Medical Billing Place of Service Codes: A 2026 Complete Guide for Physicians

Medical billing place of service (POS) codes are 2-digit codes entered in field 24B of the CMS-1500 claim form that identify the setting where a physician rendered a service to a patient. According to the CMS Place of Service Code Set, the POS code entered on a claim determines whether the physician is reimbursed at the facility rate or the non-facility rate under the Medicare Physician Fee Schedule (MPFS). Because non-facility rates are consistently higher than facility rates for the same procedure, selecting the wrong POS code directly reduces physician reimbursement on every affected claim. In 2026, POS codes also govern telehealth reimbursement rates, making accurate POS selection a billing compliance requirement for practices delivering virtual care.

This guide covers what place of service codes are, how they affect reimbursement, the 10 most commonly used POS codes in 2026, the updated telehealth POS rules, and the most common POS errors that cause claim denials.

What Are Place of Service Codes in Medical Billing?

Place of service codes are standardized 2-digit numeric codes maintained by CMS that identify the physical location where a physician or non-physician practitioner (NPP) provided a face-to-face service to a patient. They are entered in field 24B of the CMS-1500 claim form for all professional service claims billed under the MPFS. CMS requires that the POS code reflect the actual setting where the beneficiary received the service, not the location of the billing physician or the practice’s primary address.

POS codes serve 3 functions in the medical billing process:

• Rate determination: the POS code signals to the Medicare Administrative Contractor (MAC) and commercial payers whether to apply the facility or non-facility payment rate to the claim.
• Setting verification: the POS code confirms that the service was clinically appropriate for the documented setting, which is reviewed during medical necessity audits and Recovery Audit Contractor (RAC) reviews.
• Coordination of benefits: payers use POS codes to coordinate payment responsibilities between Medicare, Medicaid, and private insurers when more than one payer covers the patient’s service.

Why Do Place of Service Codes Affect Physician Reimbursement?

Under the Medicare Physician Fee Schedule, CMS assigns 2 separate payment rates for most procedures: a facility rate and a non-facility rate. The non-facility rate is higher than the facility rate because it includes a practice expense (PE) component that accounts for the overhead costs the physician incurs when providing the service outside a facility setting, such as staff, equipment, and supplies. When a service is provided inside a facility (hospital, ambulatory surgical center, skilled nursing facility), the facility bills separately for those overhead resources under its own claim, so the physician’s PE component is reduced.

The reimbursement difference between rates is material. For CPT 99214 (Level 4 E/M, established patient) in 2026, the non-facility rate is approximately $148.04 and the facility rate is approximately $105.45, a difference of $42.59 per claim. A physician billing 20 Level 4 E/M visits per day who incorrectly assigns a facility POS code instead of a non-facility POS code loses approximately $851.80 in reimbursement per day and over $221,000 per year.

Per CMS policy, the facility rate applies when the patient is an inpatient of a hospital (POS 21) or an outpatient of a hospital (POS 19 or POS 22), regardless of where the face-to-face encounter with the physician occurred. For all other settings, the POS code reflects the actual location of the patient at the time of service.

What Are the Most Commonly Used Place of Service Codes in 2026?

The 10 most commonly used place of service codes in physician billing in 2026 are:

POS 11: Office

POS 11 is the most commonly used place of service code and applies to services rendered in a physician’s private office or clinic. POS 11 triggers the non-facility payment rate, which is the highest reimbursement rate available under the MPFS for most E/M and procedural services. It is used for the majority of outpatient visits, in-office procedures, and preventive care services.

POS 02: Telehealth Provided Other Than in Patient’s Home

POS 02 applies to telehealth services where the patient is located outside their home at the time of the encounter, such as at a clinic, a school, or a community location. Under the CY 2026 PFS Final Rule, POS 02 is reimbursed at the facility payment rate and must be paired with modifier 95 for audio/video telehealth or modifier 93 for audio-only telehealth.

POS 10: Telehealth Provided in Patient’s Home

POS 10 applies to telehealth services where the patient is located in their own home at the time of the encounter. POS 10 is reimbursed at the non-facility payment rate under the CY 2026 PFS, making it the higher-reimbursement telehealth POS code of the 2 available options. It must also be paired with modifier 95 (audio/video) or modifier 93 (audio-only).

POS 21: Inpatient Hospital

POS 21 applies to services rendered to patients formally admitted as inpatients of an acute care hospital. POS 21 triggers the facility payment rate regardless of where the physician physically saw the patient. It is used for hospital visits, inpatient consultations, and inpatient procedures billed under the physician fee schedule.

POS 22: On-Campus Outpatient Hospital

POS 22 applies to services rendered in an outpatient department physically located on the campus of a hospital. POS 22 triggers the facility payment rate. It was revised from the prior description of simply ‘Outpatient Hospital’ to ‘On Campus-Outpatient Hospital’ to differentiate it from POS 19, which was created for off-campus outpatient hospital settings.

POS 19: Off-Campus Outpatient Hospital

POS 19 applies to services rendered in a provider-based outpatient department located off the physical campus of the hospital. POS 19 triggers the facility payment rate, consistent with POS 22 policy. Physicians seeing patients at off-campus hospital-owned clinics must use POS 19, not POS 11, to accurately represent the setting.

POS 23: Emergency Room

POS 23 applies to services rendered in a hospital emergency department to patients who present for unscheduled, urgent evaluation and treatment. POS 23 triggers the facility payment rate. It is distinct from POS 21 in that the patient has not been formally admitted to the hospital.

POS 24: Ambulatory Surgical Center (ASC)

POS 24 applies to services rendered in a freestanding ambulatory surgical center approved to perform surgical procedures that do not require inpatient hospitalization. POS 24 triggers the facility payment rate. The ASC bills separately for facility resources under the ASC payment system, and the physician bills the professional component under POS 24.

POS 31: Skilled Nursing Facility

POS 31 applies to services rendered to patients admitted to a Medicare-certified skilled nursing facility (SNF) for skilled care following a qualifying hospital stay. POS 31 triggers the facility payment rate. It is distinct from POS 32 (nursing facility), which covers custodial long-term care settings not provide skilled level services.

POS 12: Home

POS 12 applies to services rendered in a patient’s private residence for non-telehealth, in-person home visits. POS 12 triggers the non-facility payment rate. It is distinct from POS 10, which applies specifically to telehealth services delivered while the patient is in their home. Home visit E/M codes (CPT 99341 to 99350 for established patients) are used in conjunction with POS 12.

What Are the 2026 Telehealth Place of Service Code Updates?

The CY 2026 Medicare Physician Fee Schedule Final Rule permanently extends several telehealth billing flexibilities that were introduced during the COVID-19 public health emergency. The 2 valid POS codes for Medicare telehealth billing in 2026 are POS 02 and POS 10, and their correct application determines which payment rate the physician receives.

The 3 key telehealth POS rules for 2026 are:

1.   POS 10 pays the non-facility rate, POS 02 pays the facility rate: physicians billing telehealth services to patients located at home (POS 10) receive a materially higher reimbursement than for patients located elsewhere (POS 02). Selecting POS 02 when the patient is at home understates reimbursement on every telehealth claim.
2.   Both POS codes require a telehealth modifier: per
3.   CMS Medicare Claims Processing Manual Chapter 26, POS 02 and POS 10 must each be paired with modifier 95 for real-time audio/video telehealth or modifier 93 for audio-only telehealth. A claim submitted with POS 10 or POS 02 but without a telehealth modifier will be rejected.
4.   Virtual direct supervision is permanently adopted: for 2026, CMS permanently allows physicians to provide direct supervision of applicable services via real-time audio/video technology, enabling billing for supervised services without requiring the supervising physician to be physically present at the service location. 

Conclusion

Medical billing place of service codes are 2-digit identifiers that determine whether a physician is reimbursed at the facility or non-facility rate under the Medicare Physician Fee Schedule. Selecting the correct POS code requires knowing the actual setting where the patient received the service, not where the physician’s primary practice is located. In 2026, POS 10 and POS 02 govern all Medicare telehealth reimbursement, with POS 10 yielding the higher non-facility rate for home-based virtual care. The 4 most common POS errors, billing POS 11 at hospital-owned off-campus clinics, using POS 02 instead of POS 10 for home telehealth, omitting telehealth modifiers, and misassigning hospital setting codes, each carry denial risk and potential overpayment liability under RAC audit review.

For the complete and current POS code list and descriptions, physicians should reference the CMS Place of Service Code Set and CMS Medicare Claims Processing Manual Chapter 26 for 2026 telehealth billing requirements. Consult a certified medical coder (CPC or CCS) or a healthcare billing compliance specialist for practice-specific POS code decisions.

FAQs

What Is a Place of Service Code in Medical Billing?

A place of service code is a 2-digit code entered in field 24B of the CMS-1500 form that identifies the setting where the physician rendered the service and determines whether the facility or non-facility payment rate applies to the claim under the Medicare Physician Fee Schedule.

What Is the Difference Between POS 02 and POS 10 for Telehealth?

POS 02 applies when the patient is outside their home during a telehealth visit and is reimbursed at the lower facility rate, while POS 10 applies when the patient is in their home and is reimbursed at the higher non-facility rate. Both codes require modifier 95 or 93 in 2026.

Does the Wrong Place of Service Code Cause a Claim Denial?

Yes, an incorrect POS code causes claim denials when the setting is inconsistent with the billed procedure, when a required telehealth modifier is missing, or when the POS code triggers an incorrect payment rate that flags the claim during payer or RAC audit review.

What Is the Difference Between a Facility and Non-Facility Rate in Medical Billing?

The non-facility rate is higher because it includes a practice expense component covering the physician’s office overhead, while the facility rate is lower because the facility bills separately for overhead resources under its own claim.