denied. CMS originally rolled out these edits in 2017, but they remained inactive with respect to claim denials while CMS conducted several rounds of testing. Beginning in July 2019, however, CMS will direct Medicare administrative contractors (MACs) to permanently implement these validation edits and return such claims that contain facility locations that are not an exact match to the provider.

In light of these changes, providers should take these immediate steps to avoid claim denials.


1. Identify Even Slight Discrepancies in Listed Facility Locations Now.

The validation edits require that facility addresses listed on claims be exact matches to the addresses listed on PECOS or Form CMS-855. Even slight discrepancies will result in a claim denial. Examples of such discrepancies may include spelling variations such as “Road” versus “Rd.” or “Suite” versus “Ste.” Other examples of discrepancies may include slight spelling errors or mismatched suite numbers. Notably, as discussed in a previous legal alert, even different suites within the same building will be treated as distinct facility locations for purposes of the billing rules, which is why CMS is seeking this specificity with the validation edits. CMS issued instructions to MACs and others to make the practice location address screen received from PECOS available to providers in the direct data entry (DDE) system. Accordingly, starting this month, a practice location screen will be available in DDE, and providers should compare their practice locations available on the DDE screen to that listed in PECOS to ensure it exactly matches the addresses submitted on claims.


2. If Discrepancies Exist, Correct Submitted Claims or Immediately Submit a Change Form CMS‑855 Enrollment Application.

If discrepancies exist in listed facility addresses on submitted claims, providers can make the necessary corrections directly in DDE. These corrections can be made in the DDE MAP 171F screen. Alternatively, if the addresses are correct on DDE but the claim(s) submitted by the provider includes a discrepancy, the provider should ensure it changes its claim system to include the enrolled address. If, however, providers need to add a new or correct an existing practice location address in PECOS, they will need to submit a new or change Form CMS-855 enrollment application in PECOS. Providers should take immediate corrective action when necessary to avoid delays in claim processing. Additionally, providers should note that all rules about excepted PBDs continue to exist. For example, if a location is a new off-campus location, it will not receive the same reimbursement as grandfathered hospital-based PBDs.


3. Ensure That Billing Staff Is Aware of Address Listing Protocols.

Once a provider confirms all addresses are appropriate, providers should ensure that CMS rules and protocols are followed for including addresses on all future claim forms. It may be necessary to educate billing staff, as well as create additional protocols in a provider’s billing process, as CMS has implemented varying protocols based on where services are rendered. For example, if all services rendered on a claim are from a billing provider’s single address, providers will fill out a different section of the DDE, as opposed to when the services rendered on the claim stem from multiple locations. For more information on specific protocols, providers should review the CMS publication “Activation of Systematic Validation Edits for OPPS Providers with Multiple Service Locations.”

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Providers should closely examine, review and continue to monitor their systems to ensure accuracy in billing. This includes easily missed but correctable information such as the facility’s address and suite number. Providers must stay vigilant or, in the case of hospital outpatient departments, face costly denied claims. To discuss potential implications for non-excepted PBDs, please consult one of the authors.