Telehealth has become a permanent fixture in healthcare delivery, but many practices still struggle with billing it correctly. The difference between place of service code 02 (telehealth) and 10 (phone-only) can mean the difference between a paid claim and a denial. Add state-specific parity requirements and modifier rules into the mix, and compliance becomes complex fast.
This guide covers the essential rules to bill telehealth accurately and stay audit-compliant.
Place of Service Codes: The Foundation of Telehealth Billing
Place of service (POS) codes tell payers where the patient-provider encounter occurred. For telehealth, you have two primary options:
POS 02: Telehealth, Patient Home
Use POS 02 when:
- The patient is in their home (or another location outside your facility)
- You have two-way synchronous audio-video communication
- Both provider and patient have internet connectivity
- The visit qualifies for telehealth reimbursement under Medicare/payer rules
POS 02 tells payers this is a billable telehealth visit eligible for equivalent reimbursement to an in-office visit. Medicare and most commercial payers reimburse POS 02 visits at the same rate as in-office (POS 11) visits after 2023 parity law expansion.
POS 10: Phone-Only Consultation
Use POS 10 when:
- The encounter is audio-only (no video)
- No video capability exists or the patient refused video
- Documentation clearly notes “telephone consultation” or “phone-only visit”
POS 10 visits reimburse at a lower rate (typically 50-60% of in-office equivalent) because audio-only limits clinical assessment. Medicare CPT codes like 99441-99443 (established patient phone visit) are specifically designed for audio-only and already baked into lower RVUs.
Critical error: Billing a phone-only encounter as POS 02 (or using video CPT codes 99213-99215 for audio-only calls) triggers denials or overpayment recoupment. Auditors flag these patterns immediately.
Modifier 95: The Telehealth Modifier
Modifier 95 appended to an E/M code explicitly identifies the service as a telehealth visit. CMS guidelines state that modifier 95 should be used when appropriate, but specific rules vary by payer.
When to Use Modifier 95
Medicare (CMS): Modifier 95 is NOT required for POS 02 visits after 2023, as the POS code itself identifies the telehealth location. However, many providers still append it for clarity and to simplify claim processing.
Commercial payers: Requirements vary. Anthem, United Healthcare, and Aetna have different preferences. Check your credentialing agreements or call the payer to confirm.
State Medicaid programs: Many state Medicaid programs require modifier 95 to identify telehealth. Texas Medicaid, for example, requires “modifier 95 for audio-video telehealth” even though POS 02 is used.
Common Modifier 95 Mistakes
- Appending 95 to a phone-only code (99441). Phone codes don’t use 95; they’re inherently phone-based.
- Appending 95 to phone billing (POS 10) when the code structure doesn’t support it.
- Omitting 95 when the payer requires it, causing manual review and payment delays.
Best practice: Include modifier 95 for all POS 02 visits unless your payer explicitly states it’s not needed.
Audio-Only Telehealth Billing Rules
Audio-only visits are more restrictive than video telehealth. Medicare and most payers have specific rules:
CPT Codes for Audio-Only Established Patients
CPT 99441-99443: Established patient phone/e-visit consultation
99441 = 5-10 minutes = approximately $45 Medicare reimbursement
99442 = 11-20 minutes = approximately $71
99443 = 21-30 minutes = approximately $94
These codes are time-based and explicitly for established patients. They’re never used with POS 02 or modifier 95 because they are already identified as phone-based services in their RVU structure.
New Patient Audio-Only Visits
Medicare does NOT cover new patient audio-only telehealth under standard E/M codes. If a new patient contacts your practice and you can only do a phone consultation, you have limited options:
- Schedule a follow-up video visit (POS 02, 99203-99205) and bill that
- Use a brief check-in code (99441-99443) at reduced reimbursement, understanding it may not be covered for new patients depending on payer
- Offer the visit as self-pay or defer to a video consultation
Many practices incorrectly bill new patient codes (99203-99205) with POS 10, assuming parity laws apply. They don’t. Audio-only new patient visits often trigger denials.
State Parity Laws and Reimbursement Requirements
As of 2026, 42 states have telehealth parity laws requiring private payers to reimburse telehealth at the same rate as in-office visits. However, rules vary by state and are not always consistent with federal law.
Key State Variations
California Parity Law (AB 72): Requires parity for audio-video telehealth after 2023. Commercial payers must reimburse POS 02 visits at in-office rates. Audio-only can be covered at a lower rate if parity law allows (and most do).
Texas Parity Law (HB 1264): Requires parity for all telehealth modalities effective 2023. Payers must reimburse POS 02 at in-office rates. Modifier 95 is recommended for tracking compliance.
Florida Parity Law (HB 1261): Applies to group health plans (not fully comprehensive). Audio-video parity required; audio-only can be lower.
New York Parity Law (Chapter 5505): Requires parity for audio-video telehealth during and after declared disaster (expanded post-COVID). Standard commercial plans have variable rules depending on payer agreement.
No parity requirement states: 8 states (Mississippi, Missouri, South Carolina, Wyoming, Montana, North Dakota, South Dakota, and Vermont) have no comprehensive state parity mandate. Practices in these states must rely on individual payer agreements. Some payers reimburse at parity; others pay 50-75% of in-office rates.
How to Check Your State’s Requirements
Visit the American Medical Association’s Telemedicine Resource Center or your state’s Medical Board website. Document your state’s rules in your compliance manual.
Medicare Telehealth Requirements
Medicare telehealth rules are federally set but have regional nuances:
Eligible Specialties and Services
Medicare covers telehealth for most E/M visits (99201-99215), behavioral health services, and certain procedures like psychiatric services and dialysis support. Some high-touch services (physical exams requiring stethoscope, palpation, orthopedic testing) may be flagged as inappropriate for audio-only but are acceptable for video telehealth.
Patient Location Requirements
The patient must be in an eligible location: home, workplace, rural facility, or federally designated shortage area. You cannot bill telehealth if the patient is physically in your office (that’s an in-office visit, POS 11).
Documentation Requirements
The medical record must clearly state:
- The mode (audio-video or audio-only)
- The patient’s location
- Any barriers to in-person care (distance, transportation, health conditions)
- For audio-only: justification for why video was not feasible
CMS auditors look for this documentation. A sample audit of 20 telehealth claims without location documentation noted recently recovered $3,200 in overpayments from a cardiology practice.
Common Compliance Pitfalls and How to Avoid Them
Pitfall 1: Wrong POS Code for Visit Type
Issue: Audio-only visit billed as POS 02 with 99213.
Impact: Denial or overpayment recoupment if audit occurs.
Fix: Use POS 10 for audio-only, or use CPT 99441-99443 codes explicitly designed for phone.
Pitfall 2: Modifier 95 Misuse
Issue: Appending 95 to phone codes (99441 + 95) or omitting 95 when payer requires it.
Impact: Manual review delays or claim denials.
Fix: Never append 95 to phone-specific CPT codes. Use 95 only with standard E/M codes (99213-99215) when billed with POS 02.
Pitfall 3: Billing New Patients Audio-Only
Issue: Billing new patient E/M codes (99203-99205) with POS 10.
Impact: Denials from Medicare and many commercial payers.
Fix: Schedule new patient video visits, or document why audio-only was clinically appropriate and required by payer.
Pitfall 4: No Patient Location Documentation
Issue: Medical record states “telehealth visit” but does not specify patient location.
Impact: Medicare audit finding; potential overpayment recoupment.
Fix: Mandatory documentation template: “Patient location: home in XYZ state. Distance to clinic: 45 miles. Video audio-video visit conducted via Zoom.”
Pitfall 5: Failing to Honor State Parity Laws
Issue: Practice in California reimburses telehealth at 75% of in-office rate; violates AB 72 parity law.
Impact: State Attorney General complaint, enforcement action, retroactive parity adjustments.
Fix: Know your state law. Update fee schedules to ensure parity where required. Document this in your compliance manual and review annually.
Billing Workflow Checklist
- [ ] Confirm visit mode: audio-video or audio-only
- [ ] Confirm patient location (must be outside your facility for POS 02)
- [ ] Select correct CPT code (99213-99215 for E/M, 99441-99443 for established phone, 99203-99205 only if video)
- [ ] Select correct POS code (02 for telehealth, 10 for audio-only phone)
- [ ] Apply modifier 95 if your payer requires it (check credentialing agreement)
- [ ] Document patient location, mode, and clinical rationale in medical record
- [ ] Verify parity law requirements for your state and ensure fee schedule compliance
- [ ] Review claim status for denials; address any patterns immediately
Bottom Line
Telehealth billing compliance hinges on three fundamentals: correct POS codes, appropriate CPT codes, and clear documentation. Audio-video visits get preferential treatment (higher reimbursement, fewer restrictions), while audio-only visits face tighter constraints. Know your state’s parity law and your payer’s modifier requirements. Most denials stem from mixing these up. Get this right, and telehealth becomes a clean revenue stream.
