The Basics of Medical Billing's Place of Service Codes

by  Find-A-Code™
Aug 9th, 2023

Discussions about medical billing records often focus on CPT and ICD-10 codes. Being the two most common code sets, they get talked about the most. But there is another code set that doesn't get a lot of attention despite being just as important. It is known as Place of Service (POS) codes.

POS codes play a more crucial role in medical billing than they usually get credit for. The codes are essentially ID numbers relating to the types of facilities at which healthcare services are provided. Public and private payers require POS codes to ensure accurate reimbursements.

Developed by the Federal Government

We can thank the Centers for Medicare and Medicaid Services (CMS) for developing and standardizing POS codes. Their strategy for doing so involves more than just randomly assigning codes to healthcare facilities on a first-come, first-served basis. Though each POS code is only two digits, the digits actually matter. They mean something.

POS codes are not designed to identify individual facilities by name. Rather, they tell payers the type of facility attached to a particular claim. Just by looking at a code, an experienced medical biller can tell if the facility in question was an office, an after-hours clinic, a hospital, etc. The codes are all about the service setting rather than geographic location.

Payment Rates Vary Among Providers

Why would payers need to know the setting in which services were rendered? Because different types of providers are subject to different reimbursement rates. You have had personal experience with this yourself if you have ever compared the costs of care at your GP's office with the same care at a local emergency room. Hospitals charge higher rates for primary care than GPs.

Accurate POS codes ensure that providers are reimbursed at the right rate. It is a matter of ensuring fair compensation based on rates negotiated between providers and payers.

Examples of PS Codes

Technically, there could be up to 100 different PS codes in play at any given time. Not all 100 options are in use at this time. Nonetheless, the ones that are used are meaningful to coders, billers, and payers. Here are just five examples:

• POS 11 Office – Describes services rendered in a physician's office or other healthcare clinic where patients receive primary care on an outpatient basis.
• POS 21 Inpatient Hospital – Describes services rendered in a hospital or other emergency setting requiring an overnight stay.
• POS 22 On-Campus Outpatient Hospital – Describes services rendered at a medical facility located on a hospital campus but run separately from the hospital itself.
• POS 31 Skilled Nursing Facility – Describes services provided in a skilled nursing facility or nursing home. The services usually apply to patients requiring long-term care or rehabilitation.
• POS 41 Ambulance - Land – Describes ambulance services from a provider who transports patients over land.

The POS 02 Telehealth code has become increasingly popular commensurate with the steady growth of telehealth services. Since the start of the COVID pandemic, medical coders and billers have been seeing this code more often.

POS Codes for Analytics Purposes

The primary reason for using POS codes is to ensure fair compensation for services rendered. But they do offer another benefit: they make it easier for private and public research organizations to analyze healthcare utilization patterns. In essence, the codes make it easier to understand where people are accessing the healthcare services they need.

CPT, ICD-10, and other code sets are the foundation of modern medical billing and payments. Every code is important in that it provides payers with critical information. Even the POS code is a big deal.