Friday, April 22, 2016

How ZIP code determines the Fee schedule amounts

ZIP Code Determines Fee Schedule Amounts

The POP determines the basis for payment under the FS, and the POP is reported by its 5-digit ZIP Code. Thus, the ZIP Code of the POP determines both the applicable GPCI and whether a rural adjustment applies. If the ambulance transport required a second or subsequent leg, then the ZIP Code of the POP of the second or subsequent leg determines both the applicable GPCI for such leg and whether a rural adjustment applies to such leg. Accordingly, the ZIP Code of the POP must be reported on every claim to determine both the correct GPCI and, if applicable, any rural adjustment. Part B contractors must report the POP ZIP Code, at the line item level, to CWF when they report all other ambulance claim information. CWF must report the POP ZIP Code to the national claims history file, along with the rest of the ambulance claims record.

A. No ZIP Code

In areas without an apparent ZIP Code, it is the provider’s/supplier’s responsibility to confirm that the POP does not have a ZIP Code that has been assigned by the USPS. If the provider/supplier has made a good-faith effort to confirm that no ZIP Code for the POP exists, it may use the ZIP Code nearest to the POP.

Providers and suppliers should document their confirmation with the USPS, or other authoritative source, that the POP does not have an assigned ZIP Code and annotate the claim to indicate that a surrogate ZIP Code has been used (e.g., “Surrogate ZIP Code; POP in No-ZIP”). Providers and suppliers should maintain this documentation and provide it to their contractor upon request.

Contractors must request additional documentation from providers/suppliers when a claim submitted using a surrogate ZIP Code does not contain sufficient information to determine that the ZIP Code does not exist for the POP. They must investigate and report any claims submitted with an inappropriate and/or falsified surrogate ZIP Code.

If the ZIP Code entered on the claim is not in the CMS-supplied ZIP Code File, manually verify the ZIP Code to identify a potential coding error on the claim or a new ZIP Code established by the U.S. Postal Service (USPS). ZIP Code information may be found at the USPS Web site at, or other commercially available sources of ZIP Code information may be consulted.

• If this process validates the ZIP Code, the claim may be processed. All such ZIP Codes are to be considered urban ZIP Codes until CMS determines that the code should be designated as rural, unless the contractor exercises its discretion to designate the ZIP Code as rural. (See Section §20.1.5.B – New ZIP Codes)

• If this process does not validate the ZIP Code, the claim must be rejected as unprocessable using message N53 on the remittance advice in conjunction with reason code 16.

B. New ZIP Codes

New ZIP Codes are considered urban until CMS determines that the ZIP Code is located in a rural area. Thus, until a ZIP Code is added to the Medicare ZIP Code file with a rural designation, it will be considered an urban ZIP Code. However, despite the default designation of new ZIP Codes as urban, contractors have discretion to determine that a new ZIP Code is rural until designated otherwise. If the contractor designates a new ZIP Code as rural, and CMS later changes the designation to urban, then the contractor, as well as any provider or supplier paid for mileage or for air services with a rural adjustment, will be held harmless for this adjustment.

Providers and suppliers should annotate claims using a new ZIP Code with a remark to that effect. Providers and suppliers should maintain documentation of the new ZIP Code and provide it to their contractor upon request.

If the provider or supplier believes that a new ZIP Code that the contractor has designated as urban should be designated as rural (under the standard established by the Medicare FS regulation), it may request an adjustment from the A/MAC or appeal the determination with the B/MAC, as applicable, in accordance with standard procedures.

When processing a claim with a POP ZIP Code that is not on the Medicare ZIP Code file, contractors must search the USPS Web site at, other governmental Web sites, and commercial Web sites, to validate the new ZIP Code. (The Census Bureau Web site located at contains a list of valid ZIP Codes.) If the ZIP Code cannot be validated using the USPS Web site or other authoritative source such as the Census Bureau Web site, reject the claim as unprocessable.

C. Inaccurate ZIP Codes

If providers and suppliers knowingly and willfully report a surrogate ZIP Code because they do not know the proper ZIP Code, they may be engaging in abusive and/or potentially fraudulent billing. Furthermore, a provider or supplier that specifies a surrogate rural ZIP Code on a claim when not appropriate to do so for the purpose of receiving a higher payment than would have been paid otherwise, may be committing abuse and/or potential fraud.

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