In medical billing, providers use two-digit numbers known as Place of Service Codes (POS) to show where a patient has received care. These codes inform insurers about the setting in which the service took place, such as a clinic, hospital, or home.
Place of service codes ensure accurate reimbursements. The insurers use these codes to route claims appropriately. This helps them apply coverage rules based on the location of services. The rates of the services vary across locations. A patient treated in the office would be charged differently from a patient who was treated at the hospital.
However, the providers need to stay current with the payer-specific guidelines related to POS. That is because not all services are allowed in every location. Conducting regular audits is the key to identifying patterns of incorrect POS use.
The billing place, also known as POS, is the physical setting in which the medical service is provided to a patient, such as a hospital, office, home, or telehealth. It plays a crucial role in determining the appropriate rate of payment for a service. The place of service is also a key factor in identifying whether the service was valid or medically necessary.
For example, the provider has placed a surgical procedure under POS code 02. The payer would instantly deny the claim since POS 02 is for the telehealth services. Such costly errors show the importance of the place of services in medical billing.
Place of Service codes are the numeric form of geographical location where a medical service takes place.
Centers for Medicare & Medicaid Services (CMS) defines Place of Service code as a two-digit code that represents the physical site where healthcare services were provided to the patient.
The POS codes affect how the services are billed and reimbursed. As the healthcare services continuously evolve, the CMS regularly updates POS codes to reflect new and advanced care settings. It reflects a complete picture of the service context. Hence, it is essential for both the payers and providers to stay updated with the continuously advancing POS codes.
This ensures that the billing system stays aligned with modern care delivery.
Place of Service codes are divided into two categories:
Facility POS codes are used when the medical services are performed at a place that is not owned or operated by the provider. The entities running such settings are mostly hospitals, Ambulatory Surgical Centers (ASCs), and emergency rooms.
The payment or reimbursement of the service is split between the provider and the facility in this case.
Following are a few of the many Facility POS codes:
This code is used when a patient receives care in an urgent care facility. Such facilities are designed for immediate care, but they do not come under emergency services. They have a dedicated staff, medical equipment, and operational overhead. Therefore, POS Code 20 falls under facility settings.
POS Code 21 applies when a patient is admitted to the hospital. It is referred to as inpatient services. They have inpatient beds and support services, hence classified as a facility place of service.
When medical care is provided to the patient in a hospital setting, it comes under Place of Service Code 22. However, the patient is not admitted overnight in this case. Because of the resources, operating rooms, diagnostic equipment, and nursing staff, it falls under the category of facility place of service.
The services delivered to a patient in the hospital emergency room come under POS Code 23. These are emergency services for urgent care.
POS 24 represents the services delivered to a patient in an ambulatory surgical center. Since it is a specialized healthcare facility for outpatient surgeries, it comes under the facility’s POS.
These codes are used when the medical services take place at a location that is run by the provider themselves. The healthcare providers own the full service in the non-facility setting. They are mostly physicians who own independent clinics.
The provider gets a higher reimbursement without any separate facility fee.
Some of the examples for Non-facility POS codes are:
POS 02 is provided to the patient via telecommunication. However, this telehealth service occurs when the patient is not at home. For example, at work or any other location.
When a provider gives their healthcare services to patients in a school, it comes under POS Code 03. That is because a school does not have an institutional facility supervising its medical services. And therefore, the services provided in a school do not impact the providers’ reimbursement.
POS Code 04 applies when a provider treats patients in a homeless shelter. Such shelters do not have the structural or operational characteristics of a facility. Therefore, the costs of the services also differ from those of formal healthcare facilities.
When a patient receives telehealth services in their own home, the provider applies POS Code 10 in their medical billing.
POS code 11 applies when a patient receives healthcare services in the provider’s office. It is usually referred to as an outpatient service. Since the provider’s office does not have the same level of infrastructure and extensive medical equipment, the reimbursement rates differ. That is why it comes under a non-facility place of service.
The use of correct POS codes ensures accurate reimbursements for providers. It directly influences the amount since the insurance companies reimburse differently based on the location.
Let’s suppose a patient receives care in the provider’s office (POS 11). He will be reimbursed more compared to the patient who received outpatient hospital care (POS 22). These differences come from the different fee structures of offices and hospitals.
POS codes are important because they help providers forecast their expected reimbursement based on the location. This also avoids underpayments due to incorrect reporting of the service locations.
Correct POS codes ensure clean claims and faster payment cycles. If there is a mismatch between CPT and POS codes, it results in claim denials. The POS codes need to be aligned with the procedures for a better claim acceptance rate.
This reduces the need for resubmissions while maintaining a steadier cash flow.
Telehealth medical practices are becoming so common these days. It is important to distinguish between in-person and virtual visits for claim acceptance. POS codes for telehealth services ensure proper tracking and reimbursement of the remote services.
Place of service codes play an important role in the evolving hybrid care models. It helps the insurance companies adapt accurate payment structures for appropriate payments.
POS codes are crucial to reflect the actual location of the services. These codes are required by CMS and many private insurers. Proper coding helps maintain regulatory compliance. However, incorrect usage results in audits and fines.
Some services are only covered and reimbursed if performed in a particular setting. POS codes help identify the location of the services. This helps the insurers accept or deny the claims according to that. For example, certain infusion therapies are only reimbursed if conducted in a hospital outpatient department.
The POS coding system guides the insurance companies about plan-specific policies. Hence, this alignment also decreases the back-and-forth communication regarding patient benefits.
The accurate POS code indicates how much a patient owes to the provider. A service that the patient receives in an emergency room sometimes results in a higher copay than the same service received in an office.
Accurate POS codes also encourage transparency for patients with expected financial responsibility. It helps build trust between the providers and the patients.
POS codes are used to verify the actual location of services for fraud prevention. That is because improper use of POS codes for expensive locations increases the risk of legal consequences. Accurate use of such codes helps maintain the integrity of the provider and their practice.
Place of service codes also strengthen audit readiness by supporting billing accuracy.
The insurance companies and government agencies use POS data to make better policies and while supporting operational planning. It also helps in the future resource allocation of healthcare services.
It is important to stay up-to-date with the regularly changing service codes. Failure to use the latest codes results in denials and underpayments. The providers need to monitor:
The medical billing documentation needs to clearly reflect the physical location of the service. Moreover, the documentation for the service and method of delivery also needs to be attached for payer reviews. These details ensure medical justification during regular audits.
The telehealth services have a separate set of codes that need to be accompanied along with the modifiers. These are mostly based on the payer rules. Billing errors in telehealth services cause denials. Therefore, staying current with the changing telehealth policies is the best practice for correctly using POS codes.
Verifying POS with procedure codes is important because, in some cases, some services are not allowed in a particular setting. Mismatches trigger claim rejection, leading to a disruption in the revenue cycle of the practice.
The use of claim scrubbers helps detect inconsistencies between Place of Service codes. They reduce the chances of error before submission, resulting in a higher claim acceptance rate.
Well-informed billing staff are less likely to cause costly POS coding errors. They must be regularly trained on the latest place of service codes and the payer-specific guidelines.
To identify the recurring errors in POS code usage, regular internal audits are conducted. It helps the staff make corrective actions before they affect the practice’s reimbursement.
The accurate use of Place of Service (POS) codes is essential for clean claims and timely reimbursements. Even a small mistake leads to denials or revenue loss. Prime Doc Billing reviews the practice’s POS code usage and implements regular audits to ensure accuracy.
References:
Centers for Medicare & Medicaid Services. (2022). Place of service codes for professional claims. U.S. Department of Health & Human Services.
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