Important “PECOS” Update

Remember the “PECOS” concerns of a few years ago?  Doctors that were not updating their Medicare ordering information via this online service were potentially affecting referrals to DME and other services. It required all physicians and other health professionals billing Medicare to be signed up for the program through its Provider Enrollment, Chain and Ownership System, known as PECOS.  Many ignored the requirement or were not aware of it (especially older physicians).  Thus CMS stopped short of enforcing those requirements, because as many as 200,000 doctors and other health care professionals out of about 750,000 did not have enrollment records in PECOS. This would potentially result in a denial of claims for DME and many other services.  There was an outcry from the industry and, as a result, the potential “edits” (denials) were put on indefinite hold.

Here is an update (and it is good news):

CMS has released a final rule detailing the requirements for “ordering and referring” in Medicare.  As noted above, in 2009 CMS began issuing warnings for Medicare claims that failed to meet CMS’s ordering and referring criteria, including the requirement that the ordering/referring provider have an updated enrollment record in PECOS.  This rule finalized requirements that have been in development for three years.

The final rule includes these changes to some of the previous requirements:

•    CMS changed the regulatory language from requiring an enrollment in PECOS to “requiring enrollment in Medicare” — including PECOS or other legacy Medicare enrollment systems.

•    CMS removed specialist services from those that are required to list the ordering or certifying provider on the claim and meet the other criteria. This change resulted in CMS replacing the term “refer” with “certify” for the applicable items and services. The requirements in this final rule apply to ordered or certified items and services including DMEPOS, clinical laboratory and imaging services, and home health claims billed by Medicare Part B suppliers. For these claims, ordering or certifying providers must be eligible to order or certify in Medicare, their legal name and NPI must be listed on the claim, and they must have an enrollment record in Medicare. The requirements vary slightly for medical interns and residents who order or certify these items and services.

•    Residents in an accredited graduate education program also could enroll in Medicare to order services. The interim rule had excluded residents.

CMS will continue to issue warnings for claims that fail to meet these criteria, but at this point CMS will not deny claims that do not meet the criteria. In the future, CMS will begin to deny claims, but has not indicated when this will occur.


In 2010, Congress required the use of national provider identifiers for ordering and referring physicians on claims for medical equipment or services from laboratories, imaging providers and suppliers. CMS later issued an interim regulation requiring all physicians who order supplies or refer services, including those from specialists, to be enrolled in PECOS by July 2010, but CMS delayed enforcement of that rule as the agency worked to validate and update enrollment records. Enforcement would have meant that claims for items or services would be rejected unless the ordering or referring physician also was in the enrollment system, not just the physician who provided the care.

Bottom line:

•    Medicare contractors will continue to use legacy systems, not just PECOS, to determine if an ordering physician has a valid record. Both PECOS and legacy systems collect enrollment data.

•    The Medicare agency has not activated automatic edits that would deny payment for noncompliant claims from physicians and other health professionals. CMS is delaying activation indefinitely and will not turn on the edits without 60 days of advance notice.

•    The rule continues to require physicians and other professionals to use national provider identifiers on applications to enroll in Medicare and Medicaid. This allows CMS and state health agencies to link claims for services and supplies to the referring professional and check for suspicious activity. CMS expects that changes in the final rule will save the system $1.6 billion over 10 years.

“CMS officials have said the enrollment and billing changes are needed to fight Medicare fraud and protect patients. Through the enhanced enrollment process, CMS will be able to verify the credentials of health professionals who order or certify equipment and supplies — a major hub of fraudulent activity.”