American Society of Plastic Surgeons
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Place of Service Coding

The amount Medicare and other payers reimburse can vary based on where the service is provided. Under the Medicare Physician Fee Schedule (MPFS), the Place of Service (POS) code is generally used to reflect the actual setting where the beneficiary receives the face-to-face service. For example, if the physician's face-to-face encounter with a patient occurs in the office, the correct POS code on the claim, in general, reflects the 2-digit POS code 11 for office. (See Table 1)

Table 1 – Place of Service Codes for Care Provided in the Office
Place of Service Code(s) Place of Service Name Place of Service Description
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 (ICF), where the health professional routinely provides health examinations, diagnosis and treatment of illness or injury on an ambulatory basis.

However, there are two exceptions to this general rule – these are for a service rendered to a patient who is a registered inpatient or an outpatient of a hospital. In these cases, the correct POS code is that of the appropriate inpatient POS code (at a minimum POS code 21) or that of the appropriate outpatient hospital POS code (at a minimum POS code 19 or 22, for outpatient services performed off campus or on campus). (See Table 2)

Table 2 – Place of Service Codes for Care Provided in the Hospital
Place of Service Code(s) Place of Service Name Place of Service Description
19 Off Campus-Outpatient Hospital A portion of an off-campus hospital provider-based department which provides diagnostic, therapeutic (both surgical and nonsurgical) and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization. (Effective January 1, 2016)
21 Inpatient Hospital A facility, other than psychiatric, which 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 medical conditions.
22 On Campus-Outpatient Hospital A portion of a hospital's main campus which provides diagnostic, therapeutic (both surgical and nonsurgical) and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization. (Description change effective January 1, 2016)

Most insurance payments for physician services are based on three major categories of physician costs: practice expense, physician work, and malpractice insurance. The practice expense is intended to cover overhead costs involved in providing a service.

To account for different practice expenses that physicians incur at different settings, Medicare designates both a non-facility rate and a facility rate for each service/CPT code within the fee schedule.

Because surgeons generally incur higher practice expenses by performing services in their offices, Medicare generally reimburses at a higher rate for services via a non-facility fee schedule. For services performed at a facility setting such as a hospital, Medicare generally reimburses physicians at a lower "facility" rate, with a second payment to the facility that includes any overhead expense.

EXAMPLE: Medicare Physician Fee Schedule RVUs for CPT 19350 – Nipple/areola Reconstruction
Non-Facility (AKA office) RVUs 24.51 total RVUs
Facility (AKA (Hospital) RVUs 19.73 total RVUs

Past audits by the Office of the Inspector General have indicated overpayments have occurred when incorrect POS codes were submitted on Medicare claims – in 2015, the estimate was over $33.4 million in overpayments.

The OIG indicates it will begin auditing claims again soon. ASPS members are encouraged to review internal controls to ensure correct place-of-service code are being reported. This can help to reduce the risk of repayments, not just to Medicare, but commercial payers as well.