If you do medical billing or manage practice documentation, you already know about Place of Service (POS) codes. Those small two-digit numbers—like POS 11 (office) or POS 10 (telehealth)—you enter into claims without a thought. But those little codes aren’t just administrative details. They’re key to reimbursement amounts, claim validation, and payer guidelines.

Using the wrong POS code—even accidentally—can lead to claim denials, audits, or worse, fraud accusations. Mastering POS in medical billing helps protect your practice’s revenue and compliance status.

In this guide, we’ll break down POS codes, common billing scenarios and best practices to ensure your documentation is accurate and audit-proof. Each section builds on the last, giving you the tools to navigate the complexities of your healthcare billing process.

Let’s get started.

What Are POS Codes?

Place of Service codes (POS) are standardized two-digit numbers used in a medical billing to indicate where healthcare services were delivered. Every CMS-1500 claim form (Box 24B) and electronic billing submission requires the correct POS code just like other essential medical billing codes, to communicate with Medicare, Medicaid, and commercial payers.

Think of POS codes as the “billing address” for each healthcare encounter. Did the patient visit your office (POS 11)? Did they receive care remotely through telehealth from their home (POS 10)? Or perhaps the service occurred in an outpatient hospital department (POS 22)? Each of these locations and dozens more has its own POS code.

These codes aren’t arbitrary; they’re managed by the Centers for Medicare & Medicaid Services (CMS), who update them to match changing healthcare delivery scenarios. For example, the rapid adoption of telehealth during the COVID-19 pandemic led CMS to introduce and define codes like POS 10 (telehealth from the patient’s home) vs POS 02 (telehealth from locations other than home).

In short, correct POS coding simplifies your healthcare billing process and means answering one simple question for insurers:

“Where was this healthcare service provided?”

Now that we know what POS codes are, let’s get into why these codes carry so much financial and compliance weight in your billing process.

Why Do POS Codes Matter So Much?

Here’s why these two-digit Place of Service codes matter so much:

1. They Determine Your Reimbursement Amount

Your practice’s reimbursement is based on whether you’re billing under a facility or non-facility rate. Non-Facility Settings typically get higher reimbursement, while Facility Settings get lower reimbursement due to separate facility billing.

Example (Real-world financial impact):
Billing a Level 4 established patient office visit (CPT 99214):

• Office (POS 11): Approximate reimbursement ~$110
• Hospital Outpatient (POS 22): Approximate reimbursement ~$80

That small difference—$30 per visit—adds up quickly over hundreds of patient encounters, making accurate POS coding directly impactful to your bottom line.

2. They Validate Medical Necessity

Place of Service codes justify the clinical appropriateness and necessity of services. For example:

• A procedure billed with POS 23 (Emergency Room) indicates urgency, justifying immediate care.
• Billing POS 21 (Inpatient Hospital) means the patient’s condition required hospitalization, supporting inpatient-level care.

Accurate POS coding supports your claims, reducing denials and documentation scrutiny.

3. They Keep Your Practice Compliant

Accurate POS codes are essential for maintaining medical billing compliance and avoiding costly audits. And staying compliant isn’t optional; it’s essential to cash flow, reputation, and operational continuity.

4. They Provide Essential Data for Practice Decisions

Analyzing POS data can give you valuable insights to optimize practice decisions and resource allocation. For example:

• Identifying shifts from inpatient (POS 21) to outpatient (POS 22) or telehealth (POS 10, POS 02) settings.
• Which settings are most profitable for certain services or patient populations.

Consistently verifying POS codes strengthens your medical billing compliance and protects your financial stability.

Recent Updates to POS Codes

CMS updates POS codes to match changing healthcare delivery models. Recent changes include: POS 10 – Telehealth (Patient’s Home) – Added in January 2022 to distinguish telehealth services provided to patients at home, clarifying reimbursement policies.

• POS 19 – Off-campus Outpatient Hospital
  Introduced to differentiate between outpatient hospital services delivered on-campus (POS 22) and off-campus.
• POS 58 – Non-residential Opioid Treatment Facility
  Created to clearly identify outpatient treatment centers providing medication-assisted treatment.

Best Practice:
Review CMS publications regularly to update your POS code definitions in the billing system promptly to avoid claim denials.

Comprehensive List of Common POS Codes

Below is a carefully curated list of commonly used POS code definitions and descriptions for quick reference. Place of Service codes you’ll encounter regularly in medical billing. Having these at your fingertips will simplify accurate coding and reduce compliance risks.

POS Code	Place of Service	Brief Description
01	Pharmacy	Facility where drugs and medical items are dispensed directly to patients
02	Telehealth (Other than Home)	Telehealth provided to the patient at a location other than their home
03	School	Educational facility
04	Homeless Shelter	Temporary housing for homeless individuals
05	Indian Health Service Free-standing Facility	IHS-owned independent facility
06	Indian Health Service Provider-based Facility	Facility affiliated with an Indian Health Service facility
07	Tribal 638 Free-standing Facility	Independently owned by a tribal entity
08	Tribal 638 Provider-based Facility	Tribal-owned facility affiliated with an IHS facility
09	Prison/Correctional Facility	Jail, prison, detention center
10	Telehealth (Patient’s Home)	Telehealth service provided directly to the patient in their home
11	Office	Provider’s regular practice location
12	Home	Patient’s private residence
13	Assisted Living Facility	Facility providing daily living assistance
14	Group Home	Residence providing services for daily living assistance
15	Mobile Unit	Mobile facility for preventive, diagnostic, or treatment services
16	Temporary Lodging	Hotel, camp, cruise ship
17	Walk-in Retail Health Clinic	Walk-in clinic located within retail store
18	Place of Employment/Worksite	Patient’s workplace
19	Off Campus-Outpatient Hospital	Off-campus hospital outpatient department
20	Urgent Care Facility	Facility distinct from ER, providing urgent outpatient care
21	Inpatient Hospital	Facility providing inpatient medical and rehabilitation services
22	On Campus-Outpatient Hospital	Hospital’s main campus outpatient services
23	Emergency Room – Hospital	Hospital’s emergency department
24	Ambulatory Surgical Center	Freestanding facility for outpatient surgery
25	Birthing Center	Non-hospital, non-office birthing facility
26	Military Treatment Facility	Medical facility operated by Uniformed Services
31	Skilled Nursing Facility	Inpatient skilled nursing and rehabilitation
32	Nursing Facility	Facility providing skilled nursing and related services
33	Custodial Care Facility	Long-term care facility providing personal assistance
34	Hospice	Facility providing palliative care for terminally ill
41	Ambulance – Land	Ambulance transport (land-based)
42	Ambulance – Air or Water	Ambulance transport (air or water)
49	Independent Clinic	Non-hospital affiliated clinic
50	Federally Qualified Health Center	Clinic in medically underserved area
51	Inpatient Psychiatric Facility	Facility providing inpatient mental health services
52	Psychiatric Facility – Partial Hospitalization	Partial hospitalization psychiatric facility
53	Community Mental Health Center	Ambulatory comprehensive mental health facility
54	Intermediate Care Facility/Individuals with Intellectual Disabilities	Facility for health-related care to individuals with intellectual disabilities
55	Residential Substance Abuse Treatment Facility	Residential facility for substance abuse treatment
56	Psychiatric Residential Treatment Center	Residential psychiatric treatment center
57	Non-residential Substance Abuse Treatment Facility	Outpatient substance abuse treatment facility
58	Non-residential Opioid Treatment Facility	Outpatient opioid treatment facility
60	Mass Immunization Center	Location administering mass vaccinations
61	Comprehensive Inpatient Rehabilitation Facility	Inpatient rehabilitation services
62	Comprehensive Outpatient Rehabilitation Facility	Outpatient rehabilitation services
65	End-Stage Renal Disease Treatment Facility	Dialysis treatment facility
71	Public Health Clinic	State or local health department clinic
72	Rural Health Clinic	Clinic providing ambulatory care in rural areas
81	Independent Laboratory	Independent diagnostic or clinical laboratory
99	Other Place of Service	Any location not explicitly identified above

 

Common POS Coding Mistakes (and How to Fix Them)

Even experienced practices sometimes misuse important medical billing codes, leading to denials and audits. Here’s how to spot and prevent common mistakes:

Mistake #1: Using the Default Office Code (POS 11) Incorrectly

• Issue: Automatic use of the office POS regardless of service location.
• Impact: Denials, audits, or incorrect payments.
• Quick Fix: Implement location-verification workflows to select the correct POS codes every time.

Mistake #2: Telehealth Location Confusion (POS 02 vs. POS 10)

• Issue: Misclassifying telehealth encounters based on patient location, affecting reimbursement rates.
• Impact: Underpayment for telehealth services.
• Quick Fix: Train front-desk and billing staff to distinguish between POS 02 and POS 10 at scheduling and billing stages.

Mistake #3: Facility vs. Non-facility Mix-up (POS 11 vs. POS 22/19)

• Issue: Billing facility-based visits as non-facility or vice versa, causing reimbursement discrepancies.
• Impact: Audits, delayed payments, and lost revenue.
• Quick Fix: Define and communicate facility boundaries and location rules with visual guides or maps to staff.

Mistake #4: Outdated POS Codes

• Issue: Using retired or modified POS codes.
• Impact: Claim denials.
• Quick Fix: Schedule quarterly POS code audits and updates in your billing and EHR systems.

Improving billing accuracy in healthcare through correct POS coding ensures your practice receives timely reimbursements.

Master POS Coding to Protect Your Revenue

POS coding isn’t just about compliance, it’s about your practice’s bottom line. Choosing the right code affects reimbursement, medical necessity, and protects your practice from audits and denied claims.

Stay up to date on CMS updates, avoid common coding mistakes, and audit your claims regularly. And you’ll have smoother billing, fewer denials, and better financial health.

Ready to check your POS coding or streamline your billing? Contact our coding experts today for a free coding review. We’ll make sure your claims get paid correctly – every time.