WHY POS is important in claim submission ?

Reporting place of service (POS) codes

Physicians are required to report the place of service (POS) on all health insurance claims they submit to Medicare Part B contractors. The POS code is used to identify where the procedure is furnished. 

Physicians are paid for services according to the Medicare physician fee schedule (MPFS). This schedule is based on a payment system that includes three major categories, which drive the reimbursement for physician services:

• Practice expense (reflects overhead costs involved in providing service(s))

• Physician work

• Malpractice insurance

To account for the increased practice expense physicians incur by performing services in their offices, Medicare reimburses physicians a higher amount for services performed in their offices (POS code 11) than in an outpatient hospital (POS 22-23) or an ambulatory surgical center (ASC) (POS 24). Therefore, it is important to know the POS also plays a factor in the reimbursement.

Note: Check with individual payers (e.g., Medicare, Medicaid, other private insurance) for reimbursement policies regarding POS codes.

Important facts when filing a claim to Medicare

• The POS is a required field, entered in the 2400 Place of Service Code loop (segment SV105) of the 837P electronic claim or Item 24B on the CMS-1500 paper claim

• The name, address and zip code of where the service(s) were actually performed is required for all POS codes, and is entered in Item 32 on the CMS 1500 claim form or in the corresponding loop on its electronic equivalent

• Must specify the correct location where the service(s) is performed and billed on the claim, since both the POS and the locality address are components of the MPFS

• If the POS is missing, invalid or inconsistent with procedure code on claim form it will be returned as unprocessable (RUC)

• For example, POS 21 (inpatient hospital) is not compatible with procedure code 99211 (Establish patient office or other outpatient visit)

Helpful hints for POS codes for professional claims

• Implement internal control systems to prevent incorrect billing of POS codes

• Keep informed on Medicare coverage and billing requirements

• For example, billing physician's office (POS 11) for a minor surgical procedure that is actually performed in a hospital outpatient department (POS 22) and collecting a higher payment is inappropriate billing and may be viewed as program abuse