According to an audit report published by the Office of Inspector, doctors are not reporting the correct "Place of Service" codes when submitting claims.  Medicare payments for the same services may vary depending on the location where the services were rendered.  This is because Medicare has determined, among other things, that the cost to produce a service may be more or less in certain settings.  In addition, payment for a professional service which is rendered in a facility (where a facility fee applies) will typically be lower than if the same services is rendered in the office setting, since the facility expense in the office setting (known as the practice expense) is rolled into the professional fee and not paid separately.  Failing to correctly code the POS can result in a physician receiving an overpayment and could even result in false claims liability.

The OIG report (found at http://oig.hhs.gov/oas/reports/region1/10600502.pdf) was based on a sample review of 100 claims for services rendered during a single calendar year.  The OIG found that physicians incorrectly coded the place of service on 81 of the 100 sampled claims by using the office place of service code even though they performed the services in an outpatient hospital or an ambulatory surgical center.  Based on the report the OIG recommended that the carrier in question recover in excess of $4,249,190 in overpayments.