Place of Service Codes: Facility vs Non-Facility

Bill the exact same procedure code, for the exact same service, and Medicare can pay you two different amounts depending on a single two-digit field on the claim: the place of service (POS) code. Get it wrong and you'll either get underpaid or flagged for a payer audit — sometimes both.

What a POS code actually does

The place of service code tells the payer where a service happened: a physician's own office, a hospital outpatient department, a patient's home, an ambulatory surgical center, and so on. CMS maintains the list, and it's used on every professional claim (CMS-1500 / 837P), in the location field.

That alone would just be informational. What makes it financially significant is that Medicare's Physician Fee Schedule — and most commercial payers that follow it — assigns two different payment rates to many procedure codes: a facility rate and a non-facility rate.

Why the rate changes

The logic comes down to who's paying for the overhead.

When a physician performs a procedure in their own office (non-facility), that physician's practice absorbs every cost of doing it: the exam room, the equipment, the clinical staff, the supplies. The non-facility payment rate is higher to account for all of that.

When the same procedure happens in a hospital — inpatient, outpatient department, or an ambulatory surgical center — the facility itself bills separately for its own overhead (the technical component: room, equipment, nursing staff). The physician is only providing the professional component: their own clinical work. So the facility payment rate to the physician is lower, because the facility is being paid separately for everything else.

Bill a facility-performed procedure with a non-facility POS code, and you're effectively asking Medicare to pay you as if your practice covered overhead costs that the hospital actually billed for. That mismatch is exactly what payer audits are built to catch.

The two codes everyone confuses

POS 11 — Office. Non-facility. The default for services performed in a physician's private practice.

POS 22 — On Campus-Outpatient Hospital. Facility. A hospital outpatient department, physically on the hospital campus.

Same physician, same procedure code, potentially the same patient — but 11 and 22 can produce different payment amounts for the professional service, because the underlying cost structure is different.

Common facility POS codes

These all carry the lower facility payment rate, because a separate entity is billing for the technical/overhead component:

21 — Inpatient Hospital
22 — On Campus-Outpatient Hospital
23 — Emergency Room – Hospital
24 — Ambulatory Surgical Center
19 — Off Campus-Outpatient Hospital (a hospital-owned outpatient department not physically on the main campus — still facility, even though it doesn't look like "the hospital")
31 / 32 — Skilled Nursing Facility / Nursing Facility

Common non-facility POS codes

These carry the higher non-facility rate, because the billing provider is absorbing the overhead directly:

11 — Office
12 — Home
20 — Urgent Care Facility (non-facility despite the name — the word "facility" here refers to the type of clinic, not the payment classification)
81 — Independent Laboratory
02 / 10 — Telehealth, depending on whether the patient was at home (10) or somewhere else (02)

That urgent care example is worth remembering specifically, because "has the word facility in the name" is not the same test as "is a facility POS code" — the actual test is whether a separate entity is billing for the overhead.

The practical takeaway

POS isn't a formality field — it changes what you get paid, and payers reconcile it against claims from the facility side too. If a hospital billed a facility claim for the same date of service and your professional claim used a non-facility POS code, that's a mismatch that can trigger review on both ends. When in doubt, POS should reflect where the service physically happened, not where the physician's practice is normally based.

Look up any code's full facility/non-facility status with the Place of Service reference tool.

Place of Service codes are maintained by CMS as a US government public domain work.