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PECOS—It Ain’t Just a River in Texas!

“PECOS” has been talked about for many years in the U.S. Healthcare Industry.  It’s a very serious issue for any health care provider in the U.S., but I am sure many have no idea what it means or how it applies to them, their businesses or referral sources and prescribers.

PECOS, CMS’ “Provider Enrollment, Chain and Ownership System”, has been talked about a lot in the U.S. Healthcare industry since its initial introduction in 2003, and the introduction of its internet-based version in 2009.  It’s a very serious issue for any health care provider in the U.S., but I’ve learned many providers have no idea what it means or how it applies to them, their businesses or referral sources and prescribers.  Even though CMS has delayed the May 1 registration deadline, it’s vital that all Durable Medical Equipment (DME) providers become educated on PECOS.  DME’s who fail to follow the proper course may, as in stretches of the Pecos River in New Mexico and Texas, find themselves navigating troubled waters.

Some basics: The intent for PECOS was for CMS to create one gigantic database where information on ALL Medicare providers exists.  According to the website, “Internet-based PECOS will allow physicians, non-physician practitioners and provider and supplier organizations to enroll, make a change in their Medicare enrollment, view their Medicare enrollment information on file with Medicare, or check on status of a Medicare enrollment application via the Internet.”

Historically Medicare provider enrollment has been handled haphazardly.  For DME providers, there has always been one entity that handled the process (the National Supplier Clearinghouse, NSC), albeit we have questioned the quality and accuracy of the NCS process – especially when you consider the numerous provider (PTAN) numbers that have been issued over the years to “questionable” providers– it was a better system than previous approaches because there was one entity responsible for maintaining all DME provider enrollments.

In terms of other providers – and think of the volumes of types: hospitals, doctors, labs, home health agencies, etc. – the process was much more fragmented.  For many, the carrier in a state that processed the claims for that entity also enrolled and maintained the providers.   For example, in North Carolina, CIGNA was the physician Part B payer and therefore handled that enrollment process and Palmetto GBA (BCBSSC) handled the hospitals.  Similarly, for a home health agency in Alaska, the carrier is Noridian Administrative Services.  As a result, there are numerous databases of Medicare providers based both on the type of service they provide and their geographic location.  For example, if you had a doctor that was part of a medical group that had offices in two adjacent states, the doctor could end up with multiple provider numbers as an individual physician, as part of the medical group, in each state, etc.

OK, so who cares?

Well, CMS decided there needed to be one repository of ALL Medicare providers, regardless of the type of service they provide or their location, and PECOS was created.  As of this moment in time, the process for enrollment hasn’t really changed.  Essentially all entities still enroll with local carriers and the National Supplier Clearinghouse (NSC) exists for DME providers.  What it does mean is that all of the carriers and the NSC upload data to a central database called PECOS.

The PECOS database is intended to be the source of all Medicare providers, everywhere.  Once it is completely created it will probably be used to track activity across the spectrum of healthcare so that Medicare can really know who is providing what types of services and where.

So now you might ask, why should I care?

One of the goals of PECOS was to make sure only enrolled Medicare providers could refer patients for Medicare services.  Quite frankly, it makes sense.  How can an MD order a wheelchair for a patient if they are not even a Medicare enrolled physician?  So now you can see how PECOS can quickly have an impact on the providers of durable medical equipment and the end users that need such equipment.

So now that you understand the potential benefits of PECOS, what are the potential “troubled waters?”

Here is the deal:  Sometime after May 1, 2013 or the delayed deadline that CMS announces, Medicare will start denying claims for DME if the prescribers NPI (National Provider Identifier) that is referenced on the claim is not found in the PECOS database.

Many prescribers have numerous NPI numbers, for each location where they treat patients, for the group practice itself, etc. and they (or their staffs) are comfortable using different NPI numbers based upon these geographic or group variations.  Once PECOS takes effect, however, a DME provider must reference the individual prescriber’s NPI on the claim, not the group AND the name configuration must exactly match the PECOS record.  In other words ‘Bob’ Baker may need to be Robert Baker.   Based upon early reports of enrollment patterns, the physician community seems to be the most under-informed of the importance of enrollment, and lags other segments significantly.  Unfortunately for our industry, DME may end up paying the price for their “casual” attitude.  For example:  There may be physicians out there who are considered hospitalists (employed hospital staff members) that never bill directly for their services.  These physicians had no reason to enroll in PECOS and even though they participate in ordering DME for hospital discharges, the DME company cannot get paid based on their order as of the new deadline established by CMS.

The theory is that the majority of current mismatches in the claims approval process now are due to this, wrong NPI #s, wrong names, and unregistered referrals… but who knows for sure.

What we do know is that claims will start being denied after the new deadline for DME suppliers.

Many suppliers have been tracking their error rate as remark codes have been reflected on claims for many months to let the provider know that the referenced ordering prescriber is not in PECOS.  In other words, leading up to the new deadline, currently Medicare has been paying claims, but they put a comment code of N264 or N265 that indicates “missing/incomplete/invalid ordering physician provider name” or “missing/incomplete/invalid ordering physician primary identifier”.  This translates into “Doctor is NOT enrolled in PECOS”.  As you can imagine, most providers are so busy responding to audits and real denials that few have had much time to pay particular attention to this notice.

At this point it is difficult to tell what percentage of claims providers have that they will deny.  I have heard numbers as low as 2% and as high as 9%.  While this seems low, even 5% of claims can mean hundred of denials a month; AND that is on top of all other denials.

Impact to the industry?

Initially more denials!  All of those remark codes that were or were not looked at will now be denial after the new deadline, at which time providers must pay attention OR not get paid.  Not only is this an issue for new referrals, but also for all of a provider’s existing patients where this remark code has been indicated on claims!  Claims for a capped rental that has been paid in the past could still be denied as of the new deadline.

What HME Providers Need To Do.

1.  For existing patients, providers need to ensure the NPI numbers referenced in their databases and the prescriber names are exactly correct!  If they aren’t correct, providers need to get them corrected and their systems updated prior to filing claims in May.

2.  For new referrals, providers need to establish a process at intake to verify that the ordering prescriber is indeed enrolled in PECOS.  There are many websites ( as an example) that provide this service, and most software applications have a program to check.  If the prescriber is not enrolled, providers need to establish a process to seek another physician or to decline to service the patient.

3.  Providers also need to establish a process for denied claims.  At this point CMS has not issued direction on how the claims will be denied.

  • Can providers bill patients?  Unknown…

  • Can providers use an ABN and hold a patient accountable?  Unknown���

  • Can providers rebill once a prescriber enrolls?  Unknown…

Clearly, CMS needs to issue direction to the DME MACs on what and how they will handle these claims.  In the interim since we really don’t know what the options are and how the carriers will handle PECOS-related issues, providers need to be super-diligent in getting ready for whatever final guidelines CMS publishes.  Until this direction is issued, providers need to clean up databases, develop procedures to avoid PECOS-related denials on new orders being placed after the new deadline, and develop a strategy to handle the volumes of denials they will be faced with after this critical date. For up to date information on the new PECOS deadline, visit

By – Kim Brummett

April 2013

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