Place of Service Codes: Get Them Right to Ensure Compliance

One of the projects included in the Department of Human Services' Office of Inspector General's (OIG) 2011 work plan is a review of claims for proper place-of-service (POS) coding for physician services. These two-digit POS codes are placed on health care professional claims to indicate the setting in which a service was provided.  The Centers for Medicare & Medicaid Services (CMS) maintain POS codes used throughout the health care industry.

The topic of POS codes-mainly the high number of errors on claims--has come up several times recently in literature from CMS, and it seems to be time for physicians and their billers to revisit the policy and ensure compliance with it.

Policy and Problems
As you know, Medicare payment to a physician varies depending on where the physician performed the service. Medicare pays a physician a higher amount when a service is performed in a nonfacility setting, such as a physician's office, than it does when the service is performed in a hospital outpatient department or an ambulatory surgery center (ASCs). Incorrect coding of POS can subsequently lead to incorrect reimbursement. Examples of a few commonly used POS codes are listed in the table below.

OIG plans to continue its POS claims review in 2011 because prior studies have found a high incidence of errors.  In July, OIG released a report that found that, for 90 of the 100 services in its sample, physicians used nonfacility POS codes on their claims for services that were actually performed in hospital outpatient departments or ASCs.  OIG attributes these errors, in part, to lack of internal controls at physician practices.

Compliance Tips
To support correct coding, reimbursement managers are encouraged to do the following.

Information Source: The most current list of POS codes can be found at

Examples of Commonly Used POS Codes and Descriptions

11  Office  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, where the health professional routinely provides health examinations, diagnosis, and treatment of illness or injury on an ambulatory basis
21  Inpatient hospital  A facility, other than psychiatric, that 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 conditions
24  Ambulatory surgical center  A freestanding facility, other than a physician's office, where surgical and diagnostic services are provided on an ambulatory basis
49  Independent clinic  A location, not part of a hospital and not described by any other POS code that is organized and operated to provide preventive, diagnostic, therapeutic, rehabilitative, or palliative services to outpatients only

Jeff Majchrzak, BA, RT(R), RCC, CNMT, CIRCC is Vice President of Radiology Services for Medlearn. A nationally renowned radiology coding authority, Jeff has amassed an incredible breadth and depth of experience, both in the healthcare setting and in the field of consulting. His real-world experience includes work in the radiology and nuclear medicine departments of several public and private hospitals.