Facility vs Non-Facility Rates in Medical Billing: Why the Office Price Is Higher
Facility vs non-facility refers to the two payment rates the Medicare Physician Fee Schedule carries for most codes: the non-facility rate for a setting the practice pays for, such as an office or freestanding center, and the lower facility rate for a hospital or other facility that bills its own claim for the overhead.
The difference comes down to who pays for the room, staff and equipment. Knowing that makes the fee schedule easier to read.
Where you see it
| Place | What it shows |
|---|---|
| Medicare PFS look-up tool | Non-facility price and facility price for each code, by locality |
| PFS relative value file (PPRRVU) | Separate non-facility and facility practice expense RVUs and totals, plus an NA indicator when a code is rarely or never performed in one setting |
| CMS-1500 box 24B | The place of service code that selects the rate |
| Remittance advice | The allowed amount, which is the selected rate for your locality; compare it against the fee schedule when it looks low (see the allowed column on our annotated remittance) |
| Commercial fee schedules | Many are a percentage of Medicare and inherit both rates |
The three parts of a fee
Every code’s payment is built from three relative value units: physician work, practice expense (PE) and malpractice (MP). Each is adjusted by its geographic practice cost index and the sum is multiplied by the conversion factor:
Payment = [(work RVU x work GPCI) + (PE RVU x PE GPCI) + (MP RVU x MP GPCI)] x conversion factor
For 2026 the conversion factor is 33.40 for most clinicians and 33.57 for qualifying participants in advanced alternative payment models. Work and malpractice do not change with the setting. Practice expense does, and that is the entire facility versus non-facility difference.
Why the non-facility rate is higher
Practice expense pays for the resources around the physician: clinical staff time, disposable supplies, equipment, and an allocation of indirect costs such as rent and administration. In an office the practice bears all of that, so the non-facility PE RVU is large. In a hospital outpatient department the hospital provides the room, nurses and equipment and is paid for them through its own outpatient claim, so the physician’s facility PE RVU covers only what the physician still brings. For 2026 CMS went further and allocated less indirect practice expense to services in facility settings, on the reasoning that most facility-based physicians no longer maintain a separate office whose overhead needs recovering.
How POS selects the rate
The place of service code on each line picks the rate. Medicare’s facility list is POS 02, 19, 21, 22, 23, 24, 26, 31, 34, 41, 42, 51, 52, 53, 56 and 61. The office (11), the patient’s home (10 for telehealth, 12 in person), independent clinics (49) and most other settings pay non-facility. One override: a service to a hospital inpatient (21) or outpatient (19 or 22) pays the facility rate regardless of where the physician actually met the patient. The full list is in our place of service codes article.
The 26 and TC relationship
Many radiation oncology and radiology codes have a professional and a technical component, and the relative value file carries three rows for them: the global code, the code with modifier 26, and the code with modifier TC. Here is 77300, basic dosimetry calculation, in the October 2026 file:
| Row | Work | PE (non-facility) | PE (facility) | MP | Total RVU |
|---|---|---|---|---|---|
| 77300 global | 0.60 | 1.37 | NA | 0.04 | 2.01 |
| 77300-26 | 0.60 | 0.35 | 0.35 | 0.03 | 0.98 |
| 77300-TC | 0.00 | 1.02 | NA | 0.01 | 1.03 |
Three things to notice. The components add up: 0.98 plus 1.03 equals the global 2.01. The professional component is priced the same in both settings, because it carries no equipment to remove, which is why the Claims Processing Manual says the facility and non-facility rates for a professional component are the same whatever the POS. And the global and TC rows show NA in the facility column: the code is rarely or never performed in a facility setting as a global or technical service, because in a facility the hospital bills the technical side. A global 77300 on a POS 22 claim is therefore always wrong.
A worked example
A radiation oncologist sees an established patient for a visit, CPT 99213, and the physicist completes a dosimetry calculation, 77300. Compare the practice’s freestanding center with the hospital department where the group also treats. Figures are 2026 national amounts before geographic adjustment at the 33.4009 conversion factor:
| Service | Freestanding center, POS 11 | Hospital outpatient, POS 22 |
|---|---|---|
| 99213 | work 1.30 + PE 1.46 + MP 0.09 = 2.85 RVU, 95.19 | work 1.30 + PE 0.33 + MP 0.09 = 1.72 RVU, 57.45 |
| 77300 | global 2.01 RVU, 67.14 | 77300-26, 0.98 RVU, 32.73; the hospital bills the TC (1.03 RVU) on its outpatient claim |
| Physician total | 162.33 | 90.18 |
The visit is the same work in both places; the 37.74 gap is the overhead Medicare assumes the hospital is paying. For the dosimetry calculation the physician is paid for the professional component alone and the technical payment moves to the hospital. Weekly treatment management, 77427, behaves differently: its PE RVU is 2.22 in both columns, so it pays 5.85 RVU (195.40) in either setting. It has no technical component, so its payment does not change with the setting.
What to do
- Bill the rate by place of service, per line. A group that treats in both settings needs both fee schedules loaded and the POS set from the treatment location on the schedule, not from a default.
- Never bill the global code in POS 19, 21 or 22. The NA in the facility column means CMS does not price the global code there. Use modifier 26; the hospital bills the technical component. The Iridium Suite claim scrubber flags a global code billed with a facility place of service before the claim is sent.
- Read the remittance against the right column. A facility allowed amount on a service you performed in your own center means the claim had the wrong POS; correct and resubmit rather than appeal.
- Model site changes before they happen. When a hospital acquires a freestanding center or a practice opens one, every code with a technical component changes payer, modifier and price. Run the fee schedule both ways first.
- Update the fee schedule each January and each quarter from the CMS relative value files; the October release can change individual codes.
Related terms
- Place of service codes, the full list
- Place of service 22
- Modifiers 26 and TC
- Allowed amount
- CPT 77427, weekly radiation treatment management
Further reading: CMS Physician Fee Schedule look-up tool overview; CMS PFS relative value files; Medicare Claims Processing Manual, chapter 12, section 20.4.2 (PDF); CMS fact sheet: CY 2026 Physician Fee Schedule final rule.
Frequently asked
What is the difference between facility and non-facility rates?
The Medicare Physician Fee Schedule lists two prices for most codes. The non-facility price applies when the service is performed in a setting the practice pays for, such as an office, and includes the practice's overhead. The facility price applies in a hospital, ASC or similar setting that bills its own facility claim, so it pays the physician less.
Why is the non-facility rate higher?
Only the practice expense component of the RVU changes between the two. In an office the practice supplies the room, clinical staff, supplies and equipment, so the practice expense RVU is larger. In a facility the hospital bears those costs and is paid separately for them, so the physician's practice expense RVU is smaller.
How does the place of service decide the rate?
The POS code on each claim line selects the rate. Medicare pays the facility rate for POS 02, 19, 21, 22, 23, 24, 26, 31, 34, 41, 42, 51, 52, 53, 56 and 61, and the non-facility rate for the office (11), home (10 and 12) and most other settings.
How do modifiers 26 and TC relate to facility and non-facility?
For codes with professional and technical components, the global code equals the 26 and TC components added together. In a facility the physician bills the professional component with modifier 26, which is priced the same in both settings, and the hospital bills the technical component on its own claim. The global code is normally billed only in a non-facility setting.