Starting July 1, 2025, Critical Access Hospitals (CAHs) that bill under Method II will face a new billing claim edit. CMS is implementing claim edits to verify that practitioners are correctly reassigned to the hospital’s enrollment. Facilities that do not comply risk payment disruptions for professional claims. Here’s what’s changing, why it matters, and how CAHs can prepare. 

What is Method II Billing? 

Method II billing allows CAHs to submit claims for outpatient professional services provided by practitioners on CAH Claim form UB-04 instead of the 1500 Form. The outpatient professional services will be paid at 115% of the physician fee schedule amount. This approach can simplify billing and optimize reimbursements for CAHs. However, under CMS guidelines, practitioners who bill through Method II must be officially associated or "reassigned" to the hospital's enrollment. 

While the reassignment requirement has existed for years, enforcement has been limited. That will change starting July 1, 2025. 

What’s Changing on July 1, 2025? 

Effective July 1, CMS will implement a claim edit for Method II professional claims. This new edit will verify that the practitioner is properly reassigned to the hospital's Critical Access Hospital enrollment in PECOS (Provider Enrollment, Chain, and Ownership System). The purpose of the new claim edit is to detect and prevent duplicate billing of professional claims from CAHs and physicians with the same date of service, beneficiary, and procedure information. Overpayments have occurred in the past because Medicare claims’ systems have not been programmed to detect when a CAH submits a claim for reimbursement for professional services when the physician has reassigned their billing rights or when providers submit a claim for reimbursement when they have reassigned their billing rights to the CAH. 

This change will enhance CMS systems’ edits to detect and prevent duplicate payments for CAHs and health care professionals 

If a reassignment is missing, the claim may be denied. For full details, you can view the CMS Transmittal 13041. 

Previously, reassignment to the CAH enrollment was only required for Electronic Health Record (EHR) reporting. Going forward, reassignment will be mandatory for claims adjudication. 

Why Facilities Must Act Now 

Facilities should review their reassignments of practitioners to CAH enrollments. Reviewing and updating practitioner enrollments now will help avoid payment delays and denials later.  

For broader information about Critical Access Hospital enrollment requirements, you can visit the CMS Critical Access Hospital Center. 

Stay on top of CMS Changes with Lutz 

Staying ahead of CMS regulatory changes is crucial to maintaining steady cash flow and operational efficiency. While the new Method II billing edits may seem like a technical adjustment, they carry significant financial implications for Critical Access Hospitals. Conducting a thorough review of your practitioner enrollments now can help avoid costly payment interruptions down the road. 

At Lutz, we specialize in helping healthcare organizations confidently navigate operational, financial, and regulatory challenges. If you have questions about this new billing requirement or need assistance reviewing your facility’s enrollments, contact us to learn how we can help.