Coding Corner: Be spot-on in place of service coding

July 01, 2012
Area(s) of Interest: Payor Issues and Reimbursement Practice Management 

CPR’s “Coding Corner” focuses on coding, compliance, and documentation issues relating specifically to physician billing. This month’s tip comes from the Director of Editorial Development for the AAPC, G. John Verhovshek, MA, CPC.

Place of service (POS) codes indicate the setting in which a health care service was provided. There are approximately 50 POS codes; among the most familiar are 11 Office, 21 Inpatient Hospital, and 24 Ambulatory surgical center. A complete list of POS codes may be found in the Medicare Claims Processing Manual (Chapter 26, Section 10).

Assigning POS seems straightforward, but errors are common. The U.S, Department of Health and Human Services Office of Inspector General (OIG) has identified the most frequent causes of POS errors:

  • Default physician billing software settings
  • Physicians’ billing personnel/agents were confused about the precise definition of a “physician’s office” or were following established practice in applying the office place of service code
  • Physicians’ billing agents were unaware that an incorrect place of service code could change the Medicare payment for a specific service
  • Personnel made isolated data entry errors

All staff should know that POS codes affect reimbursement. Double check POS prior to claims submission and make POS coding part of your internal auditing process. If possible, change billing software so that place of service does not default to “physician office,” but requires billing personnel to enter the POS.

Providers should verify that they are reporting the POS code that applies to the setting in which the service was provided, and that the submitted procedure code is compatible with that POS. For example, Office or Other Outpatient (procedure codes 99201-99215) should be billed with POS codes 11 Office, POS 22 Outpatient Hospital, etc., whereas home service (99341-99350) should be billed with POS 12 Home.

Clear guidance on POS definitions

Occasionally, a POS error occurs because of confusion over how the place of service is defined. For example, what is the place of service if a physician leases office space from an ambulatory surgery center (ASC)? If a physician sells his or her practice to a hospital, is the office location still considered freestanding for reimbursement purposes?

To clarify POS definitions, observe the following guidelines:

  • An office (POS 11) is where the physician (or group) pays all of the overhead expenses, including rent (or mortgage), staff salaries, supplies, utilities, etc.
  • In an outpatient hospital (POS 22), the hospital employs the staff, owns the space, and incurs all of the overhead expenses. The hospital bills a facility fee to cover the cost of the expenses. Outpatient hospital locations include the observation unit, outpatient surgery unit, endoscopy suite and hospital clinics.
  • An emergency room (POS 23) is a hospital location where emergency diagnosis and treatment of illness or injury is performed. The hospital charges a facility fee to cover the overhead costs.
  • An inpatient hospital (POS 21) includes all services provided to a patient that has been formally admitted to the hospital. All overhead expenses are billed through the hospital.
  • An ASC (POS 24) is certified by Medicare to perform designated surgical procedures. The ASC bills a facility fee to cover the cost of overhead associated with the procedures. Laboratory and radiology services, other than those performed to assist in a procedure, are not permitted in the ASC during the ASC hours of operation. Other non-surgical services, imaging, infusions or diagnostic procedures not on Medicare’s list of ASC-approved services should not be performed in the facility.


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