Reporting place of service (POS) codes

Physicians 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. Physicians 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 physician services:

• Practice expense (reflects overhead costs involved in providing service(s))
• Physician work
• Malpractice insurance

To account for the increased practice expense physicians incur by performing services in their offices, Medicare reimburses physicians a higher amount for services performed in their offices (POS code 11) than in an outpatient hospital (POS 22-23) or an ambulatory surgical center (ASC) (POS 24). Therefore, it is important to know the POS also plays a factor in the reimbursement.

Note: Check with individual payers (e.g., Medicare, Medicaid, other private insurance) for reimbursement policies regarding POS codes.

Important facts when filing a claim to Medicare

• The POS is a required field, entered in the 2400 Place of Service Code loop (segment SV105) of the 837P electronic claim or Item 24B on the CMS-1500 paper claim

• The name, address and zip code of where the service(s) were actually performed is required for all POS codes, and is entered in Item 32 on the CMS 1500 claim form or in the corresponding loop on its electronic equivalent

• Must specify the correct location where the service(s) is performed and billed on the claim, since both the POS and the locality address are components of the MPFS

• If the POS is missing, invalid or inconsistent with procedure code on claim form it will be returned as unprocessable (RUC)

• For example, POS 21 (inpatient hospital) is not compatible with procedure code 99211 (Establish patient office or other outpatient visit)

Helpful hints for POS codes for professional claims

• 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

Site of Service Payment Differential

Under the Medicare Physician Fee schedule (MPFS), some procedures have separate rates for physicians’ services when provided in facility and nonfacility settings. The CMS furnishes both rates in the MPFSDB update.

The rate, facility or nonfacility, that a physician service is paid under the MPFS is determined by the Place of service (POS) code that is used to identify the setting where the beneficiary received the face-to-face encounter with the physician, nonphysician practitioner (NPP) or other supplier. In general, the POS code reflects the actual place where the beneficiary receives the face-to-face service and determines whether the facility or nonfacility payment rate is paid. However, for a service rendered to a patient who is an inpatient of a hospital (POS code 21) or an outpatient of a hospital (POS code 22), the facility rate is paid, regardless of where the face-to-face encounter with the beneficiary occurred. For the professional component (PC) of diagnostic tests, the facility and nonfacility payment rates are the same – irrespective of the POS code on the claim. See chapter 13, section 150 of this manual for POS instructions for the PC and technical component of diagnostic tests.

The list of settings where a physician’s services are paid at the facility rate include:

*Inpatient Hospital (POS code 21);

*Outpatient Hospital (POS code 22);

*Emergency Room-Hospital (POS code 23);

*Medicare-participating ambulatory surgical center (ASC) for a HCPCS code included on the ASC approved list of procedures (POS code 24);

*Medicare-participating ASC for a procedure not on the ASC list of approved procedures with dates of service on or after January 1, 2008. (POS code 24);

*Skilled Nursing Facility (SNF) for a Part A resident (POS code 31);

*Hospice – for inpatient care (POS code 34);

*Ambulance – Land (POS code 41);

*Ambulance – Air or Water (POS code 42);

*Inpatient Psychiatric Facility (POS code 51);

*Psychiatric Facility — Partial Hospitalization (POS code 52);

*Community Mental Health Center (POS code 53);

*Psychiatric Residential Treatment Center (POS code 56); and

*Comprehensive Inpatient Rehabilitation Facility (POS code 61).

Physicians’ services are paid at nonfacility rates for procedures furnished in the following settings:

*Pharmacy (POS code 01);

*School (POS code 03);

*Homeless Shelter (POS code 04);

*Prison/Correctional Facility (POS code 09);

*Office (POS code 11);

*Home or Private Residence of Patient (POS code 12);

*Assisted Living Facility (POS code 13);

*Group Home (POS code 14);

*Mobile Unit (POS code 15);

*Temporary Lodging (POS code 16);

*Walk-in Retail Health Clinic (POS code 17);

*Urgent Care Facility (POS code 20);

*Birthing Center (POS code 25);

*Nursing Facility and SNFs to Part B residents (POS code 32);

*Custodial Care Facility (POS code 33);

*Independent Clinic (POS code 49);

*Federally Qualified Health Center (POS code 50);

*Intermediate Health Care Facility/Mentally Retarded (POS code 54);

*Residential Substance Abuse Treatment Facility (POS code 55);

*Non-Residential Substance Abuse Treatment Facility (POS code 57);

*Mass Immunization Center (POS code 60);

*Comprehensive Outpatient Rehabilitation Facility (POS code 62);

*End-Stage Renal Disease Treatment Facility (POS code 65);

*State or Local Health Clinic (POS code 71);

*Rural Health Clinic (POS code 72);

*Independent Laboratory (POS code 81);and

*Other Place of Service (POS code 99).