Place of Service (POS) codes are standardized two-digit codes used in healthcare billing to indicate the location where a medical service was provided. These codes are mandatory on professional claims submitted to insurance payers, including Medicare and private companies, because the location of care directly impacts how the claim is processed. Place of Service 11, or POS 11, specifically designates the “Office” setting, which is the most common code used for routine appointments with a physician or other healthcare provider.
The Official Definition of Office
The Centers for Medicare & Medicaid Services (CMS) provides the precise regulatory definition for POS code 11, which is simply titled “Office.” This code identifies a location, other than a hospital, skilled nursing facility, or other institutional setting, where a health professional routinely furnishes examinations, diagnoses, and treatments for illnesses or injuries on an ambulatory basis. The core distinction is that the physical location must be owned, occupied, and controlled by the physician or the group practice itself.
The use of POS 11 tells the payer that the provider’s practice is responsible for all the overhead costs associated with that location, such as rent, utilities, staff salaries, and equipment. This setting is often referred to as a “non-facility” setting in billing terminology.
The definition is designed to exclude locations that are financially integrated with or considered a department of a hospital, even if they appear to be a standalone clinic. Proper application ensures that the billing accurately reflects the operational ownership and cost structure of the physical location where the care was delivered.
Impact on Reimbursement Rates
The choice of Place of Service code determines whether a service is paid at the facility rate or the non-facility rate. Medicare and most commercial insurance payers establish two different payment amounts for many of the same medical services. The non-facility rate, which is applied when using POS 11, is typically higher than the facility rate.
This difference exists because when a service is performed in a non-facility setting like an office, the physician’s practice bears the full cost of the practice expenses. These expenses include the costs of clinical staff, medical supplies, and the building’s maintenance and equipment. To cover these expenses, the professional fee component of the reimbursement is adjusted upward.
Conversely, if the same service were performed in a “facility,” such as a hospital outpatient department (POS 22), the facility itself is reimbursed separately for those overhead costs. In this scenario, the physician’s professional fee is paid at the lower facility rate, as the physician is not responsible for those practice expenses. Incorrectly using POS 11 when a service occurred in a hospital-owned clinic can lead to overpayments and is a frequent cause of payer audits and claim recoupments.
Common Scenarios and Proper Application
Place of Service 11 is the correct code for most routine healthcare encounters that occur in a physician’s private practice. This includes annual physical examinations, follow-up visits for chronic conditions, and appointments for acute illnesses like the flu or a minor injury. Minor procedures that are safely performed in the exam room, such as wart removal, simple laceration repairs, or joint injections, are also billed with POS 11.
For example, POS 12 (Home) is used when the provider travels to the patient’s private residence to deliver care. Similarly, a service provided via telemedicine is typically coded as POS 02 (Telehealth) or POS 10 (Telehealth Provided in Patient’s Home), not POS 11.
A common source of confusion arises with hospital-owned clinics. If a physician sees patients in a building that is financially and administratively integrated with a hospital system, even if it looks like a typical doctor’s office, the correct code is often POS 22 (On-Campus Outpatient Hospital) or POS 19 (Off-Campus Outpatient Hospital). Using POS 11 in these hospital-affiliated settings is a frequent billing mistake that can result in claim denials or regulatory issues.