On Oct. 5, 2009, the Centers for Medicare and Medicaid Services (CMS) quietly began implementing system edits intended to assure that Medicare Part B providers and suppliers bill for ordered or referred items or services only when those items or services are ordered or referred by physician and non-physician practitioners who are eligible to order/refer such services. The edits are an expansion of existing claims edits intended to meet the Social Security Act requirements for ordering and referring providers. Essentially, the law requires that a provider or supplier who bills Medicare for an item or service that was ordered or referred must show the name and unique identifier of the ordering/referring provider on the claim.
That is all well and good, but CMS has interpreted that to mean that claims that are the result of an order or a referral must contain the National Provider Identifier (NPI) and the name of the ordering/referring provider and the ordering/referring provider must be in the Medicare Provider Enrollment, Chain and Ownership System (PECOS) or in the Medicare contractor's claims processing system with the appropriate type of provider. During Phase 1 of the implementation (Oct. 5, 2009 to Jan. 3, 2010), if the ordering/referring provider is not in PECOS and is not in the claims system, the claim will continue to process and the Part B provider or supplier will receive a warning message on the Remittance Advice. During Phase 2 (Jan. 4, 2010 and thereafter), if the ordering/referring provider is not in PECOS and is not in the claims system, the claim will not be paid. It will be rejected (but not denied), which means it can be resubmitted at some point, but it cannot be appealed. For more information, you can read MedLearn Matters article 6417 on the CMS web site.
Like seemingly all Medicare policies, this one is fraught with problems. For instance, despite being enrolled in Medicare, if physicians and other health care practitioners are not in the PECOS database or in contractor files, those physicians, suppliers, and other health care practitioners to whom they refer and order services will not be paid. A physician or health care practitioner who enrolled in Medicare prior to 2003 when CMS began using PECOS will be required to re-enroll if they want to continue referring and ordering. As of July 2008, there were 793,346 physicians and other health care practitioners enrolled in Medicare. According to data from an October 2009 Office of Inspector General report, there were 559,235 physicians and other health are practitioners in PECOS. Therefore, as many as 200,000 or 30 percent of all Medicare physicians and other health care practitioners are not in PECOS and will need to re-enroll, and we all know how glacial the pace of Medicare enrollment is.
Another flaw is that some providers who commonly refer Medicare patients or order services for them do not typically enroll in Medicare. For instance, some residents may not be enrolled in Medicare but will certainly be ordering or referring providers for Medicare purposes. Likewise, dentists may be ordering/referring providers but otherwise have no reason to enroll in Medicare. CMS staff indicate that they will soon be issuing instructions to deal with the dentist issue, but one wonders why CMS didn't think to do that before it started implementing the edits in question.
Finally, physicians have no practical or convenient way to check whether the physicians or other health care practitioners who send them patients with orders or referrals are included in PECOS or other contractor enrollment records. CMS has promised to address this particular concern by making publicly available a list of eligible referral providers before January 2010, but again, one is left to wonder why they did not do so before implementing the edits. I can only conclude that CMS staff favors the "shoot first and ask questions later" approach.
In the meantime, downstream providers and suppliers of referred/ordered services/items are at risk of nonpayment, even though they are not responsible for the enrollment/reenrollment of physicians and other health care practitioners who legally order and refer patients to them for items or services. That is why the AAFP, the AMA, and 54 other organizations are advocating with CMS to:
It remains to be seen how CMS will respond to this advocacy. In the meantime, please be aware of the issue and how it may affect your Medicare claims beginning in January.
Sign up to receive FPM's free, weekly e-newsletter, "Quick Tips & Insights," featuring practical, peer-reviewed advice for improving practice, enhancing the patient experience, and developing a rewarding career.