Medicare Fee Schedule: Understanding Medicare Payment Rates
The Medicare fee schedule shows the highest amounts that Medicare pays doctors for various services. This promotes financial transparency and helps prevent disputes around payments.
Knowing Medicare’s fee schedule determines how much your doctor is reimbursed for certain services, potentially impacting your out-of-pocket costs. In this article, we’ll detail what the Medicare fee schedule is and how it works, focusing on how it affects Medicare beneficiaries
Key Takeaways:
The Medicare fee schedule lists the highest amounts that doctors or other medical providers can be paid by Medicare for certain services. This is designed to allow consistency across payments.
This schedule sets how much your doctor gets paid for services and may affect what you pay out of pocket.
The Medicare fee schedule helps keep payments fair and consistent. It also prevents disputes.
What is the Medicare fee schedule?
The Medicare fee schedule is a list of prices that Medicare uses to pay doctors and other medical service providers. It lists different costs for services covered by Medicare. These include, but are not limited to:
Doctor visits
Diagnostic tests
Laboratory services
Medical equipment, such as prosthetics and orthotics
The Medicare fee schedule is designed to help manage rising physician costs and ensure consistency across Medicare reimbursements. This can be especially helpful for rural providers, who rely more on Medicare payments. A fair Medicare fee schedule can help rural providers offer more services.
How the Medicare fee schedule works
The Medicare fee schedule takes into account different factors when determining fees, including the three below.
Conversion factor (CF)
While the RVS determines the value of a service, the CF changes this to a dollar amount. It does this by multiplying the value by a dollar amount. This gives the Medicare payment amount.
Geographic Adjustment Factor (GAF)
Different locations have different costs of living and salaries. The GAF uses this information to adjust the Medicare payment based on geographic location.
Types of Medicare fee schedules
Medicare covers many services, each requiring different resources and time. To capture the fees for different service types, Medicare has created multiple schedules.
Physician fee schedule (MPFS)
The physician fee schedule pays for services provided by a physician or other medical professional, such as a physical therapist, mental health counselor, or marriage and family therapist. Diagnostic tests other than laboratory tests fall under this fee schedule.
These include cognitive assessments, psychological and neuropsychological tests, radiology services, and opioid use screenings. Other services covered include psychotherapy for crisis, audiology services, and opioid use disorder treatment.
Clinical laboratory fee schedule
The clinical laboratory fee schedule includes most diagnostic tests done in a lab. Private payer rates are used to help determine the fee schedule.
Ambulance fee schedule
This fee schedule applies to ambulance services. These include volunteer, municipal, private, and independent service providers. It also covers institutional providers, like hospitals and skilled nursing facilities. Finally, critical access hospitals are covered under this schedule, except when they are the only ambulance service within 35 miles.
Durable medical equipment fee schedule
The durable medical equipment fee schedule covers items in Medicare Part B. This includes:
Durable medical equipment, like wheelchairs, hospital beds, and oxygen equipment
Prosthetics and orthotics, like artificial eyes, legs, arms, and back, neck, leg, and arm braces
Prosthetic devices like cochlear implants
Casts or surgical dressings for broken bones or dislocations
Therapeutic shoes, such as custom-molded shoes for individuals with diabetes
Compression items to treat lymphedema
Other specialty fee schedules
In addition to the fee schedules listed above, Medicare has additional fee schedules for specialty services. These include:
Hospital outpatient prospective payment system (HOPPS): This schedule sets fees for outpatient procedures in hospitals. This includes emergency department visits, same-day surgeries, and some medications.
Prospective payment systems (PPS): PPS covers costs for acute inpatient hospitals, home health, hospice, inpatient psychiatric facilities, and skilled nursing facilities.
How the fee schedule affects Medicare beneficiaries
The fee schedule can impact Medicare beneficiaries in several ways:
Out-of-pocket costs: The fee schedule determines Medicare’s payments to doctors and medical staff. This affects how much you pay out of pocket. For example, if a service falls under Medicare Part B, beneficiaries usually pay 20% of the approved amount after meeting their deductible. This means that if fees increase, you’ll pay more for the same services. If fees decrease, your out-of-pocket costs will be lower.
Accessibility: Low Medicare fees can lead some medical providers to refuse Medicare patients. Others may only see a limited number of them. This may make it more difficult to see a medical doctor. But if Medicare fees are higher, more medical providers might accept Medicare patients.
Services availability: Medicare’s fee schedule can directly affect what services are available. For example, if Medicare increases mental health appointment fees, more providers might offer these services.
Prices vary by location: Medicare’s fee schedule changes prices based on where you live.
Covered services: Medicare only pays for services listed in its fee schedule. Beneficiaries may have to cover more, or all, of the cost for unlisted services.
Finding and using Medicare fee schedule information
The Centers for Medicare and Medicaid Services (CMS) offers a Physician Fee Schedule (PFS) Look-Up Tool. This tool can be used to find the payment policies, pricing, and relative value units (RVU) for over 10,000 services.
Once the Part B deductible is met, Medicare beneficiaries pay 20% of the cost of services covered by Part B. So, you can use the fee schedule to figure out your out-of-pocket costs.
It’s important to note that the Medicare fee schedule only applies to Original Medicare (Part A and B). Medicare Advantage plans may follow different fee schedules, so you’ll need to check with your plan.
Bottom line
The Medicare fee schedule is a list of standardized payment amounts that the government will pay doctors for different healthcare services. Medicare determines these fees based on the time, skills, and resources needed to complete a particular procedure. They also adjust the rates based on geographic location, keeping in mind the cost of living.
Medicare beneficiaries pay 20% of the cost for Part B services, after covering their deductible. Out-of-pocket costs vary for services covered under Part A. The Medicare fee schedule can help determine out-of-pocket costs. It’s also important to monitor any changes in the fee schedule because this can affect costs and the availability of particular services.
Frequently asked questions
What is the difference between the Medicare fee schedule and the Medicare allowed amount?
The Medicare fee schedule is a list of the maximum amounts that Medicare will pay for particular services. The Medicare allowed amount is the actual amount that Medicare will reimburse the doctor. The allowed amount is the maximum amount reduced by required adjustments, like geographic area, provider status, and bundling.
How often does Medicare adjust its fee schedule?
Medicare adjusts the fee schedule once per year. The new rates begin on January 1st of each year.
Can providers charge more than the Medicare fee amount?
If your medical provider takes a Medicare assignment, they agree to the set fee. This means they cannot charge you more than that fee. However, if your medical provider doesn’t accept Medicare assignment, they can charge you more than the Medicare fee amount. Typically, this is limited to no more than 15% above the fee amount. This extra charge is referred to as an excess charge, and can be eliminated with a Medigap Plan G.