Place of Service Update

The plan to update Place of Service (POS) codes for outpatient hospital services was announced in the CY 2015 Physician Fee Schedule (PFS) Final Rule. In that Final Rule, the Centers for Medicare and Medicaid Services (CMS) noted that with the proliferation of physician practices becoming hospital based, CMS lacked a means to adequately determine the expense incurred by a practice versus the expense incurred by a hospital outpatient department. The Practice Expense (PE) is one of the components of the Relative Value Unit (RVU) and is used to determine the fee schedule amount1. In the CY 2015 PFS Final Rule, CMS was also looking for ways to more accurately value visits within the postoperative period.2 Though the Final Rule decided on new POS codes under Part B to help with the assessments, it did not recommend the new code at the time of publication.

On Aug. 6, 2015, CMS issued details regarding the new and revised POS codes under Part B in MLN Matters MM9231 (PDF, 69 KB). These changes will become effective Jan. 1, 2016. To differentiate between on-campus and off-campus provider-based hospital departments, CMS is creating a new POS code – POS 19 and revising the current POS 22 code description for outpatient hospital. These changes will affect physicians, other providers, and suppliers submitting claims to Medicare Administrative Contractors (MAC), including Durable Medical Equipment Medicare Administrative Contractors (DME MAC) for services provided to Medicare beneficiaries under Part B3.

POS Code Set – Outpatient changes4

Place of Service Update

What does this mean to physicians and practitioners?

  • To file a claim, the outpatient POS must be correctly identified. Either the hospital outpatient location is on campus, (POS 22) or it is off campus (POS 19).
  • Payments for services provided to outpatients who are later admitted as inpatients within three- days (or, in the case of non-IPPS hospitals, one-day) are bundled when the patient is seen in a wholly owned or wholly operated physician practice. For those services that have a technical component (TC) and a professional component (PC) split in the PFS, Medicare will continue to pay the facility rate for the PC when provided within the three-day, (or one-day), window.
  • Claims for covered services rendered in an Off Campus-Outpatient Hospital setting (or in an On Campus-Outpatient Hospital setting, if payable by Medicare) will be paid at the facility rate. This also applies to those services with a professional fee only, that is no PC/TC split.
  • Reporting outpatient hospital POS code 19 or 22 is a minimum requirement to trigger the facility payment amount under the PFS when services are provided to a registered outpatient. Therefore, you should use POS code 19 or POS code 22 when you furnish services to a hospital outpatient regardless of where the face-to-face encounter occurs.

MM9231 also mentions minor corrections to POS codes 17 - Walk-in Retail Health Clinic and 26 - Military Treatment Facility. These two codes have been added back to the POS list in the “Medicare Claims Processing Manual”.

To view the related Change Request (CR) 9231 (Transmittal 3315) which includes the update to CMS Manual System Publication 100-04 Medicare Claims Processing Manual, click here (PDF, 225 KB).

1 Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to   
  Identifiable Data for the Center for Medicare and Medicaid Innovation Models & other Revisions to Part B for CY 2015, 79 Fed.
  Reg. 67547, 67569 (November 13, 2014) (to be codified at 42 CFR 403, 405, 410, et al.).
2 Ibid.
3 MLN Matters® Number: MM9231 Related Change Request (CR) #: CR 9231 Related CR Release Date: August 6, 2015 Page 1
4 Ibid at Page 2.

Author - Male

About the author

Robert Bunting, CPC, CPC-H, CHC, CEDC, CEMC, CAC is Compliance Director – Emergency Medicine, McKesson Business Performance Services.