Place of Service Impacts Payment for Soft Tissue Excision

According to the Medicare Physician Fee schedule (MPFS), some procedures have separate rates for physician services when provided in a facility (hospital, out-patient surgery center) and non-facility (office) settings. CMS furnishes both rates in the MPFS Data Base (MPFSDB) update. The rate, facility or non-facility, that a physician service is paid under the MPFS is determined by the Place of Service (POS) code that is used to identify the setting where the beneficiary received the face-to-face encounter with the physician, nonphysician practitioner (NPP) or other supplier. In general, the POS code reflects the actual place where the beneficiary receives the face-to-face service and determines whether the facility or non-facility payment rate is paid. By reviewing the MPFSDB it can be determined if a specific procedure when provided in the office setting, place of service 11, is eligible for reimbursement, and if payment is allowed, at what rate.

MPFSDB RVU example

Procedures identified in the MPFSDB with the N/A flag are considered rarely or never performed in the office setting. When the N/A flag populates this field, the local carrier determines if the procedure will be allowed when performed in POS 11.

2019 Pricing information for Chicago IL

If the procedure is allowed when performed in the office setting, payment will be at the facility rate. This means that the allowed amount for the service will be less the practice expense (PE) portion of the fee schedule calculation. Practice expense is the cost of the procedure not related to physician labor (i.e., equipment, supplies, office space cost). Cost that the practice would not incur when the procedure is performed in the facility setting.

Although your local Medicare Administrative Contractor may allow payment for these services, some private and commercial payers require prior authorization, which is not a guarantee of payment, and some may disallow the procedure as not appropriate in the non-facility setting. When providing certain soft tissue excisions or biopsies in the office setting, contact the payer and obtain prior authorization for the procedure when required by the carrier policy. While prior authorization is not a guarantee of payment, appealing denials of these services has a higher rate of success if prior authorization is received. When appealing a denied claim notes should indicate that CMS states it is “rarely or never performed” in a non-facility setting, but it was medically appropriate and necessary in this scenario.

The resource tool below identifies which soft tissue excisions and soft tissue excisional biopsies are designated as not applicable or “rarely or never performed in the non-facility setting”. The Medicare Physician Fee Schedule (MPFSDB) is available at: https://www.cms.gov/apps/physician-fee-schedule/search/search-criteria.aspx