AI Solutions for Healthcare
Payment Integrity Audit: Facility vs. Non-Facility Place of Service Codes 

Under the Medicare Physician Fee Schedule (MPFS), some procedures have separate rates for physicians’ services when provided in facility and non-facility settings. In general, the Place-of-Service (POS) code reflects the actual place where the beneficiary receives the face-to-face service and determines which payment rate is paid.  

Procedures included in the MPFS are assigned a Relative Value Unit (RVU). These are resource-based values, assigned by Medicare, used to determine the cost of services and to standardize reimbursement to providers, based on metrics for Work, Practice Expense, and Malpractice factors. 

The difference in facility and non-facility rates is due to the Practice Expense (PE) RVU, which reflects the overhead costs involved in maintaining a practice, such as renting office space, buying supplies, equipment, and staff costs. The PE-RVU is decreased for many services in facility settings (such as a hospital or SNF) as compared to non-facility settings (like office) to account for the differences in practice expenses at different settings. 

In 2023 the OIG published a report for an audit they performed on physician claims paid with non-facility POS code 32 (NF or SNF with no Part A coverage), that should have been coded with POS 31 (SNF with Part A coverage) based on the presence of a Part A claim. The audit included over 1.13M physician claims, which the OIG deemed were overpaid by $22.4M. 

Claims paid using MPFS rates are at risk for overpayment when the POS is coded incorrectly for the facility vs. non-facility settings, as shown in this example from the OIG report: 

Procedure CodeFacility Rate*Non-facility Rate*Difference
11043 $161.32   $239.64$78.32

*Rates shown are the national payment amounts for CY 2020. 

What can your health plan do to reduce (or avoid) claim overpayments related to POS codes? 

The logic to identify claims potentially overpaid is complicated – making it less than ideal for real-time claim adjudication edits. First, there are thousands of impacted procedure codes and POS codes to edit against. Second, timing restricts an edit’s effectiveness. An edit will not identify a non-facility POS error if the corresponding facility claim hasn’t been received when the edit is executed. 

To enact some cost avoidance as a health plan, you can develop edits focused on procedures most likely to have been coded incorrectly – such as higher complexity surgical procedures with POS 11 (office) – with the knowledge that weaknesses will be inherent to any real-time efforts. 

Provider education can be beneficial to a health plan seeking to ensure providers code POS correctly for the setting. The OIG report makes it clear that providers frequently mis-code POS 31 and 32, so education efforts should include the important differences in SNF and nursing facility settings.  

Codoxo’s platforms use our proprietary algorithm logic combined with the benefit of access to your plan’s post-pay historical and ongoing incremental data to correctly identify POS facility vs. non-facility coding errors. In our Provider Scope platform, this intelligence is used to create provider education Themes, focused on providers more commonly miscoding POS.  

Our Audit Scope platform Rules not only identifies the specific claims with these errors, but also assists your health plan in efforts to recoup the overpaid dollars.  


Medicare Internet Only Manual 

100-04 – Claims Processing Manual 

Chapter 12 – Physician Services 

Section 20.4.2 – Site of Service Payment Differential:

MPFS Relative Value Files:

Office of the Inspector General 

Audit Report No, A-04-21-04084: