Coding errors

Wrong place-of-service code — facility billing for a non-facility visit

Every CPT code paid under the Medicare Physician Fee Schedule has two payment amounts: facility (lower) and non-facility (higher). The split exists because facility settings already include separate payment to the hospital for overhead. When a bill uses the non-facility rate for a service performed in a hospital outpatient department, the difference can be 30–50% on a single line.

Federal basis

Medicare Physician Fee Schedule — Place of Service

42 CFR §414.22, CMS Place of Service Code Set

Read the source →

What this looks like in practice

Medicare PFS payments split into facility (e.g., POS 21 hospital inpatient, 22 outpatient, 23 ER) and non-facility (e.g., POS 11 office, 12 home). The non-facility rate is higher because the practitioner pays for the overhead in those settings. When a hospital outpatient department bills using the non-facility rate, the patient may be charged at the inflated rate even though the hospital separately collected facility-fee revenue. The right rate is the one matching the actual location of service.

This pattern most commonly appears in hospital-owned physician practices ('provider-based' billing), where the same physical clinic can bill at facility or non-facility rates depending on its certification status. Federal disclosure rules (42 CFR §413.65) require notification to patients when a clinic is provider-based — but the notice gets missed, and the bill arrives at the wrong rate.

How to spot it on a bill

  • 01.Service was rendered in a hospital outpatient department, but the bill uses Place of Service 11 (office).
  • 02.The same provider, same clinic, charges different rates depending on the patient's insurance — sometimes more, sometimes less.
  • 03.You weren't given a 'provider-based clinic' notice but the bill includes a separate facility fee and the non-facility CPT rate.

What to write — ready-to-paste language

Replace the bracketed fields with your specific details. Send by certified mail with return receipt, or via the hospital’s patient portal if it offers documented messaging. Keep a copy.

On the bill dated [date], CPT [code] is listed at the non-facility rate. The service was rendered at [hospital name]'s [department], which is a hospital outpatient department. Per CMS Place of Service Code Set guidance (42 CFR §414.22), the appropriate POS is 22 (outpatient hospital), and the rate should be the facility (lower) rate. Please correct the bill and send an updated itemized statement.

This is a starting point, not legal advice. Your specific situation may warrant additional details. Our scan tool drafts this letter automatically with your bill’s specifics filled in.

CPT codes commonly involved

These codes often appear in bills affected by this pattern. Click through for the federal benchmark price on each.

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Related scenarios

Common questions

How do I know what place-of-service code was used?
Place-of-service appears as a 2-digit code on the itemized bill (often labeled 'POS' or 'Place of Service'). Standard codes: 11 = office, 12 = home, 21 = inpatient hospital, 22 = on-campus outpatient, 23 = ER. CMS publishes the full list at the URL above.
What's a 'provider-based clinic' and why does it matter?
Provider-based clinics are physician offices owned by hospitals and certified as part of the hospital under 42 CFR §413.65. Services there bill at facility rates plus a separate facility fee. Federal disclosure rules require the hospital to give patients a written notice before the visit. If the notice wasn't given, the patient has grounds to dispute the facility fee.

P.S. The dispute language above is a starting point. Bills with this pattern often have additional issues alongside it — coding errors stacked with markup, surprise bills stacked with charity- care eligibility. The scan finds all of them in one pass. Start the audit →

P.P.S.Federal law gives you these rights regardless of how the bill arrived. Insured, uninsured, in-network, out-of-network — the underlying patient-protection statutes apply.

P.P.P.S. Bills are time-sensitive. Most insurance appeals must be filed within 180 days. Charity-care discounts at non-profit hospitals are most easily applied within 240 days of the original bill. Acting earlier costs less.