Basics of Medicare Physician Fee Schedule
As the name suggests Medicare Physician Fee Schedule (MPFS) is a complete listing of fees used by Medicare to pay doctors or other providers/suppliers. This comprehensive listing of fee maximums is used to reimburse a physician and/or other providers on a fee-for-service basis. Medicare Part B pays for physician services based on the Medicare PFS, which lists the more than 10,000 unique codes and their payment rates. Physicians’ services include office visits; surgical procedures; anesthesia services; and a range of other diagnostic and therapeutic services. CMS develops fee schedules for physician offices, hospitals, ambulatory surgical centers (ASCs), skilled nursing facilities and other post-acute care settings, hospices, outpatient dialysis facilities, clinical laboratories, and beneficiaries’ homes. Medicare uses the MPFS when paying the following services:
- Professional services of physicians and other enrolled health care professionals in private practice;
- Services covered incident to physicians’ services (other than certain drugs covered as incident to services);
- Diagnostic tests (other than clinical laboratory tests);
- Radiology services.
Medicare also pays suppliers like Mammography Centers according to the MPFS. Medicare pays Institutional providers like hospitals, Comprehensive Outpatient Rehabilitation Facilities (CORFs), and Skilled Nursing Facilities (SNFs) for some services under the MPFS, depending on the institution type and service. For example, Medicare pays hospital outpatient departments for screening mammographies, and outpatient rehabilitation services, under the MPFS. The MPFS is an excellent way to learn if HCPCS codes are affected by payment policies like payment of assistant at surgery services; applicability of certain modifiers; and physician supervision of diagnostic services.
Medicare Physician Fee Schedule Payment Rates
The MPFS payment rates formula shows how a payment rate for an individual service is determined, there’s a description for each component below the formula.
Payment = ( (Work RVU*Work GPCI) + (PE RVU*PE GPCI) + (MP RVU*MP GPCI) ) * CF
Relative Value Units (RVUs): The MPFS uses 3 separate RVUs to calculate a payment:
- The Work RVU reflects the relative time and intensity associated with furnishing a Medicare PFS service
- The Practice Expense (PE) RVU reflects the costs of maintaining a practice (such as renting office space, buying supplies and equipment, and staff costs)
- The Malpractice (MP) RVU reflects the costs of malpractice insurance
Geographic Practice Cost Indices (GPCIs): Medicare adjusts each of the 3 RVUs to account for geographic variations in the costs of practicing medicine in different areas of the country. Each kind of RVU component has a corresponding GPCI adjustment.
Conversion Factor (CF): To determine the payment rate for a service, CMS systems multiply the sum of the geographically adjusted RVUs by a CF in dollars. The statute specifies the formula by which the CF is updated on an annual basis.
Medicare uses a fee schedule (a complete listing of fees) to pay doctors or other providers and suppliers to pay physicians, other enrolled health care professionals or providers and suppliers on a Fee-For-Service (FFS) basis. Medicare bases payment on whichever is less, the charge or MPFS amount. In addition to the MPFS, CMS develops fee schedules for ambulance services, clinical laboratory services, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). For most codes, Medicare pays 80 percent of the amount listed and the beneficiary is responsible for 20 percent.
MPFS Look-Up Tool
The MPFS Look-Up Tool helps health care professionals, suppliers, and institutional providers find Medicare payment amounts for each code so they can calculate the beneficiary coinsurance amount. The MPFS gives the limiting charge for nonparticipating health care professionals and suppliers who treat Medicare beneficiaries. CMS updates the MPFS quarterly. CMS issued the CY 2022 Medicare Physician Fee Schedule (PFS) final rule that updates payment policies, payment rates, and other provisions for services.