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Why accurate reimbursement with place of service coding matters

Inaccurate information on claims frequently leads to incorrect reimbursement and hassles when trying to fix errors. How can a clinical practice ensure claims are submitted correctly to minimize errors in reimbursement?  

As we already know, physicians and other practitioners (collectively "providers") that accept Medicare are paid for services according to the Medicare physician fee schedule (MPFS).

This schedule is based on a payment system that includes three major categories, which drive the reimbursement for providers services:

  1. Practice expense (reflects overhead costs involved in providing service(s))
  2. Provider work
  3. Malpractice insurance

Providers are required to report the place of service (POS) on all health insurance claims they submit to Medicare Part B contractors. The POS code is used to identify where the procedure is furnished.

To account for the increased practice expense providers incur by performing services in their offices, Medicare reimburses providers a higher amount for services performed in their offices (POS code 11) than in an outpatient hospital (POS 22) or an ambulatory surgical center (ASC) (POS 24). 

Therefore, it is important to know the POS also plays a factor in the reimbursement.

The correct place-of-service code ensures that Medicare does not incorrectly reimburse the physician for the overhead portion of the service when the service is performed in a facility setting. (1)

Application of POS coding

Listed below is a partial list of place of service codes and descriptions. (2)

Service Code(s)

Place of Service Name

Place of Service Description



 The location where health services and health related services are provided or received, through a telecommunication system.  (Effective January 1, 2017)



Location, other than a hospital, skilled nursing facility (SNF), military treatment facility, community health center, State or local public health clinic, or intermediate care facility (ICF), where the health professional routinely provides health examinations, diagnosis, and treatment of illness or injury on an ambulatory basis.



Location, other than a hospital or other facility, where the patient receives care in a private residence.


Assisted Living Facility

Congregate residential facility with self-contained living units providing assessment of each resident's needs and on-site support 24 hours a day, 7 days a week, with the capacity to deliver or arrange for services including some health care and other services.  (Effective October 1, 2003)


Mobile Unit

A facility/unit that moves from place-to-place equipped to provide preventive, screening, diagnostic, and/or treatment services.  (Effective January 1, 2003)


Off Campus-Outpatient Hospital

A portion of an off-campus hospital provider based department which provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization.  (Effective January 1, 2016)


Inpatient Hospital

A facility, other than psychiatric, which primarily provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services by, or under, the supervision of physicians to patients admitted for a variety of medical conditions.


On Campus- Hospital Outpatient

A portion of a hospital’s main campus which provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization.  (Description change effective January 1, 2016)


Ambulatory Surgical Center

A freestanding facility, other than a physician's office, where surgical and diagnostic services are provided on an ambulatory basis.


Skilled Nursing Facility

A facility which primarily provides inpatient skilled nursing care and related services to patients who require medical, nursing, or rehabilitative services but does not provide the level of care or treatment available in a hospital.


Nursing Facility

A facility which primarily provides to residents skilled nursing care and related services for the rehabilitation of injured, disabled, or sick persons, or, on a regular basis, health-related care services above the level of custodial care to other than individuals with intellectual disabilities.


CMS is reminding providers and their billing agents of the importance of correctly coding the place of service and the need for appropriate controls to prevent billing Medicare with incorrect place of service codes.

"It is extremely important that you correctly code the place of service on Part B claims."

"Using non-facility place-of-service codes for services that are actually performed in hospital outpatient departments often results in overpayments and the need to correct them retroactively.

You must insure you have adequate controls in your (or your billing agent's) billing routines to identify potential place-of-service coding errors." (1)

Helpful Hints

  • Implement internal control systems to prevent incorrect billing of POS codes
  • Keep informed on Medicare coverage and billing requirements:  for example, billing physician's office (POS 11) for a minor surgical procedure that is actually performed in a hospital outpatient department (POS 22) and collecting a higher payment is inappropriate billing and may be viewed as program abuse
  • If the POS is missing, invalid or inconsistent with procedure code on claim form it will be returned as unprocessable (RUC)
  • Be consistent: for example, POS 21 (inpatient hospital) is not compatible with procedure code 99211 (Establish patient office or other outpatient visit)(2)

In summary:  know your place of service

Place of Service codes are a vital part of how providers, practices, clinics, or other medical entities make their money. The wrong POS code can result in hassles resulting from the wrong fee amount or an outright denial of a claim.  Provider and billing personnel education is important to ensure internal controls are established so there is clarity around POS coding. 


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We thank Julie Rhee ScM, for style editing


  1. CMS MLN Matters Number SE1104 - The Importance of Correctly Coding the Place of Service by Physicians and Their Billing Agents.
  2. CMS.GOV.

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