Critical Access Hospitals, it’s time to double-check your billing setup. On July 1, 2025, the Centers for Medicare & Medicaid Services (CMS) activated a new billing edit that could cause professional claims to hit a wall—unless you've got your PECOS assignments in order.

This update specifically affects CAHs billing under Method II, where hospitals receive payment for both the technical and professional components of outpatient services on a single institutional claim. The twist? CMS will now require that the attending or rendering provider listed on these claims be formally reassigned to your hospital in PECOS. No reassignment, no reimbursement.

Here’s what you need to know—and how to make sure your billing doesn’t miss a beat.

Method II Billing

CAHs that choose Method II can streamline reimbursement by submitting a single claim for outpatient services that includes both the hospital’s and the physician’s components. It’s efficient, widely used, and particularly valuable for rural hospitals managing lean teams and tight budgets.

But this method comes with a responsibility: ensuring the professional component is backed by proper documentation—especially when it comes to provider affiliations.

What Changed on July 1, 2025?

The CMS billing edit will deny professional claims if the provider listed isn't properly reassigned to the hospital in PECOS (the Provider Enrollment, Chain, and Ownership System). This edit introduces an automated check that verifies whether that reassignment exists in the system.

If CMS can’t confirm the provider-hospital link, the professional portion of the claim will be kicked back.

Why Reassignment Matters in PECOS

In PECOS terms, reassignment means a physician has formally agreed to assign their Medicare payments to the hospital. This arrangement needs to be documented in PECOS to validate that the hospital is entitled to receive the professional fee.

If the provider is practicing at the CAH but hasn’t filed or updated this reassignment, claims are at risk—regardless of how long they’ve been on staff.

What Could Go Wrong (and How to Prevent It)

Without verified reassignment:

• Your professional claims will be denied.
• Your cash flow could take a serious hit.
• Your team will spend extra hours tracking down fixes and submitting corrections.

To avoid these issues, hospitals should take action now:

1. Review your Method II billing roster to identify all impacted providers.
2. Log into PECOS and confirm reassignment is on file for each.
3. Assist providers with the CMS-855R form if updates are needed.
4. Train your billing staff to catch and flag potential PECOS mismatches before claims go out the door.

Final Thoughts

The July 1, 2025, CMS edit may seem like a small technical change, but it carries major financial implications for CAHs using Method II billing. Proactive PECOS verification is essential to keep your professional claims flowing smoothly. Ensuring compliance now will save time, reduce rework, and protect revenue down the line.

Take Control of Your Revenue

Whether you’re running a lean front-office team or navigating a hybrid payment model, MEDTEAM can help you reclaim revenue and build a smarter, more resilient future. Contact us today.