Mitigate Damage from PECOS Denial Edits

CMS instructed contractors to turn on Phase 2 denial edits on January 6, 2014.  These edits will check the  following claims for a valid individual National Provider Identifier (NPI) and deny the claim when this information is invalid:


• Claims from clinical laboratories for ordered tests;
• Claims from imaging centers for ordered imaging procedures;
• Claims from suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) for ordered DMEPOS; and
Claims from Part A Home Health Agencies (HHAs).


Warning: Remember that you can't merely adjust claims that fail the edit. Instead, you have to file an appeal.


Background: Phase 2 of PECOS edits hit on Jan. 6, and they'll now slap you with costly deni­als as opposed to less burdensome returned claims when you have invalid ordering/referring physician information. The system will now deny claims when the doctor isn't in the Provider Enrollment, Chain, and Ownership System (PECOS) file or when the name doesn't match.


Follow These Steps to Comply

If you want to ensure that you avoid these types of denials, take these six steps to minimize cash flow delays and financial losses due to PECOS edit rules:


1.  Check and recheck. CMS posts a "Medicare Ordering and Referring File" on its website with the full list of "the National Provider Identifier (NPI) and legal name (last name, first name) of all physicians and non-physician practitioners who are of a type/specialty that is legally eligible to order and refer in the Medicare program and who have current enrollment records in Medicare (i.e., they have enrollment records in PECOS)," CMS explains on the site. The website is at CMS updates the report weekly, it says in MLN Matters article SE1305.

Even if you've checked this list in the past, you shouldn't stop referring to it when you want to confirm an ordering/referring doctor's NPI. Because the years have worn on with no PECOS edit phase 2 implementation, some providers may have let physician PECOS checks fall to the bottom of their to-do list. In fact, now is the time to step up PECOS file checking. Pay attention to which physicians are sending referrals and ordering services and verify that those physicians are eligible to do so and are currently enrolled in PECOS.

The claims denials generated by the edits should be ample motivation. You need to be proac­tive in verifying this information in advance of billing so that claims don't get denied.


2.  Spur enrollment. If you find your doctors don't have a record in PECOS, you'll need to get them to enroll in it or you won't be able to get paid.

Resource: Links to educational Medicare articles about enrolling in PECOS are in the "Addi­tional Information" section at the end of the MLN Matters article at


3.  Match the PECOS file exactly. If your claim calls a physician "Jack" and he's listed as "John" in the PECOS file, it will get shot down. Also, don't use credentials such as "Dr." in the name field, CMS advises.

Tip: On paper claims, be sure to list first name first and last name last in item 17.

Don't let software differences trigger unnecessary edits. Make sure that the physician informa­tion that is on file in the providers' software systems and is being coded on the claim for enrolled physicians matches the PECOS information, including both the NPI and physician name.


4.  Use the right NPI. "Ensure that the name and the NPI you enter for the Ordering/Referring Provider belong to a physician or non-physician practitioner and not to an organization, such as a group practice that employs the physician or non-physician practitioner who generated the order or referral," CMS instructs.


5.  Know the rules for exceptions. Use the teaching physician's information for interns and residents, CMS directs. The exception is for doctors in states that license their residents. They may enroll in PECOS on their own.


Department of Veterans Affairs, Public Health Service, and Department of Defense/ Tricare physicians do not get an exemption from PECOS. "These physicians and non-physi­cian practitioners will need to enroll in Medicare in order to continue to order or refer items or services for Medicare beneficiaries," CMS tells providers in the MLN Matters article.


6.  Check current RAs — and take action. You can get an idea of what your denial rate will be by checking out your past remittance advices. You may not have noticed PECOS edit- related messages because the claims still process. But the system previously included code N272 — Missing/incomplete/invalid other payer attending provider identifier — when the claim failed the edit.

If any of your claims were being paid with remark code N272, then this is a clear indication there is a problem with the physician information coded on the claim compared to the physi­cian information on file in PECOS.


Act now to avoid problems.


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