How POS 11 and POS 22 Codes Affect Medical Billing Claims and Payer Reimbursement

Don’t let simple coding slip-ups cost you thousands. In an industry where 5–10% of all claims face denial, according to AHIMA and the AAFP, mastering Place of Service (POS) codes is non-negotiable for healthcare providers aiming to safeguard revenue and reduce denials. 

Understanding the difference between POS 11 (Office) and POS 22 (On-Campus Outpatient Hospital) can optimize reimbursements. A Certified Community Behavioral Health Clinic once saw a 32% denial rate stemming from incorrect POS billing, nearly one-third of claims blocked, before targeted training slashed denials by 58%. 

Master these codes to improve billing and boost revenue. With U.S. providers spending over $19.7 billion annually on avoidable claim reviews, and hospitals shouldering 15% initial denial rates, accurate POS coding isn’t just best practice, it’s mission-critical for effective medical billing

What are POS Codes in Medical Billing?

In medical billing, POS stands for Place of Service, a two-digit code used on healthcare claims to indicate where the service was provided. Insurance payers use these codes to determine how to process and reimburse the claim.

POS codes are generally divided into two main categories:

• Facility POS Codes 
• Non-Facility POS Codes

This classification helps determine how services are billed and reimbursed, based on the type of setting where the care was provided.

What Are Facility POS Codes in Medical Billing?

Facility POS codes are used to indicate that a healthcare service was performed in a facility owned and operated by an organization, typically a hospital, skilled nursing facility, or other institutional setting.

In these cases, the facility shares responsibility for the overhead costs like staff, space, and equipment, which affects how the claim is reimbursed. Because the provider isn’t solely responsible for the full cost of care delivery, reimbursement rates for professional services are often lower compared to non-facility settings.

Common Facility POS Codes

POS Code	Place of Service	Description
POS 21	Inpatient Hospital	Designates services rendered to patients formally admitted to a hospital for at least one overnight stay.
POS 22	Outpatient Hospital	Refers to medical services provided in a hospital setting where the patient is not admitted overnight.
POS 23	Emergency Room – Hospital	Applies to treatment provided in a hospital’s emergency department for urgent or life-threatening conditions.
POS 31	Skilled Nursing Facility (SNF)	Used for services delivered in a licensed facility offering 24/7 nursing care and rehabilitation services.
POS 32	Nursing Facility	Indicates long-term care services provided in residential settings such as nursing homes or assisted living.
POS 61	Inpatient Rehabilitation Facility	Identifies intensive rehabilitation services provided in a facility dedicated to inpatient therapy and recovery.

What Are Non-Facility POS Codes in Medical Billing?

Non-Facility POS codes are used when healthcare services are provided in settings not owned or operated by a hospital or institutional facility. These include physician offices, homes, independent clinics, and other outpatient environments.

Common Non-Facility POS Codes

POS Code	Place of Service	Updated Description
POS 11	Office (Physician-Owned Clinic)	Services provided in a physician’s private office or clinic setting, not affiliated with a hospital.
POS 12	Home	Healthcare services rendered at the patient’s place of residence.
POS 49	Independent Clinic	Care provided at a freestanding clinic that operates independently from a hospital or healthcare system.
POS 50	Federally Qualified Health Center (FQHC)	Services delivered at a community-based center that receives federal funding to provide primary care.
POS 72	Rural Health Clinic	Care provided in a certified rural health clinic aimed at improving access in underserved rural areas.

What is POS 11 in Medical Billing?

POS stands for Place of Service, and the code 11 specifically refers to services delivered in a physician’s office or outpatient clinic. This code is used on claim forms to indicate that the medical care was provided at the healthcare provider’s office rather than a hospital or other care facility.

Insurers use POS 11 to determine appropriate reimbursement rates, as office visits usually have different costs compared to hospital or skilled nursing facility visits. Using POS 11 in medical billing correctly ensures accurate claims processing and helps healthcare providers receive timely payment.

Benefits:

• Often results in lower patient copays compared to hospital settings.
• Easier access and convenience for patients.
• Improves billing and reimbursement for routine office visits and procedures.
• Typically associated with lower facility fees, reducing overall costs for both providers and patients.

What is POS 22 in Medical Billing?

POS stands for Place of Service, and the code 22 specifically refers to services provided in an on-campus outpatient hospital setting. This code is used on claim forms to indicate that medical care was given at an outpatient hospital location rather than in a physician’s office or other healthcare facility.

Insurers use POS 22 in medical billing to determine appropriate reimbursement because outpatient hospital services generally have different cost structures compared to office visits or inpatient care. Correct use of POS 22 in medical billing ensures proper claims processing and helps healthcare providers receive accurate payments based on the setting.

Benefits:

• Allows for accurate billing that reflects the higher resources used in hospital outpatient departments.
• Facilitates higher reimbursement rates compared to office visits due to more complex facility requirements.
• Supports billing for services rendered in a hospital setting while maintaining outpatient classification.
• Helps patients by providing access to more specialized care in a hospital environment without inpatient admission.

Difference Between POS 11 and POS 22 in Medical Billing

Category	POS 11 – Physician Office	POS 22 – Hospital Outpatient (On-Campus)
Definition	Services provided in a physician-owned office or outpatient clinic.	Services delivered within a hospital’s on-campus outpatient department.
Setting	Independent medical offices or ambulatory care centers.	Hospital-based outpatient facilities located on the main campus.
Reimbursement Rate	Lower reimbursement under the non-facility fee schedule.	Higher reimbursement due to inclusion of facility overhead and resources.
Patient Copayment	Typically lower, as facility fees do not apply.	Generally higher, reflecting additional facility charges.
Billing Complexity	Simpler process; only professional claims are submitted.	More complex; requires both professional and facility claims.
Access & Convenience	More convenient for routine visits and follow-up care.	Access to advanced diagnostics and specialty services without admission.
Insurance Verification	Standard eligibility checks and payer validation.	Requires comprehensive verification due to hospital billing protocols.
Facility Fees	Minimal or no facility fees applied.	Facility fees are typically included, increasing total patient charges.
Use Case	Preventive care, chronic disease management, minor procedures.	Outpatient surgeries, infusions, advanced imaging, and specialty care.
Scalability	Ideal for private practices and small group clinics.	Structured for hospital systems and large outpatient departments.

Ensuring Accurate POS 11 and POS 22 Coding: Best Practices

Accurate Place of Service (POS) coding is essential for smooth claims processing and timely reimbursements. Implementing the right strategies can help your practice avoid costly errors and reduce denials.

Verify Service Location

Confirm the exact location where the service was provided before assigning POS codes. This ensures you choose POS 11 for physician office visits and POS 22 for on-campus outpatient hospital services.

Follow Payer Guidelines

Stay updated with each insurer’s specific POS coding rules. Adhering to these guidelines prevents claim rejections related to incorrect coding.

Include Necessary Facility Fees

When billing with POS 22, always include applicable facility fees to capture the full cost of outpatient hospital services.

Use Real-Time Eligibility Checks

Use technology to verify patient insurance coverage and specific POS requirements before submitting claims.

Provide Ongoing Staff Training

Regularly train billing staff on the latest POS code updates and best coding practices to maintain accuracy.

Consider Outsourcing Billing

Partnering with experienced medical billing services can help ensure accurate POS coding, reduce errors, and speed up reimbursements, letting your team focus more on patient care.

Overview of Other Important Facility and Non-Facility POS Codes

Beyond POS 11 and POS 22, several other Place of Service codes are commonly used in medical billing. Understanding these helps provide a complete view of billing environments:

• POS 49 (Independent Clinic): Used for services delivered at clinics that operate independently and are not part of a hospital or physician’s office.
• POS 50 (Federally Qualified Health Center – FQHC): Indicates services provided at federally funded health centers offering comprehensive primary care to underserved populations.
• POS 72 (Rural Health Clinic): Assigned when care is given at rural clinics that provide outpatient services in underserved rural areas.

Role of POS 11 in Reimbursement

POS 11 in medical billing refers to “Office,” a place where a healthcare provider offers outpatient services in their clinic or private office.

Why it matters:

• Higher Reimbursement:

Claims with POS 11 are paid at a non-facility rate, which includes both the provider’s service and office overhead, usually resulting in higher payments than hospital-based settings.

• Accurate Billing:

Using POS 11 in medical billing tells the payer the service was provided in an office, helping avoid denials or payment delays.

• Patient Costs:

Patients may have lower out-of-pocket costs for office visits compared to hospital visits.

Final Thought

Understanding the distinction between POS 11 and POS 22 is more than a billing formality; it’s a critical step toward maximizing reimbursement, minimizing denials, and staying compliant with payer rules. Whether you’re a solo practitioner or part of a larger organization, accurate POS coding ensures every claim reflects the true value of care delivered.

Is billing draining your practice? 

At CloudRCM, we specialize in accurate, compliant medical billing that captures every dollar you’ve earned, starting with proper POS code usage. From reducing denials to boosting your bottom line, our team of experts takes the complexity out of coding and reimbursement. Let CloudRCM handle the billing so you can focus on what matters most: your patients.

Call us at (224) 231-6880 to schedule your free billing consultation and discover how CloudRCM can streamline your revenue cycle, optimize claims, and support your practice growth.

FAQs

Which POS code has higher reimbursement?

POS 22 generally reimburses at a higher rate due to facility fees.

Can the same service be billed under both POS 11 and POS 22?

Yes, but the place of service must reflect the actual setting of service delivery.

Is modifier -25 required for POS 22?

Modifier -25 may be required when billing for evaluation and management services along with procedures.

Why is POS code important?

It determines how much the provider is reimbursed and helps CMS/Auditors track service locations.

What happens if the wrong POS is used?

It can result in claim denials, incorrect payments, or compliance issues.

Is telehealth billed under POS 11 or POS 22?

It depends on the provider’s original setting pre-pandemic, but POS 11 is commonly used with telehealth modifiers.