The healthcare business has changed a lot in the past decade. One change is that instead of creating one giant hospital facility, providers now try to expand their reach by opening clinics, therapy centers, and specialty offices that are miles away from the main facility. However, a lot of the time, the insurance claims for all these clinics are billed under the same Medicare number. This makes the billing process very complex.
To simplify this process, the PN modifier was introduced, and it is one of the most important codes in medical billing. Many billers learn about this modifier when they have already received a string of claim returns, overpayment notices, or audit flags.
That’s why we have created this detailed guide on PN. We hope that by the end of this guide, you will have all the necessary information to use this modifier correctly. So, let’s start.
PN Modifier – Description
The PN modifier is defined as:
“Non-excepted service provided at an off-campus, outpatient, provider-based department of a hospital.”
Short as it appears, the definition has a lot of depth. So, let’s break it down in detail.
Before we can discuss the actual modifier, it is first important to understand what a provider-based department (PBD) is. In simple terms, a PBD is a clinic or outpatient facility that is structurally, financially, and operationally integrated with a hospital. The clinic also operates with the same Medicare number as the hospital’s. When a PBD is located more than 250 yards from the hospital’s main buildings, CMS classifies it as an off-campus PBD.
The 250-yard limit is actually one of the defining features of the PN modifier, because anything within this limit is considered on-campus and is not subject to the rules of PN.
Another important term to understand in the definition is “non-excepted”. Let’s explain this in a simple way. The phrase “non-excepted” refers to all off-campus PBDs that were not already billed under the Outpatient Prospective Payment System (OPPS) as of November 2, 2015. In other words, any off-campus PBD that started operations after this date is called non-excepted. In contrast, PBDs that were already billing under OPPS before this date are called “excepted”.
Now that we have explained the definition in parts, let’s discuss its purpose. Actually, from the reimbursement point of view, the impact of PN is negative. How? Well, when you append this modifier to a claim, the reimbursement is calculated using the Physician Fee Schedule (PFS), not the OPPS. And the PFS rate is approximately 40% of the OPPS rate.
Appropriate Use Cases for PN Modifier
Here are some real-world scenarios in which modifier PN can be used:
Scenario 1
Suppose a hospital opens a new primary care clinic. It was established in 2022 and is located about 2 miles from the main hospital building. The clinic operates under the hospital’s Medicare provider number. The billing department uses the UB-04 claim form to bill the services. Since this new clinic is beyond the 250-yard limit and was established years after November 2, 2015, it qualifies as a non-excepted off-campus PBD.
Now, suppose that a patient with hypertension comes to this clinic for a checkup. After the checkup, the billing team must append the PN modifier to the claim line to explain the appropriate service setting and collect reimbursement for non-excepted services from that site.
Scenario 2
Suppose a hospital system opens a dedicated outpatient rehabilitation center three miles from its main facility in 2019 to meet growing demand for physical therapy and occupational therapy services. The center operates as a non-excepted provider-based department under the hospital’s Medicare enrollment.
For each claim line billed for non-excepted outpatient physical therapy services rendered at this location, the center’s billing team must append the PN modifier. However, the modifier will be appended only to the facility/institutional claims.
Accurate Usage Guidelines for PN Modifier
Now that we have clarified what the PN modifier is, here are some additional guidelines that will help you use this modifier correctly and avoid any errors. Take a look:
Know When PN Must Not Be Used
As we have already explained, PN is used only for off-campus, non-excepted outpatient PBDs. There are three types of locations for which PN must never be used:
- Any PBD located within 250 yards of the hospital’s main building.
- All services furnished in a dedicated emergency department, whether located on or off campus, are classified as excepted. So, never use PN for off-campus emergency departments.
- Excepted off-campus PBDs.
Ensure PECOS Enrollment and Address Accuracy
Every off-campus outpatient PBD must be enrolled in the Provider Enrollment, Chain, and Ownership System (PECOS) through the CMS-855A enrollment form before the team can bill for services at that location.
Once enrolled, the service facility address reported on the UB-04 institutional claim must be an exact character-for-character match to the address listed in PECOS.
Report PN on Every Applicable Claim Line
The PN modifier must be reported on each claim line on the UB-04 that contains a HCPCS code for services that are provided at a non-excepted off-campus PBD.
Final Thoughts on PN Modifier
We have finally reached the end of this guide. We understand that this is a lot of information to take in. So, let’s quickly recap the important points that we discussed in this guide:
- The PN modifier is used to identify services provided at “non-excepted” off-campus, outpatient, provider-based departments.
- When you use this modifier, the payment is calculated using the PFS, not the OPPS. This payment is approximately 40% less than OPPS.
- Facilities that use this modifier must be enrolled in the PECOS.
With that said, medical billing can be very confusing, and if you don’t have the right tools and experience, claim denials can eat up your revenue. That’s why it is better to opt for outsourced medical billing and coding services. Many expert companies like NeuraBill offer such services with guaranteed results.
