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What is a Medicare Fee Schedule?

Health Care and Health Insurance
by Jacqueline Lee
There are many resources for those who need a little guidance through the medicare fee schedule.
There are many resources for those who need a little guidance through the medicare fee schedule.

The Medicare Fee Schedule (MFS) is a tool that is used by physicians, EM services, clinical laboratory services, and other medical service workers. This resource can be extremely helpful for insurance companies and other industries that work with insurance to provide the best service to patients.

As you may already know, Medicare is a federal health insurance program for those who are 65 years old and above and those with certain disabilities or End-Stage Renal Disease (ESRD). The MFS lists the allowable fees for the beneficiaries, which is the dollar amount that is considered paid in full by a Medicare payment. Whether you are an insurance provider or an employee in a doctor's office trying to figure out billing, it is important to understand the value of an MFS.

What is a Medicare Fee Schedule?

A Medicare Fee Schedule is a complete listing of how much certain medical services, including telehealth services, and supplies cost for those who have Medicare and for physician services. The Centers for Medicare and Medicaid Services (CMS) develop a new Medicare Fee Schedule every year. According to their website, "This comprehensive listing of fee maximums is used to reimburse a physician and/or other providers on a fee-for-service basis."

The Medicare physician fee schedule uses a resource-based relative value system (RBRVS) that creates a value to current procedural terminology or CPT codes that are made by the American Medical Association (AMA). To put it more simply, each code is created depending on the specific situation of the person receiving care.

CMS also determines the final relative value unit (RVU) for every predetermined code. Then the RVU is multiplied by the annual conversion factor (a dollar amount) to find out the national average fee. Keep in mind that these payment rates are not the same across the board and are adjusted according to different factors like geographic location and other indicators from local physicians. The Geographical Practice Cost Index (GPCI) is used along with the RVU to create an accurate rate. This means when you are estimating your client's Medicare fees, the information is calculated for you depending on the data that is input.

Reading a Medicare fee schedule for clients

There are three components of the RBRVS for different kinds of medical procedures. They determine the RVU, as explained above. Here are the three factors:

  1. Physician work/professional component: This factor is normally counted by calculating time required, professional skill or mental stress that a medical professional is required to provide the service or procedure.
  2. Practice expense: The component is conveyed as an overhead cost. This could include the assistant's time, equipment or supplies.
  3. Professional liability insurance: This component is also known as malpractice expense and accounts for 4% of the total relative value for each service, on average according to the AMA.

When it comes to reading a Medicare fee schedule in order to provide the correct coverage amount for clients, the MPFS look-up tool is extremely helpful. There is even a booklet to assist those who may not be familiar with the look-up tool, similar to a search function.

For most rates and codes, you should be aware that Medicare pays for 80% of the amount due. This means that the beneficiary for who the claim is being filed will only need to pay about 20% of the total listed amount. When looking at Medicare fee schedules, be sure that you are using the most up-to-date listing. For example, the MPFS is updated quarterly by CMS.

Once you have found the correct fee schedule on the CMS website, go to the overview page of the MPFS look-up tool, found here. This section has a step-by-step selection process and the user can customize different searches. As the user, you need to input the correct information to find out the correct charge data. This includes pricing information by code, payment policy indicators, RVUs and GPCI. Each search criteria should be applied in order to get the correct coverage amount for the client, so be sure to have the correct code and RVU for the service or telehealth service completed.

Managing medical fees can seem overwhelming to the client, so whether you are working for a physician or a third-party insurance company, take your time to ensure that the correct information is being calculated by the look-up tool and site.

Effective insurance through the Medicare fee schedule

In order to help the professionals who are filing claims on behalf of the beneficiary, it's important to know that there are three different parts of Medicare that have been broken down depending on the service provided. This is helpful information to know when dealing with the fee schedule.

  1. Part A: This section covers hospital stays, hospice care and even some home health care. 
  2. Part B: Essentially medical insurance, this section covers doctor's services, outpatient care and preventative services, along with other medical requirements.
  3. Part D: Created for the cost of prescription drugs and shots or vaccines.

In order to provide the best service for the clients, the Medicare fee schedule was created to make sure Medicare is being dispersed correctly. Take a look at the CY 2022 Medicare Physician Fee Schedule final rule to learn more about what has changed in the new fee schedule that will be active on and after January 1, 2022. Here is a small round-up of the updated MPFS:

  • Allows the use of audio-only communications technology when receiving mental health services in certain circumstances.
  • Finalizes recent changes to Evaluation and Management (E/M) visit codes
  • Modifies payment for therapy services furnished in whole or in part by a Physical Therapist Assistant or Occupational Therapy Assistant.
  • Finalizes considerations for vaccine administration services.

The Medicare fee schedules are always being evaluated for effectiveness and considerations are taken in order to elevate the Medicare experience for beneficiaries. 

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