Guide

Facility vs non-facility: the site-of-service differential

Summary

Medicare publishes two payment amounts for many CPT codes: a non-facility rate, which assumes your own office absorbed the overhead (rent, staff, supplies), and a lower facility rate, which assumes a hospital or facility already billed separately for that overhead. The place-of-service code you enter on the claim tells the payer which rate applies, and billing the wrong POS code prices your visit against the wrong overhead assumption.

By Gale Editorial · Updated 2026-07-26. Every figure cited to a dated source. How we write.

Two payment amounts for the same code

The Medicare Physician Fee Schedule publishes two payment amounts for most codes: a non-facility rate and a facility rate, both visible on the same CMS lookup for a given code and locality 1Ref 1Centers for Medicare & Medicaid Services (2026).Physician Fee Schedule Search.The lookup tool showing both facility and non-facility payment amounts for a code by locality2Ref 2Centers for Medicare & Medicaid Services (2026).Physician Fee Schedule.That the Physician Fee Schedule sets both rate structures and updates annually through rulemaking. The non-facility rate is generally higher because it includes a practice expense component priced as though your own office paid for the exam room, front-desk staff, supplies, and equipment for that visit. The facility rate is lower because it assumes those overhead costs were already billed separately by the facility — a hospital outpatient department, an ambulatory surgical center — through its own facility fee.

How the payer knows which one to apply

The place of service (POS) code on your claim tells the payer which rate to use. CMS maintains the full POS code set: office is POS 11, a patient's home is POS 10, telehealth delivered to a patient's home is POS 10, telehealth delivered elsewhere is POS 02, and hospital outpatient is a different code entirely from a private office 3Ref 3Centers for Medicare & Medicaid Services (2026).Place of Service Code Set.The definitions of specific POS codes (office 11, home 10, telehealth 02/10) that determine which rate applies. Enter POS 11 for a visit conducted in your own private office and the claim prices at the non-facility rate; enter a facility POS code because the visit happened in or through a facility setting, and the claim prices at the facility rate — even if the CPT code billed is identical either way.

Why this differential exists at all

The logic is a cost-avoidance rule: Medicare doesn't want to pay twice for the same overhead. If a hospital outpatient department bills its own facility fee for the space, staff, and equipment supporting your visit, paying you the full non-facility rate on top of that would double-pay the practice-expense component. The facility rate strips that component out of your professional payment because the facility's own claim already covers it. This is why the differential tracks where the overhead was actually incurred, not the complexity or length of the visit itself — a well-documented, high-complexity visit still prices at the facility rate if it happened in a facility setting.

Where this trips up a solo practice

The most common error is billing POS 11 out of habit for a visit that actually happened somewhere else — a home visit, a nursing facility round, telehealth delivered while covering at a hospital-affiliated site — because the office POS code is the one already saved as a claim default. The opposite error also happens: a solo practitioner who rents space inside a hospital-owned building, without that space being licensed and billed as hospital outpatient, still bills POS 11 correctly, because POS tracks the billing arrangement, not the physical building. When the arrangement is ambiguous, check with the site or facility administrator which POS code applies before defaulting to what's already saved in your system.

Telehealth adds its own POS layer

Telehealth visits carry their own POS distinction on top of the facility/non-facility split: POS 10 for a patient at home generally prices at the non-facility rate, while POS 02 for a patient at a different originating site can price differently depending on the code and current CMS telehealth policy for that year 3Ref 3Centers for Medicare & Medicaid Services (2026).Place of Service Code Set.The definitions of specific POS codes (office 11, home 10, telehealth 02/10) that determine which rate applies. Because telehealth payment policy shifts year to year, confirm the current POS-to-rate mapping for telehealth codes against the same-year Medicare Physician Fee Schedule lookup rather than assuming last year's mapping still holds 1Ref 1Centers for Medicare & Medicaid Services (2026).Physician Fee Schedule Search.The lookup tool showing both facility and non-facility payment amounts for a code by locality2Ref 2Centers for Medicare & Medicaid Services (2026).Physician Fee Schedule.That the Physician Fee Schedule sets both rate structures and updates annually through rulemaking.

Checking your own claims for the mismatch

If a remittance pays less than you expected for a familiar code, check the POS code you billed before assuming an underpayment — a facility-rate payment on a code you expected at the non-facility rate is often a correctly-processed claim carrying the wrong POS, not a payer error. Compare the paid amount against both the facility and non-facility figures shown on the CMS Physician Fee Schedule lookup for that code 1Ref 1Centers for Medicare & Medicaid Services (2026).Physician Fee Schedule Search.The lookup tool showing both facility and non-facility payment amounts for a code by locality — if it matches the facility rate and you billed from your own office, the fix is a corrected claim with POS 11, not an appeal.

Common questions

The facility/non-facility structure originates in the Medicare Physician Fee Schedule, but many commercial payers price against it as their reference point, so the same POS-driven logic often carries over into commercial claims. Your specific contract controls whether and how a commercial payer applies the distinction — worth confirming rather than assuming Medicare's structure applies exactly.

It depends on whether the clinic bills its own facility fee separately from your professional claim — if it does, you bill the facility POS code and facility rate; if the space isn't licensed and billed as hospital outpatient, POS 11 and the non-facility rate can still apply. This is a billing-arrangement question best confirmed with the site's administration rather than assumed from the building.

Check which POS code you're using for the telehealth visit and whether it matches the originating site correctly — POS 10 and POS 02 can carry different payment implications, and current-year CMS telehealth policy affects specific codes' eligibility and rate. A same-code payment drop after switching to telehealth is worth tracing to the POS code first.

No — the POS code must reflect where the visit actually occurred and how any facility overhead was billed, not whichever rate is higher. Billing a facility-setting visit under a non-facility POS code to capture the higher rate misrepresents the claim and creates audit exposure independent of the dollar amount involved.

CMS's Physician Fee Schedule search tool returns both the facility and non-facility payment amounts for any code by locality, alongside the RVUs behind each figure. It's the same public lookup used for any other fee schedule question and requires no login.

Run your practice on Gale

The software is free. Gale earns one flat 3.5% all-in per paid transaction — only on transactions that actually pay. No subscription, no setup fee, no network cut.

Start or manage a practice →

References

1.Centers for Medicare & Medicaid Services (2026). Physician Fee Schedule Search. Centers for Medicare & Medicaid Services (CMS). link ✓The lookup tool showing both facility and non-facility payment amounts for a code by locality
2.Centers for Medicare & Medicaid Services (2026). Physician Fee Schedule. Centers for Medicare & Medicaid Services (CMS). link ✓That the Physician Fee Schedule sets both rate structures and updates annually through rulemaking
3.Centers for Medicare & Medicaid Services (2026). Place of Service Code Set. Centers for Medicare & Medicaid Services (CMS). link ✓The definitions of specific POS codes (office 11, home 10, telehealth 02/10) that determine which rate applies

https://www.gale.care/for-providers/fs-facility-vs-nonfacility-rates · 3 sources. Competitor details are cited to dated public sources and maintained as they change; figures are estimates, not commitments. Synthetic demonstration.

← Back to for providers