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

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 audit 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.

• CPT 99203
• CPT 99213
• CPT 99214

Related scenarios

• Upcoded ER visit — when the level on the bill doesn't match the chart

  ER visits billed at a higher complexity level than the medical record supports are the most common billing-error pattern in the country. Federal coding rules let you dispute the level.

• Unbundled charges — when one procedure gets billed as several

  Federal coding rules (NCCI edits) explicitly prohibit billing certain combinations of CPT codes together. When you see them on your bill, the federal benchmark gives you grounds to dispute.

• Modifier-25 abuse — separate E/M billed alongside a procedure

  Modifier 25 lets a provider bill an office visit alongside a procedure on the same day, but only when the visit is a 'significant, separately identifiable' service. The OIG has repeatedly flagged inappropriate use.

• Observation vs. inpatient — billed under the wrong status

  Observation status looks like an inpatient stay to the patient (same room, same care) but bills under outpatient rules — which can mean much higher cost-share for Medicare beneficiaries and a denied SNF benefit.

• Annual physical billed as a sick visit

  Preventive visits (annual physicals, well-child checks) are required by the ACA to be $0 cost-share when in-network. When the same visit gets coded with a diagnostic code, you may owe a copay or coinsurance you weren't expecting.

• Anesthesia time billed in excess of documented minutes

  Anesthesia bills are calculated by time units. Each 'unit' is 15 minutes of documented anesthesia time, plus base units for the case complexity. Time-unit inflation is a documented audit pattern.

Common questions