Why is the physician paid less in the hospital?

The facility rate excludes most practice expense because the hospital is paid separately for the space, staff and supplies.

Is an off-campus hospital department billed differently?

Yes. Off-campus provider-based departments use place of service 19, and some are paid at a reduced site-neutral rate under OPPS. The hospital's billing office should confirm the department's status.

Wound Care In The Office Vs. Hospital Outpatient Setting: What Changes In Billing

Physician Office

In the office (place of service 11), the physician is paid the non-facility rate under the Physician Fee Schedule. That rate includes practice expense for staff, space and most routine supplies. In 2026, skin substitutes used with a covered application in the office are paid to the practice as incident-to supplies.

Hospital Outpatient Department

In a hospital-based wound center (place of service 19 or 22), the physician bills the professional service at the lower facility rate, and the hospital bills its facility fee under the Outpatient Prospective Payment System on the institutional claim. Clinic visits are billed by the hospital with its own visit code, and supplies and many add-on services are packaged into the hospital payment.

Skin Substitutes In Each Setting

For 2026, CMS aligned payment for skin substitute products across the office and hospital outpatient settings, paying them as incident-to supplies at a single rate. In the hospital, the product goes on the hospital's claim. In the office, it goes on the practice's claim with the application code.

Getting Place Of Service Right

Billing the office rate for a service performed in a hospital department is an overpayment, and auditors check place of service against hospital claims for the same day. Providers who split time between a private office and a hospital wound center need a clear process to flag where each visit took place.

Frequently Asked Questions

Why is the physician paid less in the hospital?: The facility rate excludes most practice expense because the hospital is paid separately for the space, staff and supplies.
Is an off-campus hospital department billed differently?: Yes. Off-campus provider-based departments use place of service 19, and some are paid at a reduced site-neutral rate under OPPS. The hospital's billing office should confirm the department's status.

Billing Support For This Specialty

Physicians Professional Billing Services, Inc. has billed wound care, surgical and procedural specialties since 1998, across every Medicare Part B MAC jurisdiction.

Wound Care & Skin Substitute Billing Services Request A Consultation

Primary Sources

This page is general information about billing and coverage rules and is not legal, coding or reimbursement advice for a specific claim. Coverage policies change; confirm current requirements with CMS and the applicable Medicare Administrative Contractor.