As a health care provider, understanding the rules and regulations of the Medicare Physician Fee Schedule can be a challenging task. The Medicare Fee Schedule is a comprehensive list of all the fees that Medicare has approved for reimbursing physicians and other healthcare providers for their services.

In this article, our team at Weave discusses some key issues you need to know about the Medicare Physician Fee Schedule, including what it is, payment policy indicators, schedule differences, and how to remain current on all the regulations.

What Is the Medicare Physician Fee Schedule?

Medicare Part B and the Centers for Medicare and Medicaid Services (CMS) use the Medicare Physician Fee Schedule (MPFS) as a policy tool for calculating the total reimbursement cost for patient healthcare and physician services. The fee schedule takes into account three primary factors regarding physician payment rates, known as relative value units (RVUs):

  1. Physician Practice Expense (peRVU) includes overhead and maintenance costs, such as supplies, rent, equipment, staff expenses, etc. It also depends on the setting, whether an office (non-facility) or a hospital (facility).
  2. Physician Work Service (wRVU) includes the level of time and effort required for each physician service, including the necessary skill level as well as physical and mental effort.
  3. Professional Malpractice Insurance (mRVU) includes the cost of malpractice insurance for the physician.

Keep reading as we dig deeper into the RVUs and other variables regarding Medicaid services and fee schedules.

What Does a Health Care Professional Need To Know?

So, what are the most important details you should know about the CMS Fee Schedule?

Who It Applies To

First, the fee schedules apply to these healthcare providers:

  • Primary care physicians
  • Durable medical equipment suppliers
  • Clinical laboratory services
  • Ambulance services

RVUs, GPCIs, and the Fee Schedule Equation

The Fee Schedule equation looks like this:

Total – RVU = (wRVU x wGPCI) + (peRVU x peGPCI) + (mRVU x mGPCI)

GPCIs, or Geographic Practice Cost Indicators, reflect the total costs of medical services based on the physician’s geographical location. For example, the cost of an X-ray in California will be different than in Arkansas.  

The final rule to the equation involves multiplying the answer by a Conversion Factor (CF), which, according to a recent press release, CMS reduced for 2023 to $33.06. This is a $1.55 decrease from 2022. The answer determines the payment rate for a physician depending on the CPT code. The last equation looks like this:

Payment Rate = (Total RVU) x (Current CF)

After all those variable factors and calculations, the final rule is that Medicare payment rates will consist of an 80% cost reimbursement and a 20% copay by the patient. In addition, CMS uses pre-claim review initiatives and prior authorization to ensure physician compliance with Medicare regulations and rules.

Telehealth Services Fee Schedule Changes

After the COVID-19 PHE (Public Health Emergency), millions of Medicare beneficiaries in the United States took advantage of increased patient access to remote services via telehealth providers. In November 2022, the CMS released its rules regarding the 2023 CMS Fee Schedule for remote medical care, such as digital evaluation and behavioral health services.

The final rule will eliminate billing reimbursement for telephone evaluation and management (E/M) services, eliminate mandatory direct supervision, and create three new codes for prolonged E/M services.

Quality Payment Program

Before the Quality Payment Program (QPP), Medicare reimbursement cost increases followed regulations within the Sustainable Growth Rate (SGR) law, which capped spending increases. However, the SGR would have caused considerable reductions in the fee schedule.

To prevent this, Congress passes an annual law protecting Medicare reimbursement rates and adjusting for inflation. Now, high-quality physicians and providers who are part of an Accountable Care Organization can earn a cost increase.

Differences Between the Medicare and Medicaid Fee Schedule

Health equity is an important consideration for Medicare beneficiaries. Therefore, knowing the differences between the Medicare and Medicaid Fee Schedules is vital.

The CMS manages the Medicare Physician Fee Schedule, whereas the Medicaid Fee Schedule operates at a state level with minimal assistance from CMS. Thus, the Medicaid Fee Schedules vary from state to state across the country.

Furthermore, Medicaid Fee Schedules have the lowest reimbursement rates. In fact, a Medicaid carrier usually gets lower reimbursement costs for a patient who receives a Medicaid service than for providing the same service to a Medicare beneficiary.

How To Stay Up-to-Date on the Medicare Physician Fee Schedule

As a physician, staying up-to-date regarding the regulations and final rule changes for the MPFS and other programs, like the Medicare Shared Savings Program and Consolidated Appropriations Act, is essential. First, you can access the CMS website. The American College of Surgeons has another informative and useful page about the fee schedule, as does the American Medical Association and American Academy of Neurology.

Another option would be leveraging professional payment services from Weave. Our experts will handle all the hard work, ensuring that your practice remains compliant and up-to-date regarding all the MPFS changes.

CMS Physician Fee Schedule Look-Up Tool

In addition, the CMS Physician Fee Schedule Look-Up Tool is another valuable resource you can use as a care provider to remain current with any final rule changes or modifications. Remember, the CMS changes the determining variables every year, like the Conversion Factor. Utilizing the CMS Physician Fee Schedule Look-Up Tool will help you understand the ins and outs of the most current Fee Schedules. In addition, you can use the CMS website to learn more about additional fee schedules, such as the Ambulatory Surgical Center (ACS) schedule.

Contact Weave Today to Learn More About Our Professional Payment Management Services

As you can see, gaining a fundamental understanding of the Medicare Physician Fee Schedule is challenging. However, you don’t have to spend hours struggling to calculate your payment rates. Instead, let our professionals at Weave take care of all the hard work.

We offer a comprehensive payment processing solution that will allow your practice to provide patients with a seamless billing process and fast, accurate Medicare reimbursement services. To learn more about the Medicare Fee Schedule and request a demo of our services, call our team at Weave at 833-572-2139.