Place Of Service Codes: What They Are And Why They Are Used

by  Find-A-Code™
Apr 3rd, 2023

You likely know enough about medical coding to have a basic understanding of ICD-10-CM and CPT codes. But have you heard of Place of Service (POS) codes? POS codes do not get as much attention as some of the other code sets, but they are still an intricate part of medical coding and billing careers.

Medical codes are sets of alphanumeric codes designed to streamline medical billing so that providers do not have to compile pages of notes explaining the procedures and services they are billing for. The first medical codes were implemented decades ago to streamline private medical insurance. What started as a simpler way to bill for medical care has become a nearly unmanageable behemoth of data.

What POS Codes Are

Each distinct code set serves a unique purpose. For example, ICD-10-CM codes are diagnostic codes. Clinicians use them to make their diagnoses clear on billing statements. An accurate diagnosis will affect billing for future procedures, so the codes need to be right.

Similarly, POS codes serve a specific purpose. They tell both private and public payers where services were rendered. The information is often necessary to determine who should actually be billed for a particular service. Some services normally billed to Medicare or Medicaid would not be eligible for government payment if rendered in a certain location. Billing would have to be deferred to private insurance.

POS codes are fairly simple to work with. First, a POS code consists of two numbers. That's it. By contrast, a CPT code is a 5-character code made up of both numbers and letters. Only having to work with two numbers is easier.

Second, although the CMS has made provision for up to 99 POS codes, only about fifty of the numbers have been assigned to date. Compare that to a CPT code set that already contains tens of thousands of entries.

Why POS Codes Are Used

To someone not involved in medical coding or billing, the POS code might seem irrelevant. After all, why does it matter where services were rendered? As previously discussed, some services are not covered by certain payers if they aren't provided in designated locations. But it goes beyond that.

Under HIPAA regulations adopted in 1996, medical providers must have capability of storing and transferring health records digitally. They also must make every effort to protect patient information regarding everything from treatment to health history and payments.

HIPAA rules dictate that the place of service be included in medical records for the purposes of helping to maintain a complete and accurate patient history. So even when the POS has no bearing on who pays the bill, HIPAA compliance still demands that the POS code be included on claim forms.

Nothing About It Is Simple

Despite the POS code set being simpler to use than its CPT or ICD counterparts, there really is nothing simple about medical coding and billing. Our current medical billing system is extremely complicated and getting more so every day. Unfortunately, its complexity is one of the biggest contributing factors in continually rising healthcare prices.

POS codes comprise just one of multiple code sets billing and coding specialists need to deal with. And every time those code sets are updated, the system gets more complicated. Will it ever be simplified? Probably not.

Thank goodness for the tens of thousands of trained and certified specialists who turn clinician notes into medical codes that facilitate billing and payment. It is hard to imagine what healthcare billing would be like without them.