The Place of Service (POS) code set, maintained by the Centers for Medicare & Medicaid Services (CMS), is a standardized system used in medical billing to identify where a healthcare service was rendered. These two-digit identifiers are a mandatory component of professional claims, such as the CMS-1500 form, submitted to health plans under national HIPAA standards. POS 02 is designated for telehealth services. This code identifies a virtual patient encounter that takes place when the patient is at a site other than their private residence. Understanding POS 02 is necessary for providers to ensure compliance, proper claim submission, and accurate reimbursement for remote care.
Understanding Place of Service Codes
Place of Service codes are two-digit numeric identifiers that healthcare providers must include on professional claims to specify the setting where a medical service occurred. Payers, including Medicare and private insurers, use these codes to process claims and determine appropriate payment based on the location of care. The codes are reported in Box 24b of the CMS-1500 claim form or its electronic equivalent.
Using the correct POS code is a foundational element of compliant medical billing, directly impacting the financial outcome of a claim. Different locations, such as a physician’s office (POS 11) versus an outpatient hospital (POS 22), carry distinct payment rates and coverage rules. If a claim contains an incorrect or missing POS code, it is returned as unprocessable, leading to delays or denials in payment.
The Specific Definition of POS 02
The official definition of Place of Service code 02 is “Telehealth Provided Other Than in Patient’s Home.” This signifies that health services were delivered through telecommunication technology, but the patient was not located in their private residence during the encounter. The definition requires two separate locations: a distant site for the provider and an originating site for the patient.
The service must be delivered via an interactive audio and video telecommunications system that permits real-time communication. While the provider is at their designated location, the patient is situated remotely at a non-home site. This non-home location could include a school, a temporary worksite, a clinic, or a skilled nursing facility.
How POS 02 Changed Telehealth Billing
Before the regulatory changes driven by the COVID-19 Public Health Emergency (PHE), telehealth services were often billed using POS 11 (Office) combined with a modifier, such as 95, to indicate remote delivery. This practice blurred the distinction between in-person and virtual care and complicated data tracking for payers. The original POS 02 code existed but was tied to strict originating site restrictions that limited its widespread use.
CMS responded to the expansion of remote care by refining its coding system to enable better tracking and differentiation of telehealth services. CMS updated the description of POS 02 and introduced POS 10 (“Telehealth Provided in Patient’s Home”), effective January 1, 2022. This shift provided two distinct, dedicated codes for telehealth based on the patient’s location, simplifying billing and reducing reliance on the POS 11/Modifier 95 combination. The creation of these separate codes allowed CMS and other payers to establish specific, location-dependent reimbursement policies for virtual care.
Requirements for Using POS 02
Providers must adhere to specific requirements to bill using POS 02, focusing on the patient’s location and the method of service delivery. The service must be delivered using an approved telecommunication technology, typically a HIPAA-compliant, secure platform capable of both audio and video transmission. Documentation must clearly reflect the patient’s exact location, which must be a site other than their home.
The patient’s originating site can be various non-residential locations.
Non-Residential Originating Sites
- A school
- A community center
- A hospital or clinic where they are an outpatient
- A skilled nursing facility
The service rendered must be listed on the official Medicare Telehealth Services List or covered by the patient’s private payer policy. When submitting the claim, providers must pair the POS 02 code with the appropriate telehealth modifier, such as Modifier 95 for synchronous audio-visual services, to confirm the virtual nature of the encounter.
Reimbursement Implications of POS 02
Using POS 02 carries a direct financial consequence for providers due to the difference in payment rates. Claims submitted with POS 02 are generally reimbursed at the facility payment rate. This rate is calculated under the assumption that the patient is receiving the service in a location where the facility absorbs a portion of the overhead costs, such as rent, utilities, and support staff.
The facility rate is typically lower than the non-facility payment rate, which is used for services provided in settings like a physician’s office (POS 11). Providers billing with POS 02 receive the facility rate because the patient is at a site that is not the provider’s office. Therefore, the provider is not incurring the full overhead costs associated with an in-person office visit. While a telehealth modifier, such as 95, validates the service modality, it does not alter the payment rate determined by the POS code.
Distinguishing POS 02 from Other Telehealth Codes
The most frequent billing error occurs when providers confuse POS 02 with POS 10, both dedicated telehealth codes. The key differentiator is the patient’s physical location during the encounter. POS 02 is strictly for telehealth services where the patient is located at a non-residential site (e.g., a clinic, school, or worksite).
In contrast, POS 10 is reserved exclusively for telehealth encounters where the patient is located in their private home or residence. Using the incorrect code will lead to the claim being denied, as the payer’s system identifies a mismatch between the patient’s documented location and the expected reimbursement rate. Neither POS 02 nor POS 10 should be used for in-person services, which are billed with traditional codes like POS 11 (Office).