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POS 10 vs POS 02: The Telehealth Billing Code That's Costing Therapists Thousands in Denials
- Danielle Wagar
- May 26
- 7 min read
You did everything right. The session was documented. The claim was submitted on time.
The CPT code was correct.
And then it came back denied.
If you have been billing telehealth sessions and running into denials, underpayments, or payer audits you cannot explain, there is a good chance the problem is not your diagnosis code or your documentation. It is two digits on your claim form that most therapists never think twice about: the place of service code.
Specifically, the difference between POS 10 and POS 02.
This is one of the most common billing errors in outpatient mental health right now, and it is entirely fixable once you understand what each code means and when each one applies.
What Is a Place of Service Code?
A place of service (POS) code is a two-digit code on the CMS-1500 claim form that tells the payer where the service was rendered. Payers use it to determine the correct fee schedule, reimbursement rate, and coverage rules for that claim.
For in-person sessions, this is straightforward. Office visits get POS 11. Simple.
Telehealth is where it gets complicated, because there are two codes that apply to remote services and they are not interchangeable.
POS 10 vs POS 02: What Each Code Actually Means
POS 02 - Telehealth Provided Other than in Patient's Home
POS 02 applies when the patient is receiving telehealth services from a location that is not their home. This was the original telehealth place of service code, introduced before widespread consumer telehealth existed. It was designed for scenarios like a patient receiving a remote consultation from a clinic, a hospital outpatient department, or another facility.
In practical terms for outpatient therapy: POS 02 is rarely the correct code when your client is sitting in their living room on a laptop.
POS 10 - Telehealth Provided in Patient's Home
POS 10 was introduced by CMS in 2022 specifically to address the gap left by POS 02. It applies when the patient is located at their home during the telehealth encounter. For most outpatient mental health and therapy providers seeing clients via telehealth from their
personal residence, POS 10 is the correct code the majority of the time.
The distinction sounds simple. The billing implications are not.
Why Getting This Wrong Costs You Money
Using the wrong POS code does not just result in a denial. It can trigger a cascade of problems.
Denials and rejections. Many payers have updated their telehealth policies to require POS 10 for home-based telehealth. Submitting POS 02 on a claim where POS 10 is required will result in a denial. Depending on your clearinghouse and payer, it may not even make it through as a clean claim.
Underpayments. Some payers apply different fee schedules depending on POS code. If you are billing POS 02 when POS 10 is required, you may receive payment, but at the wrong rate. This is harder to catch than an outright denial and can compound quietly over months.
Audit exposure. Payers conduct post-payment audits. If your billing history shows POS 02 on claims where the documentation indicates the patient was at home, that inconsistency is a red flag. Recoupment demands are common in these situations.
Compliance risk. Consistent POS code errors, even unintentional ones, can be characterized as improper billing under payer contracts. This is a credentialing and contract integrity issue, not just a revenue issue.
The Scenario Breakdown: When to Use Which Code
Here is how to think through the correct code for common telehealth scenarios.
Your client is at home on their phone, tablet, or computer. Use POS 10. This is the standard outpatient telehealth scenario for most mental health providers. The patient's home is their location.
Your client is at their workplace. POS 02. Their workplace is not their home.
Your client is at a school. POS 02, or potentially POS 03 (School). Verify with the specific payer.
Your client is at another clinical facility receiving the telehealth consult. POS 02. They are at a non-home location.
Your client was at home but you are not certain. Document it. Your session notes should reflect the patient's location for every telehealth encounter. If you cannot confirm from your documentation, that is a documentation gap that needs to be corrected going forward.
You are the provider delivering telehealth from your office. Your location as the provider does not determine the POS code. The POS code reflects where the patient is located, not where you are.
This last point trips up a significant number of therapists. The place of service code on a telehealth claim describes the patient's location, not the provider's.
What the Major Payers Require
Payer policies on telehealth POS codes have been in flux since the COVID-19 public health emergency ended. Here is the general lay of the land as of 2025, though you should verify current policy with each payer directly as these change.
Medicare: Requires POS 10 for telehealth services provided to patients in their homes. Uses a different fee schedule (non-facility rate) for POS 10 than for POS 02 in most cases.
Medicaid: Varies significantly by state. Some state Medicaid programs have adopted the CMS POS 10/02 distinction; others have their own telehealth billing requirements. Always check your state-specific Medicaid telehealth policy.
Commercial payers (BCBS, Aetna, Cigna, United, Optum): Most major commercial payers have updated their policies to recognize POS 10. However, policy language, effective dates, and fee schedule implications vary by plan type and state. Verify through each payer's provider portal or your provider relations contact.
Headway, Alma, and similar platforms: If you are billing through a third-party platform, that platform is submitting claims on your behalf. Verify that their system is applying the correct POS code based on your session type. Do not assume it is handled correctly.
The Modifier 95 Question
You will also encounter Modifier 95 in the context of telehealth billing. Here is how it relates to POS codes.
Modifier 95 indicates that the service was delivered via synchronous telemedicine (real-time audio and video). Some payers require it. Some do not. Some require it in addition to the correct POS code. Some require it instead of a POS code change.
The interaction between POS 10, POS 02, and Modifier 95 is payer-specific. The safest practice is to:
Use the correct POS code based on patient location
Apply Modifier 95 when required by the specific payer
Verify both requirements in your payer contracts or provider manuals annually
Do not assume that using Modifier 95 alone satisfies the telehealth billing requirements for a payer that also requires POS 10.
How to Audit Your Current Claims for POS Errors
If you have been billing telehealth for more than a few months without specifically verifying your POS codes, an audit of your recent claims is worth doing.
Here is a simple process:
Pull a claims report from your practice management system filtered to telehealth sessions for the past 6 to 12 months
Review the POS code on each claim
Cross-reference with your session notes to confirm whether the patient was at home or at another location
Identify any claims with POS 02 where the patient was documented as being at home
For paid claims with incorrect POS codes: evaluate whether a corrected claim or voluntary repayment is appropriate (consult your biller or a compliance resource)
For denied claims with incorrect POS codes: resubmit with the correct POS code if within timely filing limits
This is not a comfortable process if you have a large volume of potentially miscoded claims, but it is far better than waiting for a payer audit to surface it.
Frequently Asked Questions: Telehealth Billing POS Codes
What is the difference between POS 10 and POS 02 for telehealth? POS 10 is used when the patient receives telehealth services from their home. POS 02 is used when the patient receives telehealth from a location other than their home. For most outpatient mental health telehealth sessions, POS 10 is correct.
Does the provider's location affect the POS code? No. The place of service code reflects where the patient is located during the service, not where the provider is located. A therapist billing from their office while the client is at home should use POS 10.
What happens if I have been using the wrong POS code? Depending on how long the error has been occurring and which payers are involved, you may have denials to resubmit, underpayments to identify, or in some cases a voluntary disclosure and corrected claim process to work through. A billing consultant can help you assess the scope and the right path forward.
Do all payers recognize POS 10? Most major commercial payers and Medicare now recognize POS 10. Medicaid varies by state. Always verify current policy directly with each payer.
Is Modifier 95 required in addition to POS 10? It depends on the payer. Some require Modifier 95 with the correct POS code. Others do not. Check your payer contracts and provider manuals.
Can I use POS 11 for telehealth? No. POS 11 is for in-person office visits. Using POS 11 on a telehealth claim is an error that could be characterized as misrepresentation of the service setting.
The Bottom Line
Two digits. That is the difference between a clean claim and a denial, an audit, or a recoupment demand.
POS 10 is where the patient is at home. POS 02 is everywhere else. For most outpatient telehealth mental health providers, the correct code is POS 10 the vast majority of the time.
If you are not certain your current billing setup is applying the right code, check it this week.
It is a five-minute fix that could save you months of claims problems.
Danielle Wagar is a billing and credentialing consultant at Upstate Healthcare Admin, working with solo therapists and small group practices across mental health, PT, OT, and SLP. She specializes in payer strategy, credentialing, and revenue cycle management.
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